MICHEL PIREU: Thaler’s Nobel prize a nudge to consider humanity’s irrationality
Richard Thaler of the University of Chicago Booth School of Business was awarded the Nobel economics prize last week for documenting the way people’s behaviour does not conform to economic models that portray them as perfectly rational. In so doing, Thaler has helped change the way economists look at the world. "We need to take full account of the fact that people are busy, they’re absent-minded, they’re lazy and that we should try to make things as easy for them as possible," says Thaler, who is often accredited with creating the field of behavioural economics. That’s not quite true. Adam Smith, author of the 1776 classic The Wealth of Nations, dealt with behavioural issues in the 18th century, including the need to control impulses and avoid overconfidence. Jeremy Bentham, who is considered by many as the father of the welfare state, described as the "fundamental axiom" of his philosophy the principle that "it is the greatest happiness of the greatest number that is the measure of...
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