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's work has bridged the gap between traditional economic theory and the psychological realities of human decision-making, challenging the long-held assumption that individuals always act as perfectly rational agents. His research into phenomena such as mental accounting, the endowment effect, and present bias has reshaped how economists, policymakers, and businesses understand consumer behavior and market dynamics. In 2017, the Royal Swedish Academy of Sciences awarded Thaler the Nobel Memorial Prize in Economic Sciences, citing his contributions for having "built a bridge between the economic and psychological analyses of individual decision-making." Over a career spanning more than four decades, Thaler has held faculty positions at the University of Rochester, Cornell University, and the University of Chicago. He served as president of the American Economic Association in 2015 and was elected a member of the National Academy of Sciences in 2018. His scholarship, public writing, and popular books—including Nudge (co-authored with Cass Sunstein)—have brought behavioral economics into mainstream public discourse and influenced government policy around the world.

Early Life

Richard H. Thaler was born on September 12, 1945, in East Orange, New Jersey, a suburban community in Essex County. Details regarding his parents and upbringing remain limited in publicly available sources. From an early age, Thaler developed an interest in understanding how people make decisions, an intellectual curiosity that would eventually lead him to question fundamental assumptions in economic theory.

Thaler grew up during the postwar era in the northeastern United States, a period of significant economic expansion and growing cultural emphasis on consumer behavior. While the specific influences of his childhood on his later academic career are not extensively documented, his New Jersey roots placed him in proximity to major academic and financial centers, which may have contributed to his early exposure to economic thinking.

Education

Thaler received his undergraduate education at Case Western Reserve University, where he earned a Bachelor of Arts degree. He then pursued graduate studies at the University of Rochester, where he obtained both a Master of Arts degree and a Doctor of Philosophy degree in economics.

His doctoral dissertation, completed in 1974 under the supervision of economist Sherwin Rosen, was titled "The Value of Saving a Life: A Market Estimate." The dissertation explored how economic markets implicitly assign value to human life, a topic that foreshadowed Thaler's later interest in how real-world economic behavior diverges from the predictions of standard rational-choice models. The University of Rochester's economics department at the time was firmly grounded in neoclassical economic theory, and Thaler's early exposure to rigorous rationalist models would serve as the intellectual foundation against which he would later develop his behavioral critiques.

Career

Early Academic Career and the Foundations of Behavioral Economics

After completing his doctorate, Thaler joined the faculty at the University of Rochester, where he began his academic career. During this period, he started to notice and catalog systematic ways in which human behavior deviated from the predictions of standard economic models. These observations would form the seeds of what became behavioral economics.

Thaler's early work was influenced significantly by the research of psychologists Daniel Kahneman and Amos Tversky, whose groundbreaking studies on cognitive biases and heuristics demonstrated that human judgment systematically departs from the norms of rationality assumed in economic theory. Thaler recognized that the psychological findings of Kahneman and Tversky had profound implications for economics, and he began collaborating with them to apply these insights to economic problems.

One of Thaler's most important early contributions was the concept of mental accounting, which describes how individuals categorize, evaluate, and keep track of financial activities in separate mental "accounts" rather than treating money as fungible, as standard economic theory assumes. For example, a person might treat a tax refund differently from regular income, spending it more freely, even though both are economically identical. This concept challenged the foundational economic assumption of rational utility maximization and provided a framework for understanding a wide range of consumer behaviors.

Thaler also made significant contributions to understanding the endowment effect, the phenomenon whereby people tend to value objects they already own more highly than identical objects they do not own. Working with Kahneman and economist Jack Knetsch, Thaler demonstrated through a series of experiments that this effect was robust and widespread, further undermining the predictions of standard economic models regarding exchange and valuation.

Cornell University

In 1978, Thaler moved to Cornell University, where he served on the faculty of the Samuel Curtis Johnson Graduate School of Management. He remained at Cornell until 1995, a period during which he produced much of the foundational research that would define the field of behavioral economics.

