For instance, Thaler’s research has challenged the classical economic notion that money is fungible—that is, that one dollar is the same as any other dollar. But Thaler’s work on mental accounting, one of the areas of research highlighted by the Royal Swedish Academy of Sciences in its Nobel citation, has shown that, in practice, people don’t treat money this way. Instead, they mentally earmark money for specific purposes, such as housing, food, and travel, and make financial decisions based on how those decisions will affect each small fund. “Money in one mental account is not a perfect substitute for money in another account,” Thaler wrote in a 1999 paper.

Thaler illustrated the point with his own Nobel win. Most economists, he said at the news conference, would challenge the premise of a question like, “What do you plan to do with your prize money?” Because they view money as “fungible,” they wouldn’t—in theory—distinguish prize money from any other money.

Not Thaler. “I believe in something called mental accounting, which is precisely people putting labels on money,” he explained. “Anytime I spend any money [on something] that’s really fun, I’m going to say that came from the Nobel Prize.”

‘Make it easy’

Nudge, coauthored with Harvard Law School Professor Cass R. Sunstein, explores how the concepts of behavioral economics can be used to tackle many of society’s major problems and influence public policy. Ranked as the Best Book of the Year by The Economist and Financial Times, the research prompted the United Kingdom’s government in 2010 to establish a Behavioral Insight Team, or “Nudge Unit,” to create policies that nudge British citizens to make better choices and, in turn, save the state money. Thaler served as an advisor in setting up the unit’s guiding principles.

At the heart of Nudge is what Thaler calls his “mantra”: “If you want to get people to do something, make it easy. Remove the obstacles,” he explained. “Nudges” push people toward better choices by making those choices easy. For example, employers can “nudge” employees by automatically enrolling them in a retirement savings plan, rather than requiring them to opt in; schools can “nudge” kids toward healthy food choices by putting fruit at eye level.

Thaler’s other books include Quasi-Rational Economics and The Winner's Curse: Paradoxes and Anomalies of Economic Life. His work has been published in the American Economics Review, the Journal of Finance, and the Journal of Political Economy.

Thaler was named in 2015 to Bloomberg Markets 50 Most Influential People; he also was the American Economic Association’s president for 2015. He was elected to the American Academy of Arts and Sciences in 2000.

Before joining the Chicago Booth faculty in 1995, Thaler taught at the University of Rochester and Cornell University. He also served as a visiting professor at the University of British Columbia, the Sloan School of Management at MIT, the Russell Sage Foundation, and the Center for Advanced Study in Behavioral Sciences at Stanford University.

Originally from New Jersey, Thaler attended Case Western Reserve University where he received a bachelor's degree in 1967. Soon after, he attended the University of Rochester where he received a master's degree in 1970 and a PhD in 1974.