What Is Mental Accounting?

We don't always do what we're supposed to do. We don't save enough for retirement. We order dessert — even when we're supposed to be dieting. In other words, we misbehave. That's the title of Richard Thaler's most recent book: Misbehaving: The Making of Behavioral Economics. If you've read Thaler's previous book, Nudge, you know he's an economist who studies why people don't really act the way traditional economists say they will. Thaler recently won a Nobel Prize for his contributions to the field of behavioral economics — so we thought we'd celebrate by giving you this encore episode. It's still one of our favorites.