Richard Thaler is a respected economist who became a recipient of the 2017 Nobel Prize for his research and significant contributions to the discipline of economics. His specific area of expertise is in the realm of behavioral economics and he is a theorist who has developed a bridge between behavioral science and economics through his academic research and findings. Here are 20 things that you didn’t know about this celebrated economist.
1. His Birthday
Dr. Thaler was born on September 12, 1945, in East Orange, New Jersey. As of the Fall of 2019, he turned 74 years old. His father was Alan Maurice Thaler, who had a successful career with Prudential Financial in Newark, as an actuary, and his mother was an educator turned real estate agent. His father was a native of Toronto, Ontario Canada, but moved to the United States. .Thaler was raised in a Jewish family and is the oldest of three boys. He is of Ukrainian ancestry. We learned that Richard Thaler’s great-great-grandfather was a native of Ukraine. He was born in Berezhany, Ukraine.
2. He is highly educated
After graduating from high school, Dr. Thaler attended Case Western Reserve University where he earned his bachelor’s of arts degree. He continued on with his education, enrolling at the University of Rochester’s Graduate School of Management. He earned his master of arts degree and then continued forward with the institution to earn his Ph.D.
3. He is a pioneer in behavioral economics
While economics is certainly not a new field of study and practice, there are new theories arising within the discipline that is considered to be revolutionary. Dr. Thaler is an economics theorist who developed a new area within the discipline called behavioral economics in which the science of behavior is integrated into the economics sphere.
4. Dr. Thaler has worked with other prestigious experts in the field
Thaler has collaborated with some of the top economists on several different occasions including Amos Tversky, Daniel Kahneman, and others in defining the field of behavioral economics. This is a fairly new branch of the economic field which is expanding at a rapid pace.
5. His research and findings are significant for economists
Dr. Thaler received the Nobel Memorial Prize in Economic Sciences in 2017. The recognition was in celebration of his contributions to behavioral economics from the Royal Swedish Academy of Sciences. The new branch is a melding of psychological analyses of individual decision-making and economics. His research has yielded empirical findings as well as theoretical insight which has further expanded the discipline of behavioral economics and it has been his contributions which were lauded at the event.
6. He has an impressive history
Dr. Thaler was elected as a member of the National Academy of Sciences in 2018 and is a Charles R. Walgreen distinguished service professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. He became the president of the American Economic Association in 2015.
7. His expertise covers a broad scope
Dr. Thaler is famous for his contributions to economic sciences, and in particular, for his work in the relatively recent field of behavioral economics. He is also recognized in other disciplines as an expert as well. These include behavioral finance, and nudge theory. He has served as a professor at several institutions of higher learning. These include the Graduate School of Management at the University of Rochester from 1974 through 1978, the Johnson School of Management at Cornell University from 1978 to 1995, and at the Booth School of Business at the University of Chicago from 1995 to the present.
8. Dr. Thaler has authored several publications
Thaler co-authored several books including a global best-seller that is titled “Nudge” released in 2008. He collaborated on the book with Cass R. Sunstein. The content of the book addresses many of the major problems that exist within society with regard to concepts of behavioral economics. He also released a book that he called “Misbehaving: The Making of Behavioral Economics” in 2015. In addition to this, he has authored or edited several other books that are related to the field of economics.
9. There is a website dedicated to his publications
If you’re interested in reading some of the books that he has written, Dr. Thaler has a website that contains an extensive list of his writings. In addition to writing “Nudge,” Thaler has also co-authored a variety of other books and articles including “Deal or No Deal? Decision Making Under Risk in a Large-Payoff Game Show,” American Economic Review in 2008, “Naive Diversification in Defined Contribution Savings Plans” in 2001, “How Much Is Investor Autonomy Worth?” in 2002, “Can the Stock Market Add and Subtract? Mispricing in Tech Stock Carve-outs,” “Libertarian Paternalism is Not an Oxymoron,” 2004, and “Save More Tomorrow: Using Behavioral Economics in Increase Employee Savings,” in 2004. These are peer-reviewed academic articles that are commonly used in the writing of research papers by students who are taking economics classes.
9. Dr. Thaler asks important questions about human behavior
Richard Thaler takes a different approach to defining economics in his behavioral approach. He examines how human traits govern the decision-making processes related to economics. He approaches the further definition by analyzing decision-making processes from a psychological perspective in an attempt to answer the questions about why we make the decisions that we do. His work further analyzes the tendency to not behave rationally, how notions of reasonableness and fairness are determined, along with a lack of self-control. His findings have had a tremendous impact on a lot of different areas of economic research and the development of policies within the discipline.
