Nudge: Improving Decisions About Health, Wealth, and Happiness

Nudge: Improving Decisions About Health, Wealth, and Happiness

Thaler, and Cass R.

Nudge is about how we make these choices and how we can make better ones.

Sunstein show that no choice is ever presented to us in a neutral way, and that we are all susceptible to biases that can lead us to make bad decisions.

But by knowing how people think, we can use sensible choice architecture to nudge people toward the best decisions for ourselves, our families, and our society, without restricting our freedom of choice.

Reviews of the Nudge: Improving Decisions About Health, Wealth, and Happiness

The employees can opt out or change their contribution amount at any time, but by enrolling everyone by default, the company does an end run around its workers' natural procrastination tendencies, without forcing them into anything. Another use of "nudging," this one on the state level, might be to require that everyone signing up for a driver's license check a box saying either "Yes, I want to be an organ donor" or "No, I don't wish to be an organ donor." Or, a state could change its laws so that people are, by default, assumed to be willing donors unless they say they don't want to.

The previous Australian Government decided that it would be a good idea to introduce choice into the superannuation system. The book opens with a discussion of a school cafeteria and how you can affect the eating habits of kids simply by how you place the food on display. You have to make some choice about how you are going to display the food so doesnt it make sense to set up the display so that people are nudged towards eating well, rather than badly? Choices dont occur in a vacuum and one of the lessons of this book is that if we are going to provide choices we need to think about the consequences of the choice architecture we put in place in which those choices are going to be made. There is a very disturbing discussion of the Part D prescription drug coverage process in the US in which people who do not make what is an incredibly difficult choice are randomly assigned to a range of default plans that takes the principle of government non-intervention to absurd extremes. The other idea that is very strongly pushed in this book is that people are very much loss averse. Going back to our superannuation example, one of the reasons why people dont increase their superannuation contributions despite knowing that it would be good for them in the long term is that it involves them in a perceived loss now. That the government should enable people to have their relationships recognised on the basis of it being a civil union and that this be open to all couples, irrespective of their sex or the sex of their partner. The last part of this book is a defence of the idea of nudges against radical free market types; the sorts of people who, like our previous government, think that choice is always good and ill-informed choice is even better. The idea that people might be nudged towards donating their organs after theyve finished with them, nudged to eat better food or to get better health care cover or to slow down when approaching a dangerous intersection all just seem obviously good to me, so this part of the book was preaching to the converted. But then, like Hegel, I dont equate freedom with choice, but with needs and how we understand those needs. I think freedom has less to do with getting to choose and more to do with getting adequate information on the consequences of that choice.

It has one central idea, grounded in social psychology, that with careful thought and planning people can be encouraged to freely chose things that are good for them, with the corollary that too much choice or unclear choices will lead to many/most people making bad choices. Alas, then the new international edition goes off track in that, aside from a brief postscript considering some issues about the circumstances of the 2008 financial crisis, the vast majority of the examples under discussion rely on a some pretty detailed explorations of US-based material which is a perverse understanding of international made all the more frustrating by Thaler & Sunsteins jokey, blokey little self-referential asides. There is little doubt that nudging is a good thing we know that we are more likely to continue with decisions when we feel like we have chosen freely (the psychologists call this compliance, and it is a big thing in theories of behaviour change). For a book that has as one of its areas of application politics they seem remarkably unaware of or, more likely, are extremely good at obfuscating a key dynamic of politics power while at the same time having constructed a text that is all about making sure that those of us who are subject to various forms of political power (be it about health care plans, buying gas, donating organs or managing our pension funds) do what the wielders of power want us to do.

When a company gives employees a choice among investment plans, how should the be described? Should there be a default plan such that, if no explicit choice is made, gets chosen automatically? But, should a company or a government give a subtle nudge by intelligently designing a form, an intelligent default, and so on? While in theory it is a correctable choice, it is not one that my people make over and over again. The authors argue that there is not reason for the government to be in the marriage business at all.

Not just seniors, but their doctors, pharmacists, and experts drafted by the authors found the "choice architecture" for Medicare Part D incredibly confusing, and picking out a plan took hours even for experts and economists. Many voters couldn't tell which punch hole was designated for which candidate, and as a result voted for a candidate they had not intended to.) The authors discuss nudges and choice architecture in the contexts of investing, health insurance, organ donation, school choice, privatizing marriage, and other areas. Weaker chapters were on school choice (the authors uncritically accept the notion that vouchers are good) and on medical malpractice insurance. What bugs me more about this chapter is that the authors never bother to ask, or to address: just because the cost of lawsuits might vanish from their bottom line, why do we automatically believe that doctors and hospitals would charge a patient less, rather than take the savings as increased profit? It looked at the system in Sweden, where accounts had been privatized, to see how the choice architecture had affected the way beneficiaries designed their investment plans. Yet the authors don't question whether privatizing Social Security is a good idea or a terrible idea (even though the paperback edition of the book went to press after the giant stock market crash of 2008-2009 and the book contains a postscript discussing some aspects of the crash that could have been avoided with proper nudges).

The authors cover terrain which has been explored recently in a whole slew of books: loosely speaking, why we humans persistently engage in behavior patterns which do not benefit us in the long term.

As an economist, Nudge was a book that I desperately wanted to like. The main point of the book is that nudges matter and thus should be carefully designed. The end of the paperback version of the book became really ridiculous - a bonus chapter of twenty more nudges. One problem with the writing was the lack of a targeted audience. And yet, although it's supposed to be targeted towards the layman, the writing is oftentimes confused about its audience. The rest of the book I recommend only to those want to read a laundry list of political suggestions.

  • English

  • Nonfiction

  • Rating: 3.83
  • Pages: 314
  • Publish Date: February 24th 2009 by Penguin Books
  • Isbn10: 014311526X
  • Isbn13: 9780143115267