Richard Thaler

Richard Thaler
Born	Richard H. Thaler 12 9, 1945
Birthplace	East Orange, New Jersey, U.S.
Nationality	American
Occupation	Economist, academic
Known for	Behavioral economics, behavioral finance, nudge theory
Education	University of Rochester (MA, PhD)
Spouse(s)	France Leclerc
Children	3
Awards	Nobel Memorial Prize in Economic Sciences (2017)
Website	[[{{{1}}} {{{1}}}] Official site]

Richard H. Thaler (born September 12, 1945) is an American economist who holds the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics chair at the University of Chicago Booth School of Business. A central figure in the development of behavioral economics, Thaler has spent decades examining how real human behavior diverges from the rational-actor models that long dominated economic theory — work that earned him the 2017 Nobel Memorial Prize in Economic Sciences. His research has explored phenomena such as mental accounting, the endowment effect, limited self-control, and preferences for fairness, building what the Royal Swedish Academy of Sciences described as "a bridge between the economic and psychological analyses of individual decision-making." Through collaborations with psychologists Daniel Kahneman and Amos Tversky, and through his influential concept of "nudge" — the idea that subtle changes in how choices are presented can steer people toward better decisions without restricting their freedom — Thaler has reshaped both academic economics and public policy worldwide. He served as president of the American Economic Association in 2015 and was elected to the National Academy of Sciences in 2018. His career has spanned appointments at the University of Rochester, Cornell University, and the University of Chicago, where he has been based since 1995.

Early Life

Richard H. Thaler was born on September 12, 1945, in East Orange, New Jersey. He grew up in New Jersey in a middle-class family. Details about his parents and upbringing are limited in public sources, though his later academic work would suggest an early curiosity about how people make decisions — a curiosity that would eventually reshape an entire field of study.

Thaler attended Case Western Reserve University (then known as Case Institute of Technology) in Cleveland, Ohio, where he earned his Bachelor of Arts degree. His undergraduate education provided a foundation in economics that he would later build upon at the graduate level.

Education

Thaler pursued his graduate education at the University of Rochester, earning both his Master of Arts and Doctor of Philosophy degrees in economics. His doctoral dissertation, completed in 1974, was titled "The Value of Saving a Life: A Market Estimate" and was supervised by economist Sherwin Rosen. The dissertation examined how economic methods could be used to estimate the monetary value society places on reducing the risk of death — a topic that sits at the intersection of economics and public policy. This early work foreshadowed Thaler's career-long interest in how economic theory could incorporate more realistic assessments of human behavior and decision-making.

At Rochester, Thaler was trained in the neoclassical economic tradition, which emphasized models of rational, utility-maximizing agents. However, during his graduate studies and early career, he began collecting examples of economic behavior that did not conform to these standard models — instances where people made choices that appeared irrational by the standards of traditional theory. These observations would become the foundation of his subsequent research program in behavioral economics.

Career

Early Academic Career and the University of Rochester

After completing his doctorate in 1974, Thaler began his academic career at the University of Rochester, where he had studied. During this period, he began to develop the ideas that would define his career. He started compiling a list of behaviors that contradicted the predictions of standard economic theory — what he would later term "anomalies." These included observations about how people treat money differently depending on its source or intended use, how people overvalue items they already possess, and how people struggle with self-control in ways that affect their economic decisions.

A pivotal moment in Thaler's intellectual development came through his exposure to the work of psychologists Daniel Kahneman and Amos Tversky, whose research on cognitive biases and heuristics in judgment provided a psychological framework for the economic anomalies Thaler had been documenting. Their collaboration would prove foundational to the emergence of behavioral economics as a distinct field.

Cornell University (1978–1995)

In 1978, Thaler joined the faculty of Cornell University's Samuel Curtis Johnson Graduate School of Management, where he would remain for seventeen years. The Cornell period was productive for Thaler's research program. During these years, he developed and refined several of the core concepts that define behavioral economics.

One of Thaler's most significant contributions during this period was his work on mental accounting — the theory that people categorize, evaluate, and track their financial activities using a set of mental accounts, rather than treating money as perfectly fungible as standard economic theory assumes. For example, a person might treat a tax refund differently from salary income, spending the refund more freely even though both are economically equivalent. This concept provided a systematic framework for understanding a wide range of otherwise puzzling consumer behaviors.

