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Economics: 'Nudging' your way to a Nobel Prize
So, the cat is out of the bag! Richard Thaler, a colleague of Raghuram Rajan at Chicago's Booth School of Business, has been awarded the Nobel Prize in Economics.

I am not sure, if Economics is an art or a science. At the domestic level, the monthly hisab kitab, my pocket money and postal savings, was my concept of home economics.

What none of us knew was that my mother (the family's Reserve Bank!) used to stow away a few notes every month, in folds of a Banarasi sari – for an emergency or a celebration. In today's parlance we may call it 'making a provision'. I never understood economics beyond the domestic domain.

My father, then professor of Philosophy at Delhi University, used to pull legs of his colleagues at Delhi School of Economics thus: 'What ever you guys predict, never comes true'! To add fuel to fire, the lanky Harvard Economist, John Kenneth Galbraith (also one time US ambassador to India) defined his discipline thus: 'The only purpose of economics is to make astrology look respectable!' Of course, privately I used to tell my Dad, that I found Philosophy equally fuzzy.

During my entire education, I missed the study of economics, having concentrated on the science stream. In later years, I saw economics as the way an individual, a group, a company or a nation decided to earn and spend money, and if possible save something for a rainy day. I do not know which school of economics thought to subscribe to. There is a galaxy of names to choose from - Adam Smith, Keynes, Karl Marx, Friedman, Samuelson, etc. …… right up to our very own Amartya Sen and Raghuram Rajan! There are bewildering choices from 'demand side', 'supply side' 'Laissez Faire capitalism', 'free markets', 'intelligent markets', 'market socialism' and 'government knows best' theories.

Perhaps, it was because of such a proliferation of leading economists and their often conflicting theories, that made another Nobel Laureate (Literature) Bernard Shaw quip: 'If all the economists were laid end to end, they would never reach a conclusion'.

Most economic theories have been in vogue or have come under severe fire, depending on the state of 'perceived' well being of a country or otherwise. During the UPA regime Nobel Laureate, Amartya Sen was the flavour of the season. Among other things, Sen propounded 'welfare economics' and Human Development Index, as a measure of good economic governance in developing economies.

With the advent of the NDA government, Amartya Sen has suddenly lost all his credibility, visibility and his voice. What dominates today is our very own home grown 'Modinomics', which possibly even Arun Jaitley cannot fathom. Contempt for such thinkers like Amartya Sen was palpable, when wonder Modiji enlightened us with, 'It is hard work and not Harvard'. Soon on arrival NDA changed the base year for GDP, thereby making any comparison with previous governments and the rest of the world, impossible. Accept the 'Achhe Din' mantra or perish at your own risk.

Former RBI governor, Rockstar Raghu also had an uneasy relationship with the present dispensation. Raghu's problem was that he belonged to the Chicago School. 'The main tenets of the Chicago school are that free markets best allocate resources in an economy, and that minimal government intervention is best'. Both Modi and Amit Shah promised 'Minimum government and maximum governance'. But, Raghu's folly was that he did not see it happen and like the child in the fairy tale, dared to say that the Emperor wore no clothes!

Coming back to our latest Noble Prize winner Richard Thaler, he too belongs to the Chicago school. This too may not mix well with Modinomics!

Nobel winner-to-be Richard Thaler is a strong anti-corruption campaigner. On hearing about India's demonetisation, he cheerily tweeted: 'This is a policy I have long supported. First step toward cashless and good start on reducing corruption.' But Thaler's joy soon turned into consternation, when he heard that Rs. 2000 notes had been introduced! New Delhi may not have any cheer leaders for the newly minted prize winner.

What has won Richard Thaler his coveted prize? Well it's his 'Nudge theory'. The media has mentioned that after intensive study of human decision making, they have found that more positive results can be achieved by 'nudging' people into correct economic behavior. My one liner is too simplistic a phrasing of an expert's work of a lifetime. But I can see a parallel, which most of us as kids have used. At least, I did. When Dad firmly said no, to anything I wanted, I charmed my mother into 'nudging' my Dad. She 'nudged' him with her elbow. And 'Yes' came the response, no matter how grudgingly!

Last but not the least, any economist who researches and works out the mystic mechanics of 'Modinomics' and the 'almost there Achhe Din', is bound to be the next contender for the Nobel Prize for economics.

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