Richard Thaler just won the Nobel Prize...here's a 10 minute video from PBS NewsHour that can lead into a discussion about the field that Thaler is given credit for: behavioral economics. In the process, your students will get a better understanding of what exactly this field of behavioral finance is. Enjoy!

Questions:

• What are examples of recent bubbles that demonstrate that markets are not always rational?
• What are sunk costs and how does it play into the theater ticket experiment described in the video?
• What have been consequences of his research? 
• How would you describe behavioral economics in your own words? 
• What are some things that economists get wrong about people? 
• Why is he concerned about the stock market? 

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Looking for more behavioral finance resources? Check out resources we have posted to the blog here. 

Here's an excellent Hidden Brain podcast featuring Richard Thaler where he describes more examples of our irrationality when it comes to money. 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.