Monica Black ’19
Humans are attached to their stuff.
This is the idea behind behavioral economics, a blossoming field in finance. The typical neoclassical, traditional economic vision of the human psyche is that it is rational and wants to maximize profits, but behavioral economics, which only came into vogue in the 1970s, takes into consideration the innate irrationality of humans when it comes to economic decision-making. The psychology of the consumer can affect the market.
On Wednesday, April 27, Richard Thaler , professor of economics at the University of Chicago will be giving a talk titled “Misbehaving: The Making of Behavioral Economics.”
Thaler is considered one of the fathers of behavioral economics, a young field.
Mark Smith, CC professor of economics, was instrumental in bringing Thaler to campus. Smith says, “I wanted to bring him to campus because behavioral economics is one of the most exciting trends in economics today.”
Two of Thaler’s books, “Misbehaving: The Making of Behavioral Economics” (2015) and “Nudge: Improving Decisions about Wealth, Health, and Happiness” (2009), lay out his theory and practical applications for the thinking consumer. “I have used both books as required supplemental readings in my microeconomics courses to expose my students to behavioral economics,” says Smith.
Though many students may be put off by the seemingly niche title, behavioral economics’ daily applications are manifold. In “Nudge,” Thaler and co-author Cass Sunstein detail ways that an understanding of behavioral economics can help people save money, encourage contributions to charity, and take care of their health. It also allows us to understand why we are so shortsighted when it comes to impactful economic decisions, and how to rewire that tendency.
“[Thaler] should be interesting to anyone who is interested in economics, public policy, psychology, judgment and decision-making, and simply how people think,” says Smith, who specializes in environmental economy and is interested in the policy implications of Thaler’s work. “He will be a provocative speaker. I think people will enjoy his stories.”
Hear from Thaler Wednesday, April 27, at 7:30 p.m. in Celeste Theatre.
