Summary of “The Flaws a Nobel Prize-Winning Economist Wants You to Know About Yourself”

Dominant economic theory these days often makes that assumption.
What was left of this illusion was further dismantled by the The Royal Swedish Academy of Sciences, who awarded the Nobel prize in economics to Richard Thaler, an American economist at the University of Chicago, for his pioneering work in behavioral economics, which examines humanity’s flaws-namely, why we don’t make rational economic decisions.
In 2014, a study by the Economic & Social Research Council found that 51 countries had developed centralized policy units influenced by behavioral sciences.
These flaws-or human traits, to be more charitable-may not seem unusual, but Thaler argues that appreciating the implications of human behavior has lost its importance in dominant economic theory.
As the field relied more and more on mathematics, there was a push to explain the world using rigid, complex economic models.
In a paper last year, Thaler wrote: “It is time stop thinking about behavioral economics as some kind of revolution. Rather, behavioral economics should be considered simply a return to the kind of open-minded, intuitively motivated discipline that was invented by Adam Smith and augmented by increasingly powerful statistical tools and datasets.”
Today, behavioral economics is still considered a somewhat separate subject within the broader discipline.
If Thaler has it his way, the field of study that just won him a Nobel prize won’t exist for long: “If economics does develop along these lines the term ‘behavioral economics’ will eventually disappear from our lexicon. All economics will be as behavioral as the topic requires.”

The orginal article.