The 2017 Nobel Prize in economics has been awarded to the US academic Richard Thaler of the University of Chicago for his contribution to behavioural economics.

The Guardian reports, the prize, worth 9m Swedish kroner (£845,000), is not among the Nobel Foundation’s official awards for literature, peace, medicine, physics and chemistry, but was established separately by Sweden’s central bank, Sveriges Riksbank, in memory of the Swedish chemist Alfred Nobel.

The Royal Swedish Academy of Sciences described Thaler as a pioneer of behavioural economics, which had progressed in recent years from a fringe and somewhat controversial field of research into a mainstream component of the economics profession.

His research was praised for incorporating psychological assumptions into analyses of economic decision-making. The prize-givers said his work had shown how the limitations of an individual’s knowledge in the decision-making process, as well as the consequences of social preferences and a lack of self control, can affect people’s decisions as well as market outcomes.

Thaler, born in New Jersey in 1945, is a career academic and a Charles R Walgreen distinguished service professor of behavioural science and economics, and the director of the Center for Decision Research at the University of Chicago’s Booth School of Business. He made a cameo appearance in the 2015 film The Big Short, sitting beside Selina Gomez at a blackjack table.

He is a leading proponent of “nudge theory”, a concept of behavioural science that suggests small interventions in the environment, or incentives, can encourage people to make different decisions. Thaler co-authored a book, Nudge: Improving Decisions about Health, Wealth, and Happiness, with the US professor Cass Sunstein, which brought the subject to a wider audience in 2008.

The prize-givers said his research was often cited in marketing literature, while his insights helped people recognise marketing tricks and avoid bad economic decisions. They said his work had made a “profound impact on many areas of economic research and policy”.

There have been 78 previous winners of the cash prize and medal, which has become a significant honour for economists since it was established in 1968.

BDST: 1710 HRS, OCT 09, 2017
EHJ