Richard Thaler (b. 1945)

Who They Were

Richard Thaler (born 1945) is an American economist widely regarded, with Daniel Kahneman, as one of the best-known figures in behavioural economics. Building on the psychology of Kahneman and Tversky, he spent his career showing that the systematic ways real people depart from textbook rationality matter for markets, saving, and public policy. Based for much of his career at the University of Chicago, he helped move behavioural ideas from laboratory curiosities into mainstream economics and into practical questions of how institutions and governments shape choices. In 2017 he was awarded the Sveriges Riksbank Prize in Economic Sciences for his contributions to behavioural economics. He is also known to a broad readership through his writing, including the 2008 book Nudge, co-authored with the legal scholar Cass Sunstein.

Key Contributions

Thaler introduced several concepts now central to behavioural economics. He described mental accounting, the way people sort money into separate notional budgets and treat it differently depending on the category rather than as fully fungible. He demonstrated the endowment effect in experiments using coffee mugs handed out at random, showing that owners valued the mugs more highly than buyers were willing to pay, an effect he documented with Kahneman and Jack Knetsch. With Cass Sunstein he developed the idea of choice architecture and the nudge: their 2008 book Nudge argued that the way options are structured predictably shapes decisions, and that defaults and framing can steer behaviour while preserving freedom of choice, an approach they called libertarian paternalism.

On EconRecall

American economist who built behavioural economics into a policy tool; won the 2017 economics Nobel and co-wrote Nudge. Play the games that feature Richard Thaler: