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.