Irrationally Speaking

Tokyo:

I marvel at how the idea of behavioral economics continues to take people including many top economists by surprise - if not by storm.

The tribal resistance to what has always seemed obvious to me about human nature - that we routinely choose, spend and vote against our self-interests; just look around you - is disturbing, though understandable. Thomas Franks, anyone?  

After all, folks don't like to change their minds; it requires honest introspection and causes too much painful cognitive dissonance. No matter how objectively wrong people can be, they are absolute in their certainty about being right. And no matter how smart the status quo may be, as Thomas Kuhn reminded us in The Structure of Scientific Revolutions, even very smart people just don't like to compete with (let alone contradict) conceptual frameworks and schools of thought they used, built or even created in order to succeed.  

The most recent push-back by stubborn adherents to neoclassical economics is underway with news that the University of Chicago’s Dr. Richard Thaler has won the Nobel Prize in Economics.  

Dr. Thaler joined Dr. Daniel Kahneman, among a handful of other distinguished scholars, in recent years to question the premise that humans are rational economic actors - even in the aggregate. We are most certainly not rational optimizers, at least not always or often. 

What's so interesting about this case, however, is that Dr. Thaler is actually persuading growing numbers of economists of his premise, that humans are not purely rational decision makers. He's doing so in patient, even-handed, fact-based and respectful dialogue with colleagues who disagree. Over time, the obvious strengths of his arguments are winning them over.

As society suffocates from an unrelenting tsunami of angry, uninformed opinion, Dr. Thaler's patient efforts in this regard alone should merit a Nobel Prize.

 Photo courtesy of ABC News.