A cautionary "Simpsons" and "Star Trek" analogy pretty much sums up the power of behavioral economics, said University of Chicago's Richard Thaler, who's widely regarded as the founding father of the discipline.
Traditional economic theory assumes a person is "super-rational, has no self-control problems, never has a hangover, saves exactly the right amount for retirement and then invests it perfectly," Thaler said Monday on CNBC's "Squawk Box."
"Some of my most boring colleagues may fit into that category, but the rest of the world is nothing like that," he continued. "We're more like Homer Simpson, than we are like Spock," referring to the very human failings of the Simpson's patriarch compared to the ever-logical Vulcan. (Tweet This)
"In myriad ways, we do things because we're human. We do things that are predictably different from what economists expect us to do," which can help inform better economic models and better monetary policy, Thaler said.
Behavioral factors in decision-making are on display in the stock market every day, the Booth School of Business professor said. "We had the 1987 crash and the tech bubble and the real estate bubble. Anyone who's been awake for the last 20 years has noticed that [stock] market prices don't always seem to be rational," he noted.