Nobel Banquet speech by Richard Thaler, Prize in Economic Sciences 2017

[Applause] then store our auto present era pretty staggerin of spurious Riksbank freeze economic reactance cough till alfred nobel's Midna it is a great honor to introduce the laureate of this various Riksbank prize in Economic Sciences in memory of Alfred Nobel Professor Richard Taylor [Applause] your Majesties your Royal Highnesses excellencies dear laureates ladies and gentlemen I had to run back because I decided we had a deficiency of toasts so I will end this with a toast I'm truly truly humbled to be standing here today my feelings of humility are accentuated by the invidious comparisons with my fellow laureates their discoveries of colliding black holes genes that know the time of day and images of biomolecules using cryo-electron microscopy are rather daunting and what about the beautiful speech Kazuo Ishiguro's just gave breaking a one-year tradition he managed to win the Literature Prize without a single hit song so what did I do to get up here I discovered the presence of human life in a place not far far away where my fellow economists thought it did not exist the economy instead of humans the world by describe described by economists in textbooks is populated by a species referred to as Homo economicus but I like to just call them econ's these econ solve problems like a supercomputer have the willpower of saints our free of emotion and have little regard for their fellow econ's now the presence of humans in our economy might seem rather obvious customers and employees are human even most CEOs are quite human furthermore economists engage with humans on a regular on a rather regular basis and often find their behavior to be deeply flawed indeed economists love telling stories that ridicule the flawed decision making made by others such as their spouses offspring Dean's students political leaders and please keep this part to yourself one even hear stories criticizing the decision making made by the esteemed members of the economics Nobel Prize Committee so a lot of laughter over there so we have a disconnect between the people economists know and the econ's that appear in their theories over the past 40 years along with many colleagues some of whom are here I've been trying to figure out how to introduce humans into economic theory we humans are absent-minded tend to be a little overweight we procrastinate and are notoriously overconfident to be sure we still need traditional economic theories but to make accurate predictions we need to enrich those theories by adding insights from other social sciences incorporating human behavior into economic models improves the accuracy of economics just as those fancy microscopes improve the resolution of images in biochemistry crucially once we acknowledge that humans are fallible creatures we can ask how to help them make better decisions as Cass Sunstein and I have argued we can often do so with simple nudges that point people in the right direction but don't force anyone to do anything we need these helpful nudges now more than ever consider the most important issues facing the world now such as climate change health care an aging population income inequality xenophobia and mounting threats to world peace each of these problems is at its heart behavioral but in these times when all news seems to be bad or fake I can report on progress around the world governments and NGOs are working with behavioral scientists to design and test scientifically informed policies that are working people are being helped to save more for retirement more poor kids especially girls are going to school peasant farmers are achieving more reliable harvests and we're all being successfully nudged to use less energy so I'd like to end this with the toast I promised using a phrase I write when I'm asked to sign books that that phrase which is meant as a plea is nudge for good tonight we will modify that phrase to honor Alfred Nobel so please raise your glasses and join with me in a toast in the proper Swedish manner of course no clinking nudge for the greatest benefit of mankind thank you [Applause]

Channel: Nobel Prize

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Length: 8min 6sec (486 seconds)

Published: Mon Dec 11 2017