[originaltext]American economist Richard Thaler has won the 2017 Nobel Prize fo

American economist Richard Thaler has won the 2017 Nobel Prize for Economics. Thaler was recognized for his work as a behavioral economist. That means he studies the reasons behind the economic decisions people make. Thaler received the prize partly for his research into why people often make irrational financial decisions. The Royal Swedish Academy of Sciences announced the $1.1 million prize on Monday.
Speaking of the prize money, Thaler told reporters in Chicago after the announcement, “I will spend it as irrationally as possible.” The award committee said Thaler explored “the consequences of limited rationality, social preferences, and lack of self-control.” It said the American economist’s work has shown how human qualities affect people’s individual decisions and the movements of financial markets. Thaler developed the theory of “mental accounting.” It describes how people create separate accounts in their minds to try to simplify financial decision-making. He described how this can lead to less rational financial decisions like saving for a vacation while paying high credit card interest. His research, Bloomberg noted, showed that people often choose short-term pleasures, “which is why many people fail to plan and save for their old age.” The Reuters said Thaler’s research showed that such traits “as lack of self-control and fear of losing what you already have” can cause people to make bad short-term decisions. One of those, Thaler noted, was keeping stock shares that have lost value or selling them too soon when they have gained value. Thaler helped develop the “nudge” theory. It is the idea that small incentives can influence people to make good decisions. He said people should be permitted to make their own choices, but society “should actively try to guide individuals in the right direction.” Cass Sunstein and Thaler wrote about the idea in the 2008 book Nudge. The theory has been used by political candidates as they work to influence voters and government officials seeking to make changes in society. Other areas also interested Thaler. He studied fairness. He found that people can accept increasing prices if the costs of many things are going up. But he found that they strongly disapprove of companies that raise prices simply because of high demand for one product. Bloomberg called Thaler’s Nobel Prize “a reward for 40 years of work spent studying human bias and temptation.” Thaler is considered one of the first behavioral economists. His field, once criticized, has grown in popularity among economists over the last 10 years.
Questions 23 to 25 are based on the recording you have just heard.
23. What does Richard Thaler study?
24. Why do many people fail to plan and save for their old age according to Bloomberg?
25. What can we learn about Behavioral Economics?