Will behavioural economics shape public policy now that one of its advocates has won the Nobel Prize?
Mainstream economics assumes that humans take into account all the available knowledge to make decisions and thus identifies them as rational decision-makers. All of its theories are based on this core assumption. However, economists like Daniel Kahneman and Richard H Thaler have long challenged this paradigm, both winning the Nobel Prize in economics for their dissent. Kahneman won the award in 2002 for integrating psychological principles into economic theory and Thaler's award was announced by the Nobel Committee on October 9, 2017 for "his contributions to behavioural economics".
Economic thinkers appropriating behavioural economics say humans are irrational and that policies need to be designed in a way that they choose to make rational decisions. Some mainstream economists though consider behavioural economics as a quirky field and do not relate to it. There are also some from within the field, like economists Robert Sugden and Nathan Berg, who have questioned the empirical and ethical grounding of Thaler's work.
Now as the Nobel Committee has recognised Thaler's work, many economists, including Kahneman, have welcomed this shift in global attitude towards behavioural economics.
Akshit Sangomla speaks to three experts to discuss the significance of behavioural economics and its implications for creating effective public policy
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