An interview with one of the new Nobel Laureates in Economics, Robert Shiller

There were three economists who shared the Nobel Prize in Economic Sciences this year, and one of them was Robert Shiller, a professor at Yale. He is interviewed by the Washington Post here.

Their topic area is financial markets, so it’s not explicitly food related…but in the interview, Professor Shiller discusses his views on rationality…an important assumption underpinning many economic models, including the ones we use in class. He says, “When I look around, I see a great deal of foolishness, and I can’t believe it’s not important economically.” He’s also skeptical of the idea that everyone will properly manage their retirement savings…people are mired in habit and inertia and you’d need to allocate lots of time and energy to making financial decisions.

These ideas can be related to food economics too…quite clearly on the consumption side, and also on the production side. People do irrational things all the time when it comes to the foods they buy and eat. Habits and psychology are significant drivers of food and health decisions, as any RD or MD can tell you. So…what do you think? Are people rational when it comes to food decisions? Are people each “rational” in their own way, making it hard for economists to model their decisions? Or, are people just not rational at all, and driven mostly by urges and habits when it comes to food? Does it depend on the person? How might the answer affect food policy?

I also appreciate Prof. Shiller’s general skepticism and love of facts.

We’ll get more into this topic area when we talk about market failures later.