You see, for the sake of convenience, economists have always assumed that people act rationally, in their own best interest.  Supply-siders like to believe taxpayers would set aside any tax savings and invest it to “create jobs,” despite over-whelming evidence that people either just save it or pay down debt instead.  When gas prices drop, do people use their cost savings to create jobs or switch to premium gas or make another trip to McDonald’s with the kids?  It is irrational that the overwhelming number of baby-boomers have no savings, but who needs savings if you’re going to live forever?  Are people rational decision-makers?  No!

People behave irrationally, because they are . . . well, people.

Dr. Thaler elaborated that obvious fact and developed ways to make economic assumptions about human behavior.  He is the father of “behavioral economics” and absolutely deserves the Nobel prize.

Yep, a good guy with a great sense-of-humor finally finished first!

A wider perspective is that economics has been dominated by econometrics or applied statistics for the last twenty years or so.  I can see the tide is changing, and there is finally room in economics for non-economictricians, who can actually speak “human.”