Nobel Prize Winning Economist Shows the Irrationality of Humanity Through Kids Eating Apples

Richard Thaler changed behavioral economics by not ignoring mankind's penchant for irrational decisions.

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sliced green apple

This morning, the Nobel Committee in Stockholm announced it had awarded the Nobel Memorial Prize in Economic Science to Richard H. Thaler, a professor at the University of Chicago’s Booth School of Business. Thaler won the award due to his contribution to the field of behavioral economics, as he defied traditional economic thinking when he realized that in order to understand the way people handle, treat, and view money, you must sometimes reject rationality. With this understanding, Thaler was able to find that people’s minds can be changed by making a small, ultimately inconsequential tweak, which Thaler calls a nudge. To demonstrate the effectiveness of a nudge, Thaler points to the way children consume apple slices versus whole apples.

A study out of Cornell University in 2013 showed that slicing up an apple and putting the pieces into a plastic bag “greatly increases apple consumption by kids.” In fact, in the schools that made this seemingly random change, kids were eating up to 70 percent more apples than before. Of course, as a rational observer, we all know that there is no real difference between an apple that has been sliced and an apple that has not been sliced. Yet, as Thaler points out, an altered perception, caused by a slight “nudge”, can play a huge part in the way humans engage with something.

Richard H. Thaler is seen on a screen as Secretary General of the Royal Swedish Academy of Sciences Goran K. Hansson announces the winner of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Of course, this sort of irrational behavior is hardly limited to children, as Thaler points out that adults also consistently will make decisions that defy all logic. Companies will often have employees who fail to enroll in a 401k plan, not because they believe it is against their best interest, but simply because the task seems too daunting. A company in Minnesota applied Thaler’s nudge theory by simply allowing employees to auto-enroll in a plan if they didn’t want to do research and choose a specific plan. Enrollment grew from 49 percent to 86 percent in the first year alone.

Similar to economics, learning when to throw logic out the window is a huge part of succeeding as a parent. Because while kids are not completely devoid of rationality, they will often abandon any semblance of structure on even the slightest whim. But by finding effective “nudges”, parents can find an easy, illogical fix to what was once an insurmountable issue for a kid. Because when life gives you apples, make apple slices.

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