My Quick Take on Thaler's Nobel
I'm perfectly pleased that Richard Thaler won the Nobel Prize. My concern is the particular Nobel he received.
This is a quote from p.99 of Thaler and Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness: "This is as good a point as any to state for the record that we believe in supply in demand." I read, and I enjoyed, the book, although there were many things expressed there about which I disagreed. That, however, isn't my point. Rather, my point is that this single quoted sentence is the closest to anything resembling developing an actual economic model in the book. Instead, the book offers insightful intuitions about human behavior, and offers some evidence that with appropriate changes in default rules, or nudges, some people get a better result. As far as I know, some of the claims have been contested in the empirical literature, but again, that's neither here nor there.
Thaler's work is fascinating, and it makes important contributions to the understanding of human behavior. Economics is also fascinating, and it also makes important contributions to the understanding of human behavior. Putting that together, however, does imply that "Thaler's work is economics."
I actually do think having a Nobel in applied psychology is a good idea. Indeed, I really think that having a Nobel in "truly interesting work that transcends traditional disciplinary boundaries" would be an even better idea. I think Thaler would be a terrific recipient of either or both of such Nobel prizes. I congratulate him. I just wish that the Nobel committee had a more appropriate category. I leave to others to decide whether Dylan's prize should also have been in the category of "truly interesting transcendent work. "