Richard Thaler wins 2017 Nobel prize in economics – as it happened
Professor of behavioural sciences and economics at University of Chicago given annual economics award
2.05pm BST
So we've had the Nobel prizes for this year, with the economics award the last on the agenda.
It's gone to US economist Richard Thaler for his work on behavioural economics. He plans to spend the prize money "irrationally", he told the awards committee.
Related: Nobel prize in economics awarded to Richard Thaler
Behavioural economics incorporates the study of psychology into the analysis of decision-making behind an economic outcome - such as the factors leading up to a consumer buying one product instead of another.
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Thaler will be giving a news conference in Chicago later, and here are the details:
Watch the live broadcast of the news conference with #NobelPrize winner Prof. Richard Thaler at 11 a.m. CDT: https://t.co/86VSR3by3l pic.twitter.com/DfemCWzLgR
1.24pm BST
Here's Michael Lewis, author of the book The Big Short which was subsequently made into the film in which Richard Thaler appeared, on the new Nobel prize winner, from 2015.
And here is Thaler and Selena Gomez in that very film:
1.19pm BST
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12.59pm BST
Just over a year ago Thaler and fellow Nobel prize winning economist Eugene Fama took part in an interesting debate about whether markets were efficient or irrational.
12.53pm BST
He also commented on Theresa May's speech - not the parts that received the most commentary - but on her organ donor plans, in response to another tweet:
Theresa May presumed consent for organ donation's policy was borrowed from the book "Nudge" credit to @R_Thaler & Libertarian Paternalism
No! We prefer the current model of "prompted choice" which was adopted by the Cameron government. https://t.co/n1P94za2mV
12.51pm BST
He just won the Nobel Prize. His last 3 tweets are about Expedia's online interface, the Cubs & helping others. Congrats, #richardthaler pic.twitter.com/HK4SJgHAY2
12.49pm BST
Thaler has criticised the Brexit vote as a prime example of irrational behaviour.
He told Business Insider just ahead of the UK referendum vote:
Most voters aren't really thinking about it in a very analytical way" The people behind the leave campaign are voting with their guts. There's no spreadsheet. This is much like a divorce without a prenup.
You're voting to leave, and we'll take care of all the financial details later.
12.30pm BST
Congratulations to Richard Thaler, winner of the 2017 prize in Economics! #NobelPrize @UChicago @ChicagoBooth pic.twitter.com/5xKhK1aGdg
12.20pm BST
Thaler was apparently slow to wake up when the committee called him with the news of his award, but was unsurprisingly pleased with the news.
His biography on the University of Chicago website lists one of his interests as "fine wine" which will no doubt be part of a celebration later.
12.01pm BST
Here is one of the committee members talking about Thaler, and explaining what behavioural economics is:
"He's made economics more human" - Peter Girdenfors on Richard Thaler, just awarded the Prize in Economic Sciences. https://t.co/uFs0okbJUe
11.57am BST
Here's our story on Thaler's award:
The 2017 Nobel prize in economics has been awarded to the US academic Richard Thaler of the University of Chicago for his contribution to behavioural economics.
The prize, worth 9m Swedish kroner (845,000), is not among the Nobel Foundation's official awards for literature, peace, medicine, physics and chemistry, but was established separately by Sweden's central bank, Sveriges Riksbank, in memory of the Swedish chemist Alfred Nobel.
Related: Nobel prize in economics awarded to Richard Thaler
11.43am BST
Here is the citation on Thaler's research on self-control:
In the twelfth song of the Odyssey, Circe warns Odysseus about the Sirens, who lure sailors with their enchanting singing. Odysseus who, like his crew, wanted to return home to Ithaca, solves the problem by plugging the crew's ears with beeswax and then tying himself to the mast, with strict orders to the crew to ignore whatever he says until they are out of harm's way. Odysseus' problem is the epitome of this dilemma at all levels of our life, when we are tested by short-term temptations that threaten long-term wellbeing. This could be food and drink, smoking, consumption, saving for distant goals, or post-retirement planning. A person who chooses a longer education has a lower income during their studies, but can in return look forward to benefits in the future.
Experiences that are close in time take up more of our awareness than those that are further off; a thousand krona next year is perceived as worth less than a thousand krona today, regardless of whether it is an income or an expense. In traditional economic theory this is described using discounting - the assumption is that both income and expenses reduce by a constant factor with every passing month or year. Using such an assumption, the ranking of two future alternatives will always remain the same.
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(It almost goes without saying of course, that Thaler was not one of the favourites to win the economics prize).
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And here is an interview with the Financial Times () from last year.
11.37am BST
Here's a piece from 2008 by Aditya Chakrabortty on Thaler, including how he was being wooed by the UK conservative party:
Related: From Obama to Cameron, why do so many politicians want a piece of Richard Thaler?
11.30am BST
Here's more from the citation on Thaler's research on fairness, complete with umbrella anecdote:
When making decisions, people not only take what is beneficial to themselves into account. They also have ideas about what is fair, and they can consider other's welfare in both a positive way - through cooperation or solidarity - and a negative way - such as through jealousy or malice. Large-scale experiments conducted by Richard Thaler and other behavioural economists, have shown that notions about fairness play a major role in decision-making. People are prepared to refrain from material benefits to maintain what they perceive as just distributions. They are also prepared to bear a personal cost for punishing others who violate basic fairness rules, not only when they themselves are affected but also when they see someone else affected by injustice.
One frequent objection is that results from laboratory experiments cannot be transferred to real life, but it is easy to find examples where fairness considerations have an impact outside the laboratory. Unexpected rain can create an unexpectedly high demand for umbrellas, but if a shopkeeper then raises their price to match the high demand, many consumers react negatively and feel that the shopkeeper has behaved greedily.
11.26am BST
And here is Thaler in the Big Short, with Selena Gomez:
Noblista Richard Thaler wystA...piA w jednej ze scen filmu The Big Short. Razem z SelenA... Gomez tAumaczyA czym sA... syntetyczne CDO @TOKFM_NEWS pic.twitter.com/Vp7qhLKQLm
11.20am BST
One of Thaler's theories is about "mental accounting". The citation describes this as using different reference points to help make decisions, which vary from situation to situation: "One reference point could be the price for which we bought an item, or the lowest price we find when searching on the internet, and we use this reference point to assess whether we have made a "good deal". In his research, Thaler has provided numerous examples of how mental accounting using differing reference points may lead to decisions that appear strange when evaluated from a traditional economic perspective."
An example:
11.15am BST
More on Thaler's research is here.
The citation defines behavioural economics as "a research field in which insights from psychological research are applied to economic decision-making. A behavioural perspective incorporates more realistic analysis of how people think and behave when making economic decisions, providing new opportunities for designing measures and institutions that increase societal benefit."
11.14am BST
The committee is asked about the lack of women winners of the Nobel prizes, and the panel says they are concerned and they are taking measures to improve the situation. They think things will improve and hope it will be different in five to ten years time.
11.09am BST
Thaler is asked about the Chinese economy, but says he is not really an expert on that. And he is now gone.
11.08am BST
He is asked about his "short Hollywood career" - he was in The Big Short - saying someone successful in something is assumed to be successful going forward, and how that could apply to Donald Trump.
Thaler says he is disappointed his Hollywood career was not part of the official speech giving him the award. As for Trump, he says "he would do well to watch that movie."
11.05am BST
Thaler is on the phone to the press conference now.
He is asked what the most important aspect of his research is.
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10.58am BST
The citation says Thaler has incorporated psychologically realistic assumptions into analyses of economic decision-making. He has shown how the following three traits affect individual decision-making, as well as market outcomes:
Limited rationality: Thaler developed the theory of mental accounting, explaining how people simplify financial decision-making by creating separate accounts in their minds, focusing on the narrow impact of each individual decision rather than its overall effect. He also showed how aversion to losses can explain why people value the same item more highly when they own it than when they don't, a phenomenon called the endowment effect. Thaler was one of the founders of the field of behavioural finance, which studies how cognitive limitations influence financial markets.
