How do human choices, biases, and behaviours shape our economy? This week Amol speaks to Nobel Prize winning behavioural economist Professor Richard Thaler about his theories that dive into the patterns behind our decision-making and reveal why humans aren’t always as rational as we like to think.

From overconfidence and the lure of winning at any cost, to the hidden costs of risk-taking and the psychology of incentives, his research shows why individuals and markets sometimes make surprising — or even seemingly irrational — choices.

By unpacking the experiments described in his book The Winner’s Curse we get an insight into his work and he applies these behavioural insights to the issues facing the UK today. They discuss how to get young people off welfare and into work, government debt and why Richard believes the winter fuel allowance needs a rethink.

(00:04:10) Why he thinks traditional economic theory is flawed

(00:07:44) The pros and cons of behavioural economics

(00:17:40) The story behind The Winner’s Curse

(00:19:00) The Endowment Effect

(00:21:16) The Ultimatum Game

(00:23:28) Confirmation Bias and Overconfidence

(00:25:54) Mental Accounting

(00:29:42) Young people, welfare and work

(00:33:35) Tackling government debt

(00:38:32) The housing crisis

(00:40:06) The rise of AI and dangers of social media

(00:43:00) How he found out that he’d won the Nobel Prize for Economics

(00:45:26) Richard Thaler’s legacy

(00:47:43) Amol’s reflections

(00:51:20) Listener Messages

GET IN TOUCH

Radical with Amol Rajan is a Today Podcast. It was made by Lewis Vickers with Anna Budd. Digital production was by Gabriel Purcell-Davis. Technical production was by Dave O’Neill. The editor is Sam Bonham. The executive producer is Owenna Griffiths.