When I was studying economics in the 1980s, it was quite vulnerable to the criticism that the entire edifice was built on a shaky assumption: homo economicus. But now that Kahnemann, Thaler et al. have slain h.e., economics is that much stronger.
I am happy that most people at LIRNEasia have been reading Thaler, Shiller, and other recent laureates before they were awarded the Nobel:
Mr. Thaler’s work has forced economists to grapple with the limits of traditional analysis based on the assumption that people are rational actors.
He has also been unusually successful in directly influencing public policy.
One of his most important contributions is his influence on the shift to retirement plans that automatically enroll employees, and to policies that offer employees the option of increasing their contributions over time. Both reflect Mr. Thaler’s insight that inertia can be used to shape beneficial outcomes without limiting human choice.
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