Richard Thaler wins Nobel prize in economics
Richard Thaler wins 2017 Nobel prize in economics – as it happened
Key events9 Oct 2017Summary: the last Nobel prize of the year9 Oct 2017Sign up to our email9 Oct 2017Thaler on Hollywood and spending his prize money "irrationally"9 Oct 2017Turkish lira under pressure9 Oct 2017Millennium and Copthorne jumps 23%9 Oct 2017FTSE dips but Dax hits new peak9 Oct 2017The Agenda: Annual economics prize in focusShow key events onlyPlease turn on JavaScript to use this featureSummary: the last Nobel prize of the yearSo we’ve had the Nobel prizes for this year, with the economics award the last on the agenda.It’s gone to US economist Richard Thaler for his work on behavioural economics. He plans to spend the prize money “irrationally”, he told the awards committee.Here is our news story on the award:And here is an explanation of his speciality, behavioural economics:Q&AWhat is behavioural economics?ShowBehavioural economics incorporates the study of psychology into the analysis of decision-making behind an economic outcome – such as the factors leading up to a consumer buying one product instead of another.Unlike the field of classical economics – whereby decision-making is entirely based on cold-headed logic – behavioural economics allows for irrational behaviours and attempts to understand why this might be the case. The concept can be applied in miniature to individual situations, or more broadly to encompass the wider actions of a society or trends in financial markets.Brexit is one example of how behavioural economics can be useful. As a pioneer of the subject, Thaler has suggested the theory can help explain how the narrow vote to leave the European Union was influenced by gut choices, as opposed to rational decision-making. The theory is particularly useful for companies and marketeers looking to boost sales by encouraging changes in behaviour by consumers. It can also be used for the purposes of setting public policy.Thaler is particularly well-known for his work on “nudge theory,” a term that he coined to help explain how small interventions can encourage individuals to make different decisions. Nudges can, however, be manipulative to the detriment of individuals.On that note, we’re closing for the day. Thanks for all your comments, and we’ll be back tomorrow.Thaler will be giving a news conference in Chicago later, and here are the details:Here’s Michael Lewis, author of the book The Big Short which was subsequently made into the film in which Richard Thaler appeared, on the new Nobel prize winner, from 2015.And here is Thaler and Selena Gomez in that very film: Photograph: PARAMOUNTSign up to our emailGuardian Business has launched a daily email.Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.For your morning shot of financial news, sign up here:Just over a year ago Thaler and fellow Nobel prize winning economist Eugene Fama took part in an interesting debate about whether markets were efficient or irrational.He also commented on Theresa May’s speech - not the parts that received the most commentary - but on her organ donor plans, in response to another tweet:Theresa May presumed consent for organ donation’s policy was borrowed from the book “Nudge” credit to @R_Thaler   & Libertarian Paternalism— Younes El-Ghazi (@youneselghazi) October 4, 2017
Thaler has criticised the Brexit vote as a prime example of irrational behaviour.He told Business Insider just ahead of the UK referendum vote:
 Most voters aren’t really thinking about it in a very analytical way… The people behind the leave campaign are voting with their guts. There’s no spreadsheet. This is much like a divorce without a prenup.
 You’re voting to leave, and we’ll take care of all the financial details later.
Thaler was apparently slow to wake up when the committee called him with the news of his award, but was unsurprisingly pleased with the news.His biography on the University of Chicago website lists one of his interests as “fine wine” which will no doubt be part of a celebration later.His personal website is here but so far, no mention of the Nobel prize.Here is one of the committee members talking about Thaler, and explaining what behavioural economics is: