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Should-Read: Justin Fox: Nobel Winner Richard Thaler’s Savvy, Calculating Insurrection

Summary:
Should-Readz: Justin Fox: Nobel Winner Richard Thaler’s Savvy, Calculating Insurrection: “‘Dumb stuff people do’ was an expansion, not a rejection, of mainstream economics… …In the late 1970s, Richard Thaler thought most of his fellow economists deeply misunderstood how actual people make actual economic decisions, and his renegade ideas risked derailing his career. But they didn’t. Thaler’s was a lonely struggle for a while, but it evolved into a savvy, calculating operation. And it was successful…. This relatively cautious approach has occasioned some sneering… John Cochrane… in 2015 after the publication of Thaler’s memoir, “Misbehaving”: Really, now, complaining about being ignored and mistreated is a bit unseemly for a Distinguished Service professor with a multiple-group

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Should-Readz: Justin Fox: Nobel Winner Richard Thaler’s Savvy, Calculating Insurrection: “‘Dumb stuff people do’ was an expansion, not a rejection, of mainstream economics…

…In the late 1970s, Richard Thaler thought most of his fellow economists deeply misunderstood how actual people make actual economic decisions, and his renegade ideas risked derailing his career. But they didn’t. Thaler’s was a lonely struggle for a while, but it evolved into a savvy, calculating operation. And it was successful…. This relatively cautious approach has occasioned some sneering… John Cochrane… in 2015 after the publication of Thaler’s memoir, “Misbehaving”:

Really, now, complaining about being ignored and mistreated is a bit unseemly for a Distinguished Service professor with a multiple-group low-teaching appointment at the very University of Chicago he derides, partner in an asset management company running $3 billion dollars, recipient of numerous awards including AEA vice president, and so on.

The AEA is the American Economic Association, of which Thaler soon afterward became president. Now, of course, Cochrane could add Nobel Prize to that list. Unlike a true-blue revolutionary, then, Dick Thaler is not spending his latter years muttering away in an unheated garret. So disappointing!

But also so intriguing…. Thaler’s career offers useful pointers on how to bring meaningful change to a large, dispersed organization while not getting thrown out of it…. Key themes…. Use humor…. Find allies outside the organization…. Build an infrastructure…. Stay respectable….

It’s always the students who matter most. Thaler told me in 2015 that “I don’t think I’ve changed a single person’s mind in 40 years.” But generations of graduate students have now come of age in an economics profession where behavioral research is, if still not central, perfectly respectable. That’s the change that Thaler has brought. It’s not a revolution, but it is something.

Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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