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Portrait of Richard H. Thaler
Photo: Chatham House, https://www.flickr.com/photos/chathamhouse/19531134028/ · CC BY 2.0 via Wikimedia Commons

Sveriges Riksbank Prize in Economic Sciences · 2017

Richard H. Thaler

He showed that people are predictably human with money, then helped turn that insight into plans that got millions more workers saving.

The Nobel citation: “for his contributions to behavioural economics”
Born
September 12, 1945, East Orange, NJ, USA
Affiliation at the time
University of Chicago, USA

Economics prize

2017

Awarded alone.

Age that year

72years

Born in 1945.

Headline credited impact

2.5–4.2million people benefited

Extra workers saving for retirement because of automatic-enrollment defaults (UK and US). How it was built

Sources cited

20

Fact-checked September 24, 2026.

  • A coffee mug from his famous Cornell experiments on ownership sits in the Nobel Museum. He had kept one of the originals as a memento and donated it.
  • Days before his first job was due to start, the consulting firm that hired him fired him. A business school dean's offer the next day kept him in academia.
  • At the first firm to try his Save More Tomorrow plan, workers who joined raised their savings rate from 3.5% to 13.6% of pay over four pay raises.
  • He made a cameo in the 2015 film The Big Short, and on winning the Nobel he joked that he would spend the prize money as irrationally as possible.
  • His 1994 idea of signing workers up for retirement plans automatically went unnoticed at first. By 2024, 78% of Vanguard plans with 1,000+ members did it.

The breakthrough

Putting real human behavior into economics: mental accounting, self-control and nudges

Standard economics pictured people as perfect calculators, which Thaler and Cass Sunstein later nicknamed Econs. Thaler studied real people, whom they called Humans. As a graduate student he kept a list of everyday behavior that theory could not explain, such as a professor who would not sell his old wine for $100 a bottle, yet would never pay more than $30 for one. Reading Daniel Kahneman and Amos Tversky showed him that such mistakes are systematic, so they can be predicted and built into economic models. He added several ideas of his own. Mental accounting: people split money into mental jars, such as bill money and holiday money, and judge each choice on its own instead of looking at their whole budget. The endowment effect: because losses hurt more than gains please, people want more to give up a mug they own than they would pay to buy it. Fairness: customers punish sellers who seem greedy, which is why a shop that hikes umbrella prices in a sudden rainstorm loses goodwill. Self-control: with Hersh Shefrin he described each person as a far-sighted planner struggling with a short-sighted doer, like Odysseus having himself tied to the mast so he could not give in to the Sirens' song. Thaler then turned this into design. Because people stick with whatever is preset, a good default, such as automatic enrollment in a pension plan with the right to opt out, helps the planner win without forcing anyone. Thaler and Sunstein called such gentle design a nudge.[2],[3],[4],[5],[6]

“Sunstein and I did not invent nudging – we just gave it a word.”
Richard H. Thaler, From the written version of his Nobel Prize lecture, reflecting on the book Nudge he wrote with Cass Sunstein.[3]

What it meant for humanity

Thaler's work has mattered most in a place many people ignore until too late: saving for retirement. In the United States, workers once had to fill in forms and choose funds to join a company savings plan, and many never got round to it. In 1994 Thaler suggested flipping the default so that workers were enrolled unless they said no. The idea went unnoticed until his colleague Brigitte Madrian and Dennis Shea showed in 2001 that automatic enrollment at one company raised plan participation from 49% to 86%. With Shlomo Benartzi, Thaler then designed Save More Tomorrow, in which workers agree now to save part of their future pay raises. At the first company to try it, workers who joined raised their savings rate from 3.5% to 13.6% of pay over four raises. The Nobel committee says this work was important for the US Pension Protection Act of 2006, which encouraged automatic enrollment and automatic increases. By 2011 about 4.1 million Americans were in plans with automatic increases, adding an estimated $7.6 billion a year in savings by 2013. In Vanguard-run plans in 2024, 94% of eligible workers took part where enrollment was automatic, against 64% where they had to sign up. Britain began phasing in automatic enrollment by law in 2012, and the number of eligible employees saving in a workplace pension rose from 10.7 million to 18.7 million by 2018. After his 2008 book Nudge, written with Cass Sunstein, Britain, the United States and other countries set up teams to apply behavioral science and test ideas with randomized trials. Earlier, his thesis work with Sherwin Rosen produced a way of valuing lives saved that, he notes, is now widely used.

