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What is behavioural economics? Watch Richard Thaler, who just won the Nobel for it, break it down

In this hour-long address at Carnegie Mellon University, Thaler uses everyday examples to explain complex economic and human behaviour.

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Richard H.Thaler, who won the 2017 Nobel Prize in Economics for his contribution to the field of behavioural economics, is a proponent of the idea that humans do not act entirely rationally. In an illuminating lecture (above) at the Carnegie Mellon University in Pittsburgh, Pennsylvania, the economist incorporates insights from other social sciences such as psychology to create a better understanding of the standard economic model. The video takes viewers through several stages of the idea:

  • Thaler begins by stringing together what early economists like Herbert Simon, Adam Smith, Keynes and Vilfredo Pareto had to say about irrational human behavior and its effect on economic models, after which he defines the core assumptions of economics (optimisation, self-interest, consumer sovereignty and unbiased beliefs).  
  • Thaler then dives into the question of whether these assumptions can be applied to human beings. He talks about how behavioural economics is just borrowing good psychology rather than inventing bad psychology. “All of economics will be as behavioural as it should be.”  
  • He brings up the concept of “explainawaytions” (a term coined by economist Matthew Rabin) to tell the story of an expert billiards player who plays billiards “as if” he knew math and physics.  
  • He relates fascinating (and amusing) examples of irrational human behaviour, including a graph showing the changes over time in the share price of a fund with the abbreviation CUBA (though the fund has absolutely no connection with the Caribbean country its share price jumped to a 70% premium when President Obama announced his intention to relax the United States’s diplomatic relations with Cuba).
  • Thaler illustrates how much “default settings matter.” On his flight to Pittsburgh to deliver the lecture he noticed that a majority of the passengers were watching CNBC – it was the channel that all the in-flight TVs had been set to by default.  
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Advice from an ex-robber on how to keep your home safe

Tips on a more hands-on approach of keeping your house secure.

Home, a space that is entirely ours, holds together our entire world. Where our children grow-up, parents grow old and we collect a lifetime of memories, home is a feeling as much as it’s a place. So, what do you do when your home is eyed by miscreants who prowl the neighbourhood night and day, plotting to break in? Here are a few pre-emptive measures you can take to make your home safe from burglars:

1. Get inside the mind of a burglar

Before I break the lock of a home, first I bolt the doors of the neighbouring homes. So that, even if someone hears some noise, they can’t come to help.

— Som Pashar, committed nearly 100 robberies.

Burglars study the neighbourhood to keep a check on the ins and outs of residents and target homes that can be easily accessed. Understanding how the mind of a burglar works might give insights that can be used to ward off such danger. For instance, burglars judge a house by its front doors. A house with a sturdy door, secured by an alarm system or an intimidating lock, doesn’t end up on the burglar’s target list. Upgrade the locks on your doors to the latest technology to leave a strong impression.

Here are the videos of 3 reformed robbers talking about their modus operandi and what discouraged them from robbing a house, to give you some ideas on reinforcing your home.

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2. Survey your house from inside out to scout out weaknesses

Whether it’s a dodgy back door, a misaligned window in your parent’s room or the easily accessible balcony of your kid’s room, identify signs of weakness in your home and fix them. Any sign of neglect can give burglars the idea that the house can be easily robbed because of lax internal security.

3. Think like Kevin McCallister from Home Alone

You don’t need to plant intricate booby traps like the ones in the Home Alone movies, but try to stay one step ahead of thieves. Keep your car keys on your bed-stand in the night so that you can activate the car alarm in case of unwanted visitors. When out on a vacation, convince the burglars that the house is not empty by using smart light bulbs that can be remotely controlled and switched on at night. Make sure that your newspapers don’t pile up in front of the main-door (a clear indication that the house is empty).

4. Protect your home from the outside

Collaborate with your neighbours to increase the lighting around your house and on the street – a well-lit neighbourhood makes it difficult for burglars to get-away, deterring them from targeting the area. Make sure that the police verification of your hired help is done and that he/she is trustworthy.

While many of us take home security for granted, it’s important to be proactive to eliminate even the slight chance of a robbery. As the above videos show, robbers come up with ingenious ways to break in to homes. So, take their advice and invest in a good set of locks to protect your doors. Godrej Locks offer a range of innovative locks that are un-pickable and un-duplicable. To secure your house, see here.

The article was produced by the Scroll marketing team on behalf of Godrej Locks and not by the Scroll editorial team.