Richard Thaler is the co-author of The Nudge Theory.
One of the founding members of the “Nudge” theory, Richard Thaler has recently been awarded the Nobel Peace Prize for behavioral economics 2017. His theory helped to boost tax receipts in Britain and encouraged smokers in the country to become vapers.
Richard Thaler was the co-author of the best-selling book on the concept of Nudge which was read by politicians throughout the world. They instantly began embracing the notion that people could be influenced with prompts to change their behavior. The example of prompts provided in the book referred to the word ‘tax demand.’
British Prime Minister Theresa May acknowledges The Nudge Theory.
British Prime Minister Theresa May has confirmed that merely by tweaking some sentences in tax reminder letters to the public helped to increase the revenue of the HMRC. The branch of economics promoted by Thaler also influenced the British government to announce an opt-out policy for organ donations where it was earlier being presumed that people wished to donate body parts unless they had specified otherwise. The Department of Health also adopted the principles of Nudge with its approach for E-cigarettes.
Who Is Richard Thaler And What Are His Contributions?
Richard Thaler is a US academic and a professor at the University of Chicago. He achieved fame when he suggested earlier that Brexit could be viewed as an example of behavioral economics in reality. He had argued that British voters had chosen an irrational route economically when they considered the options given to them by the elites and the mainstream media. Even before the referendum for Brexit was held, he had mentioned in an interview that voting was likely to be a risky move because the electorate wasn’t thinking analytically about the referendum.
Thaler was also the co-author of the best-selling book throughout the world which captivated politicians with his book Nudge: Improving Decisions About Health, Wealth, And Happiness. The book was released in 2008 along with US professor Cass Sunstein and the book was instrumental in bringing wider attention to his theory. Thaler was also an advisor for the creation of the Nudge unit at Whitehall which was initiated as a favorite project by former Prime Minister David Cameron during the early days of his premiership from 2010, during the times of the coalition government.
What Did The Nudge Unit Focus on?
The Nudge Theory focuses on various public health issues.
The Nudge unit was initially focusing on issues of public health on matters like obesity, organ donation, and alcohol intake despite the scope of which unit expanding and taking on its wings matters such as pensions, taxes, cell phone thefts and E-cigarettes. The Nudge unit was a replacement for the Behavioral Insights Team but after the release of the book, the unit has received credit for encouraging additional organ donations numbering 100,000 every year and also persuading an additional 20% of the population to consider changing their energy providers. Thaler has now become the leading voice on the subject of how nudging can help in tackling problems which are plaguing society. The theory promoted by Thaler is not a new one because retailers are often employing behavioral economics to enhance their sales by the concept of bringing in small changes which can help to alter the behavioral buying habits of their consumers.
Thaler had earlier mentioned that the infamous fraudster Bernie Madoff, who is considered a master at winning over the confidence of people, could have created a similar book and show people how the Nudge theory could be used for personal gain. Madoff’s loss was perhaps Thaler’s gain because after all the Nobel Peace Prize for 2017 along with the 9 million Swedish kroner which are approximate US$1.1 million will now be awarded to the co-author of the Nudge theory.
The Nudge Theory Has Received Criticism from The Political Right And Also The Left
The Nudge theory promoted by Thaler has received its fair share of criticisms from the political right who believe the book is overly paternalistic. As it is, the left was not far behind by calling it a neoliberal idea because of its reliance on individual choices instead of state intervention. The Nudge theory is unlike the field of classical economics where decision making is based on well thought out logic, while behavioral economics allows the concept of irrational actions while it attempts to understand why this may be the case. Regardless of the criticisms received by the Nudge theory, Richard Thaler has confirmed that he intends to spend the prize money received from the Nobel Peace Prize for 2017 as irrationally as he has mentioned in his best-selling book which has been acclaimed throughout the world.
Have you read The Nudge Theory by Richard Thaler? We’d love to hear your views…
