Following the announcement of Richard H. Thaler as the winner of 2017 Nobel Memorial Prize in Economic Science, it’s important to look at some of the columns that he has ever written concerning behavioral economics. This is a man who has spent his entire life trying to humanize economics. In some of his columns, the professor has explained how behavior has the power to influence the economic activity of people. Notable columns by this economist include mortgages made simpler and the power of nudges, for good and bad. In this article, we will provide his insights on the first column that was published by the New York Times. In the column mortgages made simpler, the economist begins by warning his readers that he is not the usual economist. Instead, he referred himself as a behavioral economist. He further said that he differs from traditional economists from the metrics that they use to describe the economy. As for the traditional economists, they use imaginary creatures called Homo economicus to describe the economy. He refers to traditional economics as econs and says that they are smart. However, they don’t consider self-control, distraction and emotion issues in their metrics. He further emphasizes that real people are not econs.
According to Mr. Thaler, these are people who have problems balancing their checkbooks and budgets. These are people who are worried about the amount that they should save for retirement. He compares them to Homer Simpson. The best term that can be used to describe them is Homer economics, and this gives rise to behavioral economics. In a layman’s language, behavioral economics can be used to describe the study of humans when dealing with markets. When dealing with policies related to econs, things can be very straightforward. This is because these people are regarded as smart consumers who are very good at making choices. These so-called good policies are effective in giving them a wide variety of choices to choose from. On the other hand, humans can be difficult to understand. A good example of this economics at sight is the regulations that were implemented during the Obama administration.
As for the second column, the professor uses his knowledge to explain how nudges can be used to encourage people. In the process, this helps them to make decisions that ensure that they choose the best. The professor gives examples in real life situations about how nudges can make the difference. Websites are examples of the nudges that he proposes.