This morning it was announced that the 2017 Bank of Sweden Prize for Economics in memory of Alfred Nobel (also known as the Nobel prize in economics), has been awarded to BIT’s long-time friend and colleague Richard Thaler. We are totally delighted for him, and for the field.
Richard is the third behavioural scientist to win the prize, following Daniel Kahneman (2002) and Robert Shiller (2013), representing an important step in economists’ acceptance of a more realistic model of human behaviour that incorporates the various foibles and frailties of human decision making – many of which were first catalogued by Richard and his colleagues. (And honourary mention to Angus Deaton, for his work on health, methods, and sparring with Danny in his office next door…)
Richard’s award brings back echoes of a meeting around 15 years ago. I invited Danny K (pre-Nobel prize) into the then Prime Minister’s Strategy Unit for a chat. At one point, I asked Danny what he’d seen recently that really caught his eye. After thinking for a moment, he said ‘there’s this guy – Dick Thaler – who’s done a really interesting paper on what they call “libertarian paternalism”, it’s really worth a look…’ Indeed it was…
It is difficult to talk about behavioural economics to any length of time without stumbling onto Richard’s work – ranging from time inconsistency in our preferences, self control problems, savings instruments, and even ubiquitous tools in measurement of people’s preferences like the dictator game. Richard’s contribution to making economics a truly behavioural science can be found in the pages of his “Anomalies” articles for the Journal of Economic Perspectives, which, decades later, are an essential introduction to the field and provide the intellectual scaffolding of much of what came later.
Outside of academia, Richard’s contributions have arguably been even greater. His work developing “Save More Tomorrow” with Shlomo Benartzi put the findings of behavioural economics into the field, recognising that people’s loss aversion was an almost insurmountable barrier to them saving enough right now, but their time inconsistency could be used as a tool to overcome that – an early example of using a bias to fight a bias. Thanks to Save More Tomorrow, millions of people are now able to save more for their retirement without feeling the pain of doing so.
Unusually for an academic of his standing, Richard’s popular writing, and his ability to convey the complex concepts of behavioural science to a wide audience, most recently in Misbehaving, helped to bring the field to the mainstream consciousness and surely contributed to a new generation of economists’ excitement about Behavioural economics.
The most famous of Richard’s books, 2008’s Nudge, jointly written with Cass Sunstein, wasn’t just popular, but revolutionary. The idea that lessons from behavioural economics could be easily and cheaply applied, in a way that allowed people to preserve their freedom to choose – to improve people’s “Health, Wealth and Happiness”, came at a moment when politicians the world over were despairing of the economists who had failed to predict the financial crisis. The book helped inspire the establishment of the Behavioural Insights Team (for which we are obviously grateful), and the birth of the global movement that now spans 135 countries.
Without Richard’s wisdom, friendship and humour, it is unlikely that Behavioural Economics could ever have broken into the mainstream, and it is possible that BIT itself would have never happened.
So, it’s good to see the economics establishment expressing its gratitude for the life and contribution of a man who has done so much to revolutionise the field. We too, have much to be grateful to Richard for, and so do the hundreds of millions of people globally who have benefited from his ideas and those he inspired.
Richard – we’ve come a long way since sitting in the No10 courtyard that hot July in 2010. Congratulations! And thanks. You deserve it.
Watch: Nobel laureates Richard Thaler and Daniel Kahneman in conversation at BX2015: