On Distinguished Service Professor Richard Thaler’s Economic Thoughts

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Richard Thaler is an American economist who is a theorist cum behavioral economist of finance and a Charles R. Walgreen Distinguished Service Professor of behavioral science and economics at the University of Chicago’s Booth School of Business. He was awarded the Nobel Memorial Prize in Economic Sciences in 2017 for integrating psychosomatically and expressively genuine, representative and, convincing assumptions into an examination of economic decision-making. By discovering the magnitudes, significances, and impact of restricted rationality, social choice, and lack of self-control, Professor Thaler was successful in showcasing how these human behaviors thoroughly methodically, systematically and scientifically affect choices and decisions at the micro or individual level along with market outcomes (Royal Swedish Academy of Sciences).
His pragmatic research findings and theoretical vision and underpinnings have been influential in generating the innovative and rapidly growing field of behavioral economics (Niklas & Anna, 2017). Professor Thaler’s contributions have widened the arena of behavioral finance to a wide range of the financial domain and human behavior, together with market behavior and outcomes. He is accredited with many amazing books envisioned for a layman on the subject of behavioral economics, together with Quasi-rational Economics and The Winner’s Curse, encompassing many of his Anomalies posts brushed up and revised for a general spectators in which he recognized and framed individual examples, cases, and orders of economic behavior that gave the impression of sacrilegious and violating conventional microeconomic theory (Thaler, 1988). According to Professor Thaler, Methodologies that are market-centered or market-grounded are imperfect and piecemeal. In fact, this argument is one of his regular themes. He quotes: ‘‘conventional economics assumes that people are highly-rational-super-rational-and unemotional. They can calculate like a computer and have no self-control problems (David, 2012).’’
The good professor has talked about management of resources, which is the essence of economics, in general and a successful business firm, in particular. According to him, investors will take advantage of intellectual, rational and cognitive prejudices such as endowment effect, loss antipathy and status quo preference (Fuller & Thaler). He along with Cass Sunstein (2008) gave an economic analysis and approach to health, wealth and happiness in order to improve decisions upon them.
How public and private bodies can help people make superior choices in their ordinary business of life? This is what concerns public economics, in general, and microeconomics, in particular. They discuss how public and private groups can improve choices in their day-to-day lives. We often make unfortunate and bad choices and then feel perplexed and baffled. “We do this because as human beings, we all are susceptible to a wide array of routine biases that can lead to an equally wide array of embarrassing blunders in education, personal finance, health care, mortgages and credit cards, happiness, and even the planet itself (Thaler & Sunstein, 2008).”
Professor Thaler’s noteworthy contribution to the field of economics , in general, and behavioral economics, in particular, was that he proved humans are predictably irrational coupled with the acknowledgment that economic agents are humanoid and that economic models have to take account of that (Anna, 2017). As an expert and financial analyst par excellence, he originated a sequence of economic solutions for some of America’s monetary and financial distresses. With special reference to the notions of Thomas Hazlett’s on the economic reform of the U.S. Federal Communications Commission (FCC) and display of the television broadcast frequency for refining wireless technology, plummeting costs, and generating income for the US government he argued that disposing of the radio band could reduce US deficit (Richard, 2010).
In the 2015 movie, The Big Short , Professor Thaler made a walk-on entrance highlighting the credit and housing bubble breakdown that led to the 2008 global financial crisis (Angela, 2015). He helped pop star Selena Gomez clarify and elucidate the ‘hot hand fallacy,’ during one of the film’s scenes in which people believe that whatsoever happens at the present will last into the future as well (Thaler & Gomez, 2015).
Conclusion:
How we can manage our resources properly? Why do we make choice? How human behavior affect choice and decision making? Why do business corporations and firms face a financial crisis? What is rationality? What is restricted rationality? Why are humans predictably irrational? How governments can reduce their fiscal deficits? How organizations, private or public can help people make superior choices in their lives? Once we reminisce on Richard Thaler’s economic thoughts we can find convincing answers to these questions. Furthermore, it can improve the efficacy of fiscal and monetary policy in general and public services in particular.
References:
Watercutter, Angela (2015). “The Big Short Somehow Makes Subprime Mortgages Entertaining” Wired.com.Retrieved from https://www.wired.com/2015/12/big-short-under standing-economics.
Isaac, Anna (2017). Nudge’ guru Richard Thaler wins the Nobel prize for economics. The Daily Telegraph. Retrieved from https:// www .telegraph.co.uk/business/2017/10/09/nobel-prize-awarded-us-behavioural-economist-richard-thaler/.
Royal. Swedish Academy of Sciences The Prize in Economic Sciences 2017. Retrieved from https://www.nobelprize.org/nobel_prizes/economic-sciences /laureates/2017/press.html
Pollard, Niklas; Ringstrom, Anna (2017). We’re all human: ‘Nudge’ theorist Thaler wins economics Nobel. Retrieved fromhttps://www.reuters.com/article/us-nobelprize-economics/were-all-human-nudge-theorist-thaler-wins- eco nom ics-nobel-idUSKBN1CE0X5. Reuters.
Orrell, David (2012). Economyths: How the Science of Complex Systems is Transforming Economic Thought. Icon Books. p. 123. ISBN 978-1848312197.
Thaler, Richard. (1988). The Winners Curse. Journal of Economic Perspectives. 2 (1): 191–202 doi :10 .1257 /jep.2.1.191. Retrieved fromhttp://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.2.1.191
Thaler, Richard. (2008). Designing better choices. Los Angeles Times. Retrieved from http :// articles .latimes .com / 2008/apr/02/opinion/oe-thalerandsunstein2
Thaler, Richard. (2010). Selling parts of the radio spectrum could help pare US deficit. Retrieved from http :// www .taipeitimes.com/News/bizfocus/archives/2010/02/28/2003466801
Thaler, Richard and Selena Gomez (2015). The Big Short movie – explanation of the “hot hand fallacy” Paramount Pictures, Plan B Entertainment. Retrieved from https://www.youtube.com/watch?v=WStmFKp1x3g

The author is a Research Scholar, at theDepartment of Economics, Central University of Kashmir, an Academic Counsellor, IGNOU STUDY CENTRE 1209, S.P. College, Srinagar and Editor in EPH – International Journal of Business and Management Science & Asian Journal of Managerial Science. She is also an Ezine Articles Expert Author; IJRULA title awards, 2018 winner (Best Researcher, 2018 and can be reached at: qadribinish@gmail.com