As of this Monday, the University of Chicago adds another laureate to its already long list of Nobel Prize and Nobel Memorial Prize in Economic Sciences won by its faculty members, students, or researchers.
Richard H. Thaler, who teaches at the University of Chicago Booth School of Business, became the 94th award recipient to join the university’s extraordinary list when he was awarded the Nobel Memorial Prize in Economic Sciences, commonly known as the Nobel Prize in Economics, earlier this week.
Thaler won the prize for his work in behavioural economics and for his pioneering work in challenging the assumption that people are rational when making economic decisions, the New York Times reported. They’re not – hence, explaining, for example. why they won’t pay more for an umbrella during a rainstorm.
“In order to do good economics, you have to keep in mind that people are human,” Thaler said at a news conference after the announcement.
Hailed as one of the field’s most creative thinkers, Thaler’s work contradicted traditional economic thinking that people make economic decisions rationally. The professor had shown that people made these irrational decisions consistently, and this behaviour can be predicted and modelled.
DNA Info noted that the body that awards the prize – the Royal Swedish Academy of Sciences – had chosen to honour Thaler for introducing people’s self-control, concepts of fairness and mental accounting into economic theory.
Thaler is also an author of a best-selling book titled Nudge, which is about making better decisions in our lives, be it personal investment or eating unhealthy fast foods. His alma maters include Case Western Reserve University and the University of Rochester.
With this award, Thaler joins other Nobel winners affiliated with the university, such as Milton Friedman (Economic Sciences, 1976), Subrahmanyan Chandrasekhar (Physics, 1983) and Saul Bellow (Literature, 1976) among others.
When asked how he would spend the prize money of US$1.1 million, he replied: “I will try to spend it as irrationally as possible.”