  • Save More Tomorrow, designed with Shlomo Benartzi, lifted savings at its first employer from 3.5% to 13.6% of pay over four pay raises among workers who joined; about 80% of those offered it signed up.[3]
  • Benartzi and Thaler estimated that about 4.1 million Americans were in automatic escalation plans by 2011, raising annual saving by $7.6 billion by 2013, according to the Nobel committee's background paper.[6]
  • In Vanguard-run US plans in 2024, participation was 94% with automatic enrollment and 64% without, and 29% of participants saw their saving rate rise through an automatic increase feature.[13]
  • After UK automatic enrollment began in 2012, eligible employees saving in a workplace pension rose from 10.7 million to 18.7 million by 2018; in 2018/19 only about 9% of those newly enrolled opted out within a month.[11]
  • A 2014 study quoted by the Nobel committee found 51 countries with central government policy initiatives influenced by the new behavioral sciences, a spread the committee links especially to Nudge.[6]
  • His thesis with Sherwin Rosen valued lives by the extra pay people demand for risky jobs such as mining and logging; he notes their technique for valuing lives saved is now widely used.[2]

Impact in numbers

Thaler's larger legacy is a change in how economists and policymakers picture people: as Humans with limited attention and willpower, not perfect calculators. That shift reshaped research in finance, law and public policy, and it resists counting. We record one conservative, low-confidence number, shared with Daniel Kahneman under a single outcome so it is never counted twice: extra workers in the UK and US saving for retirement because saving became the default. We credit Thaler with 15% of it. He proposed automatic enrollment in 1994 and designed automatic escalation, and the Nobel committee links this work to the 2006 US Pension Protection Act. But Brigitte Madrian and Dennis Shea supplied the decisive evidence, Shlomo Benartzi and Cass Sunstein were co-authors, and legislators, regulators and employers made it happen. Much of his influence cannot be counted: nudge units testing policies with randomized trials, the widely used method of valuing lives saved by safety rules, behavioral finance, and a public vocabulary of nudges and sludge.

EconomyFundamental science

Each number is the laureate’s credited share of a real-world outcome, cumulative to 2025. The whole outcome, the share of credit, and the reasoning are shown so you can check the arithmetic. Outcomes shared with other laureates are counted once on the impact page.

  • Low confidenceDirectModeledEconomy

    Extra workers saving for retirement because of automatic-enrollment defaults (UK and US)

    2.5–4.2

    million people benefited, credited share

    That is 15% of 17–28 million people benefited since 2006.

    How this number was built

    Same outcome and range as Kahneman's profile; pension defaults only, UK and US. UK: DWP says eligible employees in workplace pensions rose 10.7M (2012) to 18.7M (2018), +8.0M (low); TPR counts 11.385M auto-enrolled by Dec 2025, less ~9% opt-outs = 10.4M (high). US: >100M Americans have DC accounts; use 80-100M for multiple accounts. Vanguard: 94% participation with auto-enrollment vs 64% without (+30 pts, cross-sectional). Assume 40-60% of covered workers are in auto-enroll plans (61% of Vanguard plans, 78% of large): 80-100M x 0.4-0.6 x 0.30 = 9.6-18M. Total ~17-28M. Share 0.15: Thaler proposed auto-enrollment (1994) and co-designed automatic escalation, which the Nobel committee ties to the 2006 Pension Protection Act; Madrian and Shea's evidence, Benartzi, Sunstein, Kahneman-Tversky (0.05 to Kahneman), Simon (0.01), lawmakers and employers share the rest. His UK link is weaker.[3],[6],[11],[12],[13]

    Sources: NobelPrize.org; NobelPrize.org (Committee for the Prize in Economic Sciences in Memory of Alfred Nobel); UK Department for Work and Pensions; The Pensions Regulator (UK); Vanguard

The double edge

Thaler's work is not tied to physical harm, but the policies it inspired are debated. The biggest question is how much nudges really achieve. A 2022 meta-analysis of more than 200 studies found small-to-medium effects on average, yet a reanalysis that year argued that, once publication bias is corrected, no clear evidence of an average effect remains. A study of 126 trials run by two US nudge units found real effects, but far smaller than those in academic journals: 1.4 percentage points against 8.7. Pension defaults remain among the better-documented cases. Some economists object in principle, arguing that libertarian paternalism lets officials decide what people really want, and that some people dislike being steered. In 2022 two leading behavioral scientists, one of them Thaler's former co-author George Loewenstein, argued that the focus on individual nudges had distracted from bigger system-wide reforms, citing retirement saving among their examples. Defaults can also misfire: one set too low can leave some workers saving less than they would have chosen. And the same insights can help businesses exploit customers; Thaler himself condemns needless friction of this kind as sludge.

