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Richard Thaler

Early in his ca­reer, the econ­o­mist Richard Thaler made a list of “Dumb Stuff Peo­ple Do” on his of­fice black­board, said Tim Har­ford in the FT. A favourite ex­am­ple was the way guests at his din­ner par­ties in­vari­ably “hoovered up” cashew nuts over drinks. In prin­ci­ple, they could have cho­sen to stop. Most didn’t. And yet they were mostly “pleased to see the temp­ta­tion re­moved”. Thaler, who has just won the No­bel Prize in Eco­nom­ics, wasn’t the first to ap­ply seem­ingly triv­ial psy­cho­log­i­cal in­sights to ar­gue that hu­mans rarely be­have as ra­tio­nally as tra­di­tional eco­nomic mod­els as­sumed. But his book Nudge (co-au­thored with Cass Sun­stein), and his work in govern­ment pol­icy units, put bones on his the­o­ries. Thaler’s win is “a tri­umph for com­mon sense eco­nom­ics”.

A ge­nial, witty aca­demic, who made a cameo ap­pear­ance in the 2015 film The Big Short, Thaler has spent his ca­reer ex­plor­ing how to in­cen­tivise peo­ple out of shoot­ing them­selves in the foot, fi­nan­cially or oth­er­wise, said The Daily Tele­graph. His work in­spired for­mer PM David Cameron to set up a “Nudge unit”, where the stakes were much higher than cashew nuts. The big­gest suc­cess was pri­vate sec­tor pen­sions. The sim­ple ex­pe­di­ent of en­rolling peo­ple on a scheme by de­fault, while al­low­ing them to opt out, boosted take-up from 42% to 73% in four years. Af­ter the $1m prize was an­nounced, Thaler, a pro­fes­sor at the Uni­ver­sity of Chicago and a keen golfer, said he would try to spend the money “as ir­ra­tionally as pos­si­ble”.

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