Published: Wed, October 11, 2017
Markets | By Rosalie Gross

US Academic Richard Thaler Wins Nobel Economics Prize

US Academic Richard Thaler Wins Nobel Economics Prize

Mumbai: While the world watched USA economist Richard Thaler win the Nobel prize for economics on Monday, little is known about how the Modi government has been putting his famous "Nudge economics" theory into practice for a while now. As early as 1994, he proposed changing the default in DC plans to an automatic enrollment arrangement with a default savings rate and default investment strategy.

In a statement, the Royal Swedish Academy of Sciences had said that Richard H. Thaler has incorporated psychologically realistic assumptions into analyses of economic decision-making. Indeed only one women - Elinor Ostrom in 2009 - has won the economics prize to date, and not a single individual women won any Nobel award in 2017.

The Nobel committee said Thalers work shows how human traits affect individual decisions as well as market outcomes. He is a Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business, Illinois. They demonstrated, among other things, that when individuals are faced with a number of possible funds to which they can allocate their retirement savings, they tend to follow a naïve diversification strategy, leading to unintended economic effects. Thaler's theory was one valuable addition to the field of behavioural economics.

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Their book, titled Nudge: Improving Decisions about Health, Wealth, and Happiness became popular with some western politicians seeking ways to encourage their citizens to save and live healthily, without incurring voters' wrath for raising taxes or banning behaviour outright.

The last of the Nobel prizes to be awarded this year is something of an outlier — Alfred Nobels will didnt call for its establishment and it honors a science that many doubt is a science at all.

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