Social preferences: Thaler's theoretical and experimental research on fairness has been influential. He showed how consumers' fairness concerns may stop firms from raising prices in periods of high demand, but not in times of rising costs. Thaler and his colleagues devised the dictator game, an experimental tool that has been used in numerous studies to measure attitudes to fairness in different groups of people around the world.
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Thaler is professor of behavioural sciences and economics at the University of Chicago.
10.49am BST
This year's prize is awarded to RIchard H Thaler for his contributions to behavourial economics.
10.47am BST
And we're off.
10.35am BST
With just a few minutes to go, here is a live link to the announcement of the Nobel Prize in Economics, which is also at the top of this blog:
10.21am BST
#Turkey's lira is now the second-worst emerging currency this year. $TRY pic.twitter.com/7rJip0LSSp
10.03am BST
Rising tensions with the US have hit the Turkish lira, which tumbled around 6% at one point before recovering some ground.
The US has suspended handling all regular visa applications in Turkey after a member of its embassy staff was arrested, prompting a heavy fall in the Turkish currency.
The Turkish Lira was the worst performing currency early Monday, after the U.S. and Turkey announced the suspension of visa services for citizens looking to visit each country. Traders responded aggressively to the news, sending the Lira more than 6% lower against the U.S. currency - its steepest decline since 15 July 2016, when Turkey witnessed the bloodiest coup attempt in its political history.
However, the Lira managed to recover more than half of its losses, as investors viewed the recent tensions as controllable. With Turkey increasing political ties with Russia and Iran, and Washington continuing to support Kurdish groups, the political risk premium is likely to keep pressuring the Lira. However, it would require far more escalation to see the currency trading near January lows of 3.94.
9.12am BST
And here's something on the only woman to win the Economics prize:
#NobelFacts In 2009, the 1ST woman was awarded the Prize in Economic Sciences - Elinor Ostrom! pic.twitter.com/xkRwbCh1v1
9.06am BST
Here are some facts and figures about the Nobel Prize in economics:
8.42am BST
Back with the pound, and the currency is shrugging off the latest Brexit worries and political problems. Connor Campbell, financial analyst at Spreadex, said:
Sterling is using Monday's bone dry economic calendar as an opportunity to claw back some of last week's rather severe losses.
One could argue that such a data-less day would only throw a harsher spotlight on the latest round of Tory turmoil. Predictably the weekend's papers were full of reports of party infighting, with one group urging Theresa May to say goodbye to Boris Johnson, and another, more Brexity cabal attacking the pro-EU Chancellor Phillip Hammond.
8.33am BST
It's fake Nobel prize day everybody! pic.twitter.com/34lK2jPsU5
8.28am BST
One notable mover in the markets in hotels group Millennium and Coptthorne.
Its shares have soared 23% to 554p on news that Singapore's City Developments has offered to buy the shares in the group it does not already own. The move values M&C at around 1.8bn.
8.19am BST
European markets have got off to a mixed start.
The FTSE 100 is down 0.06%, not helped by the slight strengthening of the pound which is not helpful to the overseas earners which dominate the index.
8.14am BST
But here's a cynical reminder about predictions about the winners:
Predictions of who will win economics Nobel are about as reliable as economists' prediction of what will happen to the economy.. https://t.co/CQWVDL6FJ8
8.02am BST
My colleague Richard Partington has been looking at the runners and riders, who include the former governor of the Reserve Bank of India and a string of US academics. His full report is here:
Related: Nobel economics prize due to be announced
7.57am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone crisis and business.
We'll mainly be concentrating on the annual Nobel prize in economics, due to be announced in a few hours in Stockholm.
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