  • Minor

    Nudges may work less well than early studies suggested

    A 2022 PNAS meta-analysis of more than 200 studies found small-to-medium average effects with moderate publication bias; a reanalysis in the same journal argued that after correcting for that bias no clear evidence of an average effect remained. A study of 126 trials by two US nudge units, covering over 23 million people, found an average effect of 1.4 percentage points, against 8.7 in published academic studies.[14],[15],[16]

  • Minor

    Critics call libertarian paternalism a threat to free choice

    Economists led by Robert Sugden argue that nudging treats departures from textbook rationality as mistakes for officials to correct, and doubt that policymakers can know what people truly prefer. Other researchers argued that people who dislike being manipulated can be made worse off by nudges, whatever the outcome. The Nobel committee noted these critiques alongside studies showing fairly high public support for nudges.[6]

  • Minor

    Small fixes may crowd out bigger reforms

    In 2022 Nick Chater and George Loewenstein (a past co-author of Thaler's), long supporters of the approach, wrote that focusing on individual-level nudges had led behavioral public policy astray, delivering modest results and diverting support from system-level change, with retirement savings among their examples. Thaler himself said in 2021 that nudging alone would not solve climate change and called for a carbon price.[7],[17],[18]

  • Minor

    Defaults can lock people into poor choices

    Thaler points out a pitfall first flagged by Madrian and Shea: a default saving rate set too low can lead some workers to save less than they otherwise would. In Sweden's pension system, the default fund switched to 50% leverage in 2011, and almost none of its more than 4 million investors reacted, showing how strongly people stick with defaults even when they change.[3]

  • Minor

    Behavioral insights can be used to exploit people

    Marketers already use the tendencies Thaler documented, from multi-buy discounts to lottery ads that spotlight rare winners, the Nobel committee notes. Thaler and Sunstein call design that adds friction to stop people reaching their own goals sludge, the opposite of nudging for good; one example is a subscription that takes one click to start but a phone call to cancel.[3],[5],[18]

Against the odds

Thaler grew up in New Jersey after World War II, and no source we found records antisemitism aimed at him. A generation earlier, the barriers facing American Jews had been real. In the 1920s Harvard's president, alarmed that Jews made up more than a fifth of the freshman class, first proposed a quota and then reshaped admissions around character and interviews to cut their numbers. In economics, when MIT offered a young Paul Samuelson a post in 1940, Harvard made no effort to keep him, possibly because he was Jewish, as an MIT history suggests. Thaler's own obstacles were of a different kind. He describes himself as an undistinguished student held back by mild dyslexia and daydreaming. The consulting firm that hired him out of graduate school fired him before he started, leaving his young family days away from losing both job and home. Above all, he spent years as an outsider in his own field. Many economists found his list of anomalies more annoying than interesting, his first behavioral paper was rejected again and again, and senior colleagues warned that some of his writing would not count toward his career. He left Rochester partly because most of its business school faculty were cool toward his new research.

  • —

    Quota

    Context rather than a barrier he is recorded as meeting: in the 1920s Harvard, Yale and Princeton reshaped admissions to hold down Jewish enrollment after Jews passed a fifth of Harvard's freshman class. No source we found records such a barrier in Thaler's own path.[19]

  • 1940

    Discrimination

    Context from the generation before him: when MIT offered Paul Samuelson a post in 1940, Harvard made no effort to keep him. An MIT history suggests this was possibly because he was Jewish, at a time when Harvard was holding down its numbers of Jewish students and faculty.[20]

  • —

    Other

    He recalls being an undistinguished student because of mild dyslexia, daydreaming and a dislike of tedious work; his parents moved him to a more demanding private school to help.[2]

  • —

    Other

    Late in the week before he was to start his first job, the consulting firm that hired him fired him, days before his apartment lease ran out. A call to the dean of Rochester's business school produced a teaching job the next day.[2]

  • —

    Other

    For years mainstream economists resisted his work. His first behavioral paper was repeatedly rejected, many colleagues found his anomalies annoying, and he left Rochester partly because its faculty were cool toward his research.[2]

Jewish background

One Jewish parentRelationship to Jewish identity not documented

Thaler was born in 1945 in East Orange, New Jersey, the eldest of three sons of Alan Thaler, a Toronto-born actuary at Prudential, and Roslyn Thaler (née Melnikoff), a Brooklyn-born teacher who later sold real estate. When he won the Nobel Prize in 2017, the Jewish Telegraphic Agency reported that he is Jewish. The sources we found do not say which of his parents was Jewish or describe any religious practice, and his Nobel autobiography and lecture do not discuss religion or Jewish identity.[2],[8],[9],[10]

Key dates

  1. September 12, 1945

    Born in East Orange, New Jersey, the eldest son of an actuary father and a schoolteacher mother.[1],[2],[7]

  2. 1967

    Graduates from Case Western Reserve University in Cleveland, where economics and psychology were his favorite subjects.[2],[7]

