Richard H. Thaler of the University of Chicago was awarded the Nobel Prize in economics on Monday for his contributions to the field of behavioral economics. CNN Money reported:

Thaler, 72, was cited for his research in the psychology of economic decision-making.

His theory explains “how people simplify financial decision-making by creating separate accounts in their minds, focusing on the narrow impact of each individual decision rather than its overall effect,” the Royal Swedish Academy of Sciences said.

Thaler’s work is well known outside academic circles. His 2008 book “Nudge: Improving Decisions About Health, Wealth and Happiness,” which he wrote with law professor Cass Sunstein, became a popular hit.

They argued that by understanding how people make decisions, behavioral economics can be used to tackle many of society’s major problems and influence public policy. Both The Economist and the Financial Times ranked it the best book of the year.