As you are by now all probably aware, Richard Thaler won this year's Nobel Memorial Prize in Economic Sciences. All question of whether this is a "real" Nobel can now be laid to rest, since the announcement was made via the Nobel Prize's official verified Twitter account.
Thaler won the prize for his research in behavioral economics, although he's far from the first behaviorist to win it — Herbert Simon, Daniel Kahneman and Robert Shiller all got the big gold medal from Sweden. But Thaler's work is arguably more wide-ranging and influential than any of those earlier pioneers. And it's the sheer breadth of Thaler's research that offers a peek into where the discipline of economics is headed.
Loosely speaking, the economics of the past was a search for a grand unified theory. At first, supply and demand was the idea that tied econ together. Later, that was replaced with explicit modeling of economic decision-making as the optimization of a rational economic "agent." To predict anything from the price of tomatoes in Wyoming to the savings rate in Bangladesh, you would just assume that people maximize utility and companies maximize profit, then write down a mathematical optimization problem that would spit out an answer. This method — sometimes called the neoclassical approach — grew so popular that economists started applying it to sociology, law and politics.
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