During his time at Cornell, Thaler authored a series of influential columns titled "Anomalies" for the Journal of Economic Perspectives, in which he documented and analyzed economic phenomena that could not be easily explained by standard rational-choice models. These columns covered topics ranging from the equity premium puzzle and the winner's curse to seasonal patterns in stock returns and the ultimatum game. The "Anomalies" series became required reading for economists interested in the boundaries of rational-choice theory and helped establish behavioral economics as a legitimate subfield within the discipline.

Thaler's 1991 book The Winner's Curse: Paradoxes and Anomalies of Economic Life collected and expanded upon many of these anomalies, presenting them to a broader audience. The book demonstrated how auction participants systematically overbid, how people are subject to the sunk cost fallacy, and how various market behaviors defy the predictions of classical economics. In 2025, Thaler and co-author Alex Imas published an updated edition of this work, revisiting and expanding upon the original themes in light of decades of subsequent research in behavioral economics.

University of Chicago

In 1995, Thaler joined the faculty of the University of Chicago Booth School of Business, where he was appointed the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics. This appointment was notable because the University of Chicago had long been the intellectual center of the Chicago school of economics, which emphasizes rational expectations, efficient markets, and minimal government intervention—principles that behavioral economics often challenges.

Thaler's presence at Chicago Booth created a productive intellectual tension. While colleagues such as Eugene Fama championed the efficient-market hypothesis, Thaler argued that markets are populated by humans who are subject to predictable biases and limitations. This juxtaposition made the University of Chicago a uniquely dynamic environment for the debate between traditional and behavioral approaches to economics.

At Chicago, Thaler continued to develop his research on behavioral finance, which applies behavioral economic principles to financial markets. He co-founded the asset management firm Fuller & Thaler Asset Management, which uses behavioral finance insights to identify mispriced stocks, based on the premise that investors systematically overreact or underreact to new information.

Nudge Theory and Public Policy

In 2008, Thaler co-authored Nudge: Improving Decisions About Health, Wealth, and Happiness with legal scholar Cass Sunstein. The book introduced the concept of nudge theory to a popular audience, arguing that institutions can design "choice architectures" that guide people toward better decisions without restricting their freedom of choice—an approach the authors termed "libertarian paternalism."

Nudge proposed that small changes in how options are presented—such as making enrollment in retirement savings plans the default option rather than requiring employees to opt in—can have significant effects on behavior. The book argued that these "nudges" could be applied across domains including healthcare, environmental policy, and consumer protection to improve outcomes while preserving individual autonomy.

The influence of Nudge extended well beyond academia. In 2010, the United Kingdom established the Behavioural Insights Team (commonly known as the "Nudge Unit") within the Cabinet Office, directly inspired by the book's ideas. Similar behavioral policy units were subsequently established in governments around the world, including the United States, where the Obama administration created the Social and Behavioral Sciences Team in 2015.

Research on Self-Control and Fairness

A significant portion of Thaler's research has focused on the problem of self-control in economic decision-making. Standard economic models assume that individuals have consistent preferences over time and can execute long-term plans without difficulty. Thaler's work demonstrated that people frequently struggle with self-control, preferring immediate gratification over larger future rewards—a phenomenon known as present bias or hyperbolic discounting.

Thaler and his collaborator Shlomo Benartzi developed the "Save More Tomorrow" (SMarT) program, which applied behavioral insights to address the problem of inadequate retirement savings. The program asked employees to commit in advance to allocating a portion of future salary increases toward retirement savings. By leveraging inertia and loss aversion—people are reluctant to see their take-home pay decrease—the program significantly increased savings rates among participants. The SMarT program has been adopted by numerous employers and is considered one of the most successful practical applications of behavioral economics.

Thaler also contributed research on fairness as an economic concept. Working with Kahneman and Knetsch, he studied how perceptions of fairness influence market behavior, demonstrating that consumers and businesses often act according to fairness norms even when doing so contradicts profit maximization. For instance, their research showed that people view price increases during emergencies as unfair and may punish firms perceived as gouging, even at personal cost.

