‘Nudging’ towards a Nobel Economics Prize
US ACADEMIC Richard Thaler, who helped to popularise the idea of “nudging” people towards doing what was best for them, has won the 2017 Nobel Economics Prize for his work on how human nature affects supposedly rational markets.
Influential in the field of behavioural economics, his research showed how traits such as lack of self-control, and fear of losing what you already have, prompted decisions that may not have the best outcome in the longer term.
“I think the most important impact (of my research) is the recognition that economic agents are human and economic models have to incorporate that,” Thaler, a professor at The University of Chicago Booth School of Business, said in call broadcast at the Nobel news conference.
Awarding the 9 million Swedish crown (R15.2m) prize, the Royal Swedish Academy of Sciences said: “Richard Thaler’s contributions have built a bridge between the economic and psychological analyses of individual decision-making.”
Thaler brought to prominence the idea of “nudge” economics, where individuals are subtly guided toward beneficial behaviours without heavy-handed compulsion.
In researching self-control – or the lack of it – Thaler touched on an ageold problem: why New Year’s resolutions to change aspects of your life are notoriously hard to keep.
Together with Professor Cass Sunstein, he argued that society – while maintaining freedom of choice – should actively try to guide individuals in the right direction.
Their book, titled
became popular with some Western politicians seeking ways to encourage their citizens to save and live healthily, without incurring voters’ wrath for raising taxes or banning behaviour outright.
“This has also been used in public pension systems in the United States and the general idea of ‘nudging’ has made a breakthrough in public policy making,” Torsten Persson, an economics prize committee member, told Reuters.
“Not only in the US – there’s also a nudging unit for the UK government and there’s one for the Australian government.
“it even affects the Swedish government when they think about these things.” – Reuters