  3. 1974

    Earns his PhD at the University of Rochester with a thesis on the value of saving a life, supervised by Sherwin Rosen.[2],[7]

  4. 1976

    At a conference in California, psychologist Baruch Fischhoff points him to the work of Daniel Kahneman and Amos Tversky.[2]

  5. 1977

    Spends a year at the National Bureau of Economic Research near Stanford, where he befriends Kahneman and Tversky.[2],[7]

  6. 1978

    Joins Cornell University's business school, where he stays until 1995.[2],[7]

  7. 1980

    Publishes 'Toward a Positive Theory of Consumer Choice', his first behavioral economics paper, after repeated rejections.[2],[7]

  8. 1981

    Publishes the planner-doer model of self-control with Hersh Shefrin.[3],[7]

  9. 1987

    Starts his 'Anomalies' column in the new Journal of Economic Perspectives, introducing many economists to behavioral economics.[2],[7]

  10. 1990

    Publishes the coffee-mug experiment on the endowment effect with Daniel Kahneman and Jack Knetsch.[2],[5]

  11. 1995

    Joins the University of Chicago's business school, where he begins working with law professor Cass Sunstein.[2]

  12. 2004

    Publishes Save More Tomorrow with Shlomo Benartzi, a plan to raise retirement saving out of future pay raises.[3],[6],[7]

  13. 2008

    Publishes Nudge with Cass Sunstein, which spreads behavioral policy to governments around the world.[3],[6],[7]

  14. October 9, 2017

    Awarded the Nobel Memorial Prize in Economic Sciences, unshared, for his contributions to behavioral economics.[1],[4],[8]

  15. 2021

    Publishes Nudge: The Final Edition with Sunstein, adding a warning about sludge, design that makes good choices harder.[18]

Sources

  1. 1.Richard H. Thaler - Facts · NobelPrize.org (Nobel Prize Outreach)
  2. 2.Richard H. Thaler - Biographical (autobiography) · NobelPrize.org (from Les Prix Nobel 2017), 2017
  3. 3.From Cashews to Nudges: The Evolution of Behavioral Economics (Prize Lecture, written version) · NobelPrize.org, 2017
  4. 4.The Prize in Economic Sciences 2017 - Press release · NobelPrize.org (Royal Swedish Academy of Sciences), 2017
  5. 5.Easy money or a golden pension? Integrating economics and psychology (Popular science background, Prize in Economic Sciences 2017) · NobelPrize.org (Royal Swedish Academy of Sciences), 2017
  6. 6.Richard H. Thaler: Integrating Economics with Psychology (Scientific background on the Prize in Economic Sciences 2017) · NobelPrize.org (Committee for the Prize in Economic Sciences in Memory of Alfred Nobel), 2017
  7. 7.Richard H. Thaler, Curriculum Vitae · University of Chicago Booth School of Business
  8. 8.Richard Thaler, who recognized the humanity in economics, wins Nobel Prize · Jewish Telegraphic Agency, 2017
  9. 9.Roslyn Melnikoff Thaler obituary (The Arizona Republic) · Legacy.com, 2008
  10. 10.Alan M. Thaler obituary (The Arizona Republic) · Legacy.com, 2004
  11. 11.Automatic enrolment evaluation report 2019 · UK Department for Work and Pensions, 2019
  12. 12.Automatic enrolment declaration of compliance report · The Pensions Regulator (UK), 2026
  13. 13.How America Saves 2025 · Vanguard, 2025
  14. 14.The effectiveness of nudging: A meta-analysis of choice architecture interventions across behavioral domains (Mertens et al.), PNAS 119(1) · PubMed (US National Library of Medicine), 2022
  15. 15.No evidence for nudging after adjusting for publication bias (Maier et al.), PNAS 119(31) · PubMed Central (US National Library of Medicine), 2022
  16. 16.RCTs to Scale: Comprehensive Evidence from Two Nudge Units (DellaVigna and Linos), NBER Working Paper 27594 · National Bureau of Economic Research, 2020
  17. 17.The i-frame and the s-frame: How focusing on individual-level solutions has led behavioral public policy astray (Chater and Loewenstein), Behavioral and Brain Sciences 46:e147 · PubMed (US National Library of Medicine), 2022
  18. 18.How much can you 'nudge' for good? Richard Thaler explores possibilities, limits · University of Chicago News, 2021
  19. 19.Getting In: the social logic of Ivy League admissions (Malcolm Gladwell, on Jerome Karabel's The Chosen) · The New Yorker, 2005
  20. 20.Long before Hillel, Jews found a home at MIT · MIT Technology Review, 2023

Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 9 corrections made. How we check

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