“Libertarian paternalism” is the phrase he coined to describe this. In Nudge, Thaler suggests that you can help people make better decisions for themselves if you set up “choice architecture” that guides them in a certain direction-a default mechanism such as automatic enrollment in a retirement plan is one example-without forcing them to do anything.

Over the course of his career, Thaler has elucidated how living, breathing human beings make real choices in life, as opposed to the choices made by the logical, utility-maximizing creatures that classical economics has imagined people to be. Walgreen Distinguished Service Professor of Behavioral Science and Economics, and author of the international best-selling 2009 book Nudge: Improving Decisions About Health, Wealth, and Happiness, written with Cass R. The idea that people don’t always know what they want, much less what’s best for them-whether that’s resisting nuts at a party or socking away money in a 401(k)-built a career for Thaler, Charles R. “Newton had his apple,” Thaler said in an interview, with the bit of mischief he’s known for in the classroom. In this contradiction lies the insight that put Thaler on the path to becoming a leader in the field that is now known as behavioral economics-a discipline that challenged economists’ assumptions that humans are rational problem solvers. Without the temptation of the nuts, he said, “We realized that a.) we were happy, and b.) we weren’t allowed to be happy, because a first principle of economics is more choices are better than fewer choices.” Because that’s what economists do.” Even cashews could hold the key to unlocking insights about our idiosyncratic behaviors. “But then, since we were economics graduate students,” Thaler recalled, “we immediately started analyzing this. He recalled that when he came back, his friends thanked him for it (and found themselves with room to enjoy a big dinner). So Thaler, worried that his guests would fill up on the salty snacks, whisked the bowl away. As Thaler explains in his latest book, Misbehaving: The Making of Behavioral Economics, the guests while waiting with cocktails for the meal, were devouring the cashews-the entire bowl half-eaten in minutes. Thaler traces its beginnings to a dinner party he hosted in the 1970s.

Photography by Chris Strong.Ī quiet revolution in economic thinking instigated by Richard H. Management Science and Operations ManagementĬontact Employer Relations and Corporate Relations MBA Master of Arts in Middle Eastern Studies

MBA Master of Arts in International Relations MBA MA Eastern European Russian Eurasian Studies The University of Chicago Booth School of Business

Misbehaving richard thaler