Thaler also conducted influential research on the endowment effect, in collaboration with Kahneman and Jack Knetsch. Their experiments demonstrated that people tend to value an object more highly simply because they own it — a finding that contradicts the standard economic assumption that willingness to pay and willingness to accept should be approximately equal. This work had implications for understanding market behavior, negotiation, and policy design.

During the Cornell years, Thaler began writing his influential "Anomalies" column for the Journal of Economic Perspectives, which ran from 1987 to 1990 and was later continued. Each installment documented a specific way in which observed economic behavior deviated from the predictions of rational-choice theory. The column became a touchstone for researchers interested in behavioral approaches to economics and helped legitimize the study of economic anomalies within mainstream economics.

Another important area of Thaler's research at Cornell involved the concept of fairness in economic transactions. Working with Kahneman and Knetsch, Thaler conducted surveys and experiments showing that people care about fairness and are willing to sacrifice their own economic gain to punish those they perceive as behaving unfairly. This research challenged the standard economic assumption that agents are purely self-interested and had significant implications for understanding pricing, labor markets, and consumer behavior.

Thaler's work on self-control problems and intertemporal choice also matured during this period. He proposed models that incorporated the idea that individuals are conflicted decision-makers, with a "planner" self that values long-term outcomes and a "doer" self that is drawn to immediate gratification. This framework helped explain phenomena such as undersaving for retirement, overeating, and procrastination — behaviors that are difficult to reconcile with standard rational-agent models.

University of Chicago Booth School of Business (1995–present)

In 1995, Thaler moved to the University of Chicago Booth School of Business, where he was appointed the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics. The appointment was notable given the University of Chicago's historical association with the Chicago school of economics, which had long championed rational-agent models and efficient market theory. Thaler's presence at Chicago represented a broadening of the intellectual discourse at the institution.

At Chicago, Thaler continued to expand the scope of behavioral economics. His research extended into behavioral finance, where he examined how psychological biases affect financial markets. He co-founded Fuller & Thaler Asset Management, an investment firm that uses behavioral finance principles to identify mispriced stocks — essentially seeking to profit from the systematic errors that investors make due to cognitive biases. The firm's existence served as a practical test of behavioral finance theories, demonstrating that these insights could have real-world financial applications.

Nudge Theory and Public Policy

Perhaps Thaler's most widely known contribution is the concept of the "nudge," developed in collaboration with legal scholar Cass Sunstein and articulated in their 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness. The book argued that "choice architects" — those who design the environments in which people make decisions — can structure choices in ways that guide people toward better outcomes while preserving their freedom to choose otherwise. Thaler and Sunstein termed this approach "libertarian paternalism."

The concept of nudging had significant policy impact. In the United Kingdom, the government established the Behavioural Insights Team (often called the "Nudge Unit") in 2010 to apply behavioral science principles to public policy. Similar units were established in the United States under the Obama administration and in other countries around the world. Applications included automatic enrollment in retirement savings plans, simplified government forms, and redesigned tax reminders — interventions that used insights from behavioral economics to improve outcomes without mandating specific behaviors.

Thaler maintained an active public presence through the Nudges blog (nudges.org), where he and collaborators discussed applications of behavioral science to policy and everyday life.

The Winner's Curse and Continued Research

Thaler's 1991 book The Winner's Curse: Paradoxes and Anomalies of Economic Life compiled and expanded upon his "Anomalies" columns, presenting a collection of economic puzzles that challenged conventional theory. The book became a standard reference in behavioral economics. In 2025, Thaler and economist Alex Imas published an updated version of the work, revisiting the classic anomalies in light of subsequent research and identifying new ones. The updated book was discussed in conversations at the University of California, Berkeley, with professors Ulrike Malmendier and Stefano DellaVigna, and at other academic venues.

Misbehaving and Public Engagement

In 2015, Thaler published Misbehaving: The Making of Behavioral Economics, a narrative account of the development of behavioral economics and his role in it. The book traced the field's evolution from a collection of puzzling observations to a major area of economic research and policy application.