10. His Nobel acceptance lecture is available for review
Anyone who is interested in viewing and hearing Dr. Thaler’s Nobel Prize acceptance speech may do so. The speech was delivered on December 8, 2017, after he was introduced by Professor Magnus Johannesson, an economic Sciences Prize Committee Member, at the Aula Magna, at Stockholm University. It is available at the website indicated below and you can either watch the lecture or you can opt for reading the text-only version.
11. He has challenged the status quo
One of the things about Richard Thaler that is so interesting is that he challenged the established beliefs and concepts about economics through much of his work. The standard economist’s model of rational human beings in the decision-making process was not something that he entirely agreed with. While it can be risky to go against long-held beliefs, Dr. Thaler boldly challenged them and he provided empirical evidence that suggests that these old beliefs may not be accurate. He doesn’t mind going against the grain in search of improving our understanding of why people make the economic decisions that they do.
12. He proved that people are not always rational
Even some of the most stable individuals make irrationals decisions from time to time. These are the insights that he has shared with the world and he’s proven them in a resarch-based setting with enough degree of certainty to win himself a Nobel Prize. Sometimes we make decisions that do not follow sound logic and this is now included in newer economist’s models of behavioral economics.
13. His new theories can help us to save more
Understanding the economic decision-making process can help us to recognize where we are missing the mark when it comes to adequately preparing for retirement. Dr. Thaler has developed ways tht will help us to save money for retirement and to save more. He is an advocate of “libertarian paternalism,” which is a newer concept that has come out of his research and findings.
14. Thaler believes that fewer choices are better
While most mainstream economists previously assumed that the more choices you have, the better off you are when it comes to economics. Thaler challenged this belief by suggesting that having fewer choices is actually preferable to most people. This, he counters, is better because of an inherent lack of self-control that lies within people when making economic decisions. This is one of his main points when it comes to behaviors that are not rational.
15. Thaler has divided the population into two basic types
Thaler admits that there are two groups of people when it comes to making economic decisions. There are those whom he refers to as “Econs” and these are the people who more lin line with the economist’s model of rationality, but Thaler asserts that these are not common within the overall population. The other group he refers to are “Humans,” which are “the vast majority of people” and they do not fit the standard economic model of rationality. He has developed an adversarial stance against the previous model and instead of applying the old model he suggests that actual human behavior which is usually irrational is a more accurate description of what happens in the economic decision-making process.
16. He has identified “anomalies” in human thinking
When Dr. Thaler was deconstructing the standard economist’s model of human behavior, he identified an outstanding trait that is frequently exhibited in human behavior, which he labeled an “anomaly.” This is the fact that people best be paid much more to give something up than they are willing to pay to acquire it. This is something that he calls “The endowment effect.”
17. He’s shown that people do not always think rationally
We found it intriguing that the typical response of people when asked how much they’re willing to accept in exchange for an increase in the chance of death by one in a thousand, was $10,000. This was the typical response that people gave and it seems that the increased risk of dying is worth ten thousand dollars. When asked how much they would be willing to pay to lower an existing risk of death by one thousand, the answer was a mere $200.
18, Thaler showed us that we often have a skewed view of reality
The ways that the human mind works is fascinating at times but it doesn’t always make rational sense. Thanks to the research and published findings of Dr. Thaler, we get a much clearer picture of how people really think versus what logical thinking would look like. He used an example of investors in the stock market with “winners” and “losers.” His work showed that people tend to overreact to news about the stock market. When prices in the stock market drop for one group of investors, and they increase for another group, we tend to see this in black and white as the winners are those with increased stock prices and the decrease in stock value is the losers. In reality, the two groups that Dr. Thaler examined were the opposite. The so-called “loser groups” saw a reduction in stock prices, but their portfolios still performed higher than the portfolios of the winners.
19. We have a lot to learn about our own behaviors
Thanks to Dr. Richard Thaler’s groundbreaking work in his examination of human rationality and economics, we can take a better look at the reality of the situation. The truth of the matter is that we do not always make rational decisions as human beings, especially when it comes to economics. Much of it has to do with our perceptions which do not always follow logical patterns. This describes the majority of the population, instead of a few small groups. Having this knowledge about our own behaviors, we can become more vigilant and make the necessary changes to alter our behaviors.
20. He may be one of the greatest economists of all-time
Dr. Thaler has made some significant challenges to previously held beliefs and he has shown that the old ways of thinking are not entirely accurate. While they might make sense in a perfect world where people make decisions that are flawless in logic, they are not accurate because humans are not always logical in decision-making. This has had a significant impact on the academic models that are used to instruct students of economics at academic institutions and his contributions are revolutionary.