Richard H. Thaler, the American academic who co-developed the ‘nudge’ theory at the heart of auto-enrolment and Save More Tomorrow, has been awarded the Nobel Prize for economics.
The Royal Swedish Academy of Sciences has awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2017 to Thaler, of the University of Chicago, “for his contributions to behavioural economics”.
Thaler, the co-author of bestseller Nudge, which was written with Cass Sunstein, has been a key figure in promoting the use of behavioural economics to improve financial outcomes. He has argued that public and private institutions should actively, but while maintaining freedom of choice, try to nudge individuals towards outcomes that are in their interests, to overcome psychological biases such as the placing a hyperbolically increased value on gratification today rather than in the future. His work has been instrumental in leading to the introduction of nudge units in several countries, including the UK and the USA.
His ‘nudge’ theory is central to the auto-enrolment default of being opted into a workplace pension scheme but being given the option to opt out, as well as the UK government’s recent decision to move to an opt-out approach to organ transplant consent.
Thaler will receive a prize of nine million Swedish krona, roughly £850,000.
A statement from the Royal Swedish Academy of Sciences says: “In total, Richard Thaler’s contributions have built a bridge between the economic and psychological analyses of individual decision-making. His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioural economics, which has had a profound impact on many areas of economic research and policy.”