Thaler also made a cameo appearance in the 2015 film The Big Short, in which he appeared alongside singer Selena Gomez to explain the concept of the "hot hand fallacy" and synthetic collateralized debt obligations. The scene exemplified Thaler's ability to communicate complex economic concepts to a broad audience.

In 2025, Thaler continued his public engagement, participating in interviews and public discussions. He appeared on The Weekly Show with Jon Stewart to discuss the irrationality of economic behavior and its implications for public policy. He also returned to Cornell University in October 2025 for a public conversation about his work. Additionally, he participated in an in-person event at the University of Chicago Booth School of Business with the hosts of the Capitalisn't podcast, Bethany McLean and Luigi Zingales.

Personal Life

Richard Thaler is married to France Leclerc and has three children. He resides in the Chicago area, where he has been based since joining the University of Chicago in 1995. Thaler has maintained a relatively private personal life compared to his prominent public and academic profile.

When asked by a reporter what he planned to do with the Nobel Prize money (approximately 9 million Swedish kronor, or about $1.1 million), Thaler responded that he would try to spend it "as irrationally as possible" — a characteristically self-aware quip that underscored the themes of his research.

Recognition

Nobel Memorial Prize in Economic Sciences (2017)

On October 9, 2017, the Royal Swedish Academy of Sciences announced that Richard Thaler had been awarded the Nobel Memorial Prize in Economic Sciences "for his contributions to behavioural economics." The Academy's press release stated that Thaler's "empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioral economics, which has had a profound impact on many areas of economic research and policy."

The award was covered extensively in international media. The New York Times reported on the prize, noting Thaler's role in challenging the assumption of human rationality that had long underpinned economic theory. The Wall Street Journal also covered the announcement, highlighting his influence on both academic economics and public policy. USA Today reported on the prize as the final Nobel of the 2017 season. Reuters highlighted his "nudge" work and quoted him as saying, upon being informed of the prize, "I will try to spend it as irrationally as possible."

Other Honors

Thaler served as president of the American Economic Association in 2015, one of the most prestigious leadership positions in the economics profession. In 2018, he was elected a member of the National Academy of Sciences. He has been a research associate at the National Bureau of Economic Research.

Case Western Reserve University, Thaler's undergraduate alma mater, celebrated his Nobel Prize, with the university's news service highlighting his contributions to the field.

The Financial Times profiled Thaler's career and contributions to behavioral economics.

Legacy

Richard Thaler's contributions to economics have had far-reaching effects on both the academic discipline and public policy. Before Thaler and his collaborators began their work, behavioral considerations were largely absent from mainstream economic models. The standard assumption of the rational, self-interested, fully informed economic agent — often referred to as Homo economicus — dominated the field. Thaler's research demonstrated systematically that real human beings — whom he has called Homo sapiens to contrast with Homo economicus — make predictable errors in judgment and decision-making that have significant economic consequences.

The practical impact of Thaler's work is evident in policy applications around the world. The concept of nudging has been adopted by governments in numerous countries to address challenges ranging from retirement savings and organ donation to energy conservation and tax compliance. Automatic enrollment in employer-sponsored retirement plans — a policy Thaler championed based on his research into default options and inertia — has increased savings rates substantially in the United States and other countries.

Within academia, Thaler's work helped transform behavioral economics from a marginal research program into a central area of economic inquiry. His "Anomalies" columns played a particular role in making behavioral insights accessible and legitimate within mainstream economics. A generation of economists has been trained in behavioral methods that were considered unorthodox when Thaler began his career.

Thaler's co-founding of Fuller & Thaler Asset Management demonstrated that behavioral insights could be applied in financial markets, contributing to the development of behavioral finance as a practical discipline alongside its academic foundations.

As of 2025, Thaler continues to be active in research, writing, and public engagement, discussing the implications of behavioral economics for understanding contemporary economic issues, market behavior, and public policy.

Selected Works

• The Winner's Curse: Paradoxes and Anomalies of Economic Life (1991; updated edition with Alex Imas, 2025)
• Nudge: Improving Decisions About Health, Wealth, and Happiness (with Cass Sunstein, 2008; revised edition 2021)
• Misbehaving: The Making of Behavioral Economics (2015)