The winner of the Nobel economics prize says the most important impact of his work is "the recognition that economic agents are humans" and money decisions are not made strictly rationally. Richard Thaler, of the University of Chicago, was speaking in a phone call to a news conference immediately after the Nobel committee announced he won this year's $1.1 million prize, reports the AP. The Swedish Academy of Sciences said the 72-year-old's research has built a bridge between the economic and psychological analyses of individual decision-making. It says his work expanded economic analysis by considering three psychological traits: limited rationality, perceptions about fairness, and lack of self-control. A background paper from the academy offers this:
- "One frequent objection is that results from laboratory experiments cannot be transferred to real life, but it is easy to find examples where fairness considerations have an impact outside the laboratory. Unexpected rain can create an unexpectedly high demand for umbrellas, but if a shopkeeper then raises their price to match the high demand, many consumers react negatively and feel that the shopkeeper has behaved greedily. Companies that contravene fairness norms may be punished by consumer boycotts, which may get them to maintain their prices in cases where they would otherwise have raised them."
The economics prize is something of an outlier—the AP
reports Alfred Nobel's will didn't call for its establishment and it honors a science that many doubt is a science at all. It was first awarded in 1969, nearly seven decades after the series of prestigious prizes that Nobel called for, though it is broadly considered an equal to the other Nobel and the winner attends the famed presentation banquet. (Read more Nobel Prize for Economics