Top of Mind

Upending Economic Thinking

Richard Thaler won this year’s Nobel Memorial Prize in Economic Sciences for his foundational contributions to behavioral economics. The key insight of the growing field is that contrary to traditional economic models, humans don't always act rationally.

That seemingly self-evident insight has transformed economic thought, though not easily. Robert Shiller, also a Nobel winner and a pioneer in behavioral economics, wrote after Thaler's win that “there has been antagonism—and even what appeared to be real animus—toward our research agenda.”

In conversation with the New York Times, Thaler explained how seemingly silly things can lead to serious insights on sunk costs, supply and demand, and choice architecture that improved economic theory and had real-world policy implications.

Back in 2009, Yale Insights talked with Thaler about how governments and businesses can use “nudges” to encourage better outcomes.