Popular Media and Public Engagement

Thaler has maintained an active public profile beyond his academic work. He made a notable cameo appearance in the 2015 film The Big Short, in which he appeared alongside pop star Selena Gomez in a scene explaining the concept of the "hot hand fallacy" and synthetic collateralized debt obligations at a Las Vegas blackjack table.

Thaler has also been a frequent commentator in media on economic topics related to behavioral science. In 2025, he appeared on The Weekly Show with Jon Stewart to discuss the irrational aspects of economic behavior and the implications of behavioral economics for understanding markets and public policy. In a December 2025 conversation with Yascha Mounk on the Persuasion platform, Thaler discussed why people are "much more irrational than economists believe," elaborating on the persistent gap between economic models and actual human behavior.

In October 2025, Thaler returned to Cornell University for a campus visit and public conversation about his career and research, an event that drew significant interest from students and faculty.

He has also participated in academic discussions at the University of California, Berkeley, where he was interviewed by professors Ulrike Malmendier and Stefano DellaVigna about the updated edition of The Winner's Curse.

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 faculty in 1995. Beyond his academic and professional work, publicly documented details about Thaler's personal life are limited.

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 at the time), Thaler responded that he would "try to spend it as irrationally as possible," a quip that reflected his career-long interest in the gap between rational economic theory and actual human behavior.

Recognition

Thaler's most prominent honor is the 2017 Nobel Memorial Prize in Economic Sciences, awarded by the Royal Swedish Academy of Sciences. The Academy's citation stated that Thaler's "contributions have built a bridge between the economic and psychological analyses of individual decision-making" and that his "empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioral economics." Major news outlets around the world covered the award extensively.

In 2015, Thaler served as president of the American Economic Association, one of the most prominent professional organizations for economists, reflecting his standing within the discipline.

In 2018, Thaler was elected a member of the National Academy of Sciences, an honor recognizing distinguished and continuing achievements in original research.

His alma mater, Case Western Reserve University, recognized his Nobel Prize as a point of institutional pride, highlighting his undergraduate education at the university.

Thaler has been a research associate at the National Bureau of Economic Research (NBER), further reflecting his prominence in the economics profession.

Legacy

Richard Thaler's contributions to economics have fundamentally altered the discipline's understanding of human behavior. Before the rise of behavioral economics, the dominant paradigm in the field—particularly at institutions like the University of Chicago—held that economic agents are rational, self-interested, and capable of processing all available information to make optimal decisions. Thaler's research, building on the psychological insights of Kahneman and Tversky, demonstrated that this model systematically fails to account for how people actually behave.

The practical applications of Thaler's work have been extensive. The Save More Tomorrow program has helped millions of workers increase their retirement savings. Nudge theory has been adopted by governments on multiple continents as a tool for improving public policy outcomes in areas ranging from organ donation to energy conservation to tax compliance.

Thaler's "Anomalies" column in the Journal of Economic Perspectives played a significant role in legitimizing behavioral economics within the broader economics profession. By systematically documenting deviations from rational-choice predictions in a leading academic journal, Thaler helped create a body of evidence that could not be easily dismissed by skeptics.

His work in behavioral finance, including the founding of Fuller & Thaler Asset Management, demonstrated that behavioral insights could be applied not only to academic research and public policy but also to investment management—suggesting that the biases Thaler identified are pervasive enough to create exploitable patterns in financial markets.

Through his popular books, media appearances, and public engagement, Thaler has also been instrumental in making economic research accessible to non-specialist audiences. His ability to communicate complex ideas in accessible language—and his willingness to use humor as a pedagogical tool—has contributed to broader public understanding of how cognitive biases shape everyday decisions. As he continues to write, teach, and engage with public discourse into the 2020s, Thaler remains an active and influential voice in both academic economics and public policy debates.