Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler

Mar 22, 2009

Trevor rated it

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Shelves: behavioural-economics, economics, psychology, social-theory

This one took me longer to read that is reasonable for a book of its length or the clear style it is written in. I mean, such a simply written text of 250 pages ought to have finished in no time. The problem was that I don’t live in the US and so many of the examples made the book a struggle for me. All the same, there are ideas in this book that are important no matter where you live.

Don’t you just love the internet? I wanted to start this paragraph with that quote by Göring, “w...more

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Oct 22, 2008

David rated it

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Shelves: read-in-2008

This is a terrific book. 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. Their own research, at the University of Chicago, builds upon the work of Tversky and Kahneman in behavioral economics (very much in vogue this past few years).

In the book, they provide a funny, engaging, remarkably clear exposition of the various factors which...more

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Aug 18, 2008

Chris rated it

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Shelves: cognition, development

I second-guessed my purchase of Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth, and Happiness, almost the minute I received my Amazon e-mail receipt -- I had already read Malcom Gladwell's Blink, and heard about the literary disaster that is Sway, and yet there I was, reading Nudge's introduction about the arrangement of cafeteria food.

I'm glad I did. While Thaler and Sunstein are happy to revel in the small ways that their insights into "choice architect...moreI second-guessed my purchase of Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth, and Happiness, almost the minute I received my Amazon e-mail receipt -- I had already read Malcom Gladwell's Blink, and heard about the literary disaster that is Sway, and yet there I was, reading Nudge's introduction about the arrangement of cafeteria food.

I'm glad I did. While Thaler and Sunstein are happy to revel in the small ways that their insights into "choice architecture" can lead to better or worse choices, they also lay out their political principles and detail their impact on current policy debates (e.g., Social Security, Medicare Part D, Education.) To top it all off, they begin the book with a treatment of our cognitive failings, distinguishing between our automatic and reflective processing systems (what's not to love!), leading right into their arguments for how to help the automatic majority overcome their cognitive frailty without infringing the reflective minority's ability to choose.

So what is choice architecture? Well, are you choosing out of ten choices, or 100? Are you automatically enrolled in one choice or another if you don't make an active decision? How is that default set? How is information presented to you to about the available choices? All of these questions speak to choice architecture -- in other words, the arrangement and organization of choices -- which has a nasty habit of leading individuals to choices that they themselves would not find optimal (see don't be bob bias, the mind and morality).

Furthermore, "choice architecture, both good and bad, is pervasive and unavoidable." This point is essential to Thaler and Sunstein's argument if you are a libertarian. Ignoring choice architecture won't make it go away, it will only make it more likely that the choices favored by choice architecture are more likely to be poor. For instance, you can make the default option for new employees enrolled at 5% in a 401(k) with an option to opt-out, or you can make the default option to not be enrolled (as is often the case). If you stick with the current default, many who would otherwise enjoy being enrolled will not do so because of the choice architecture. Thaler and Sunstein recommend acknowledging the importance of choice architecture and deliberately deciding on its design.

Thaler and Sunstein aren't interested in helping individuals pick out their dry cleaners; as the authors note, if a dry cleaner performs poorly, it is fairly easy for individuals to make a better decision the next team.

Rather, "people are most likely to need nudges for decision that are difficult, complex, and infrequent, and when they have poor feedback and few opportunities for learning."

Individuals are primed to make poor choices for Medicare Part D, Mortgages, and retirement investments. Thaler and Sunstein don't advocate for eliminating choices because of these problems. On the contrary, their final chapter points to the infamous "third way" -- separate from both the command-and-control left and the single-minded 'choice' monkeys of the libertarian right.

There needn't be a war between 'no choice' and 'unlimited choice.' Thaler and Sunstein spend around 250 pages explaining that this is indeed a false choice. Like myself, they side with the libertarians when it comes to the importance of choice, and side with the left when it comes to the failure of 'choice' to solve all problems. Choice is important. Coercion isn't necessary. Focus on the choice architecture.

Oh, and I have to add. As someone who has long supported responding to the gay marriage debate by taking government out of the marriage business (perhaps keeping a civil union or partnership business) and leaving it to independent churches, I was very happy to see Thaler and Sunstein put forth such an argument in Nudge.

Whether you are on the left or right, worth a read! (Taken from my post)(less)

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Jun 30, 2008

Nina rated it

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I really like a lot of the ideas presented in this book. I completely agree with their major points - that policies should pay close attention to the default option, and that one of the most effective ways of helping people make good decisions is complete and clearly presented disclosure. I know I complained that Ariely's book didn't take his theories far enough because he didn't talk about the implications of people's predictable irrationality, but now I'm going to complain that this book foc...moreI really like a lot of the ideas presented in this book. I completely agree with their major points - that policies should pay close attention to the default option, and that one of the most effective ways of helping people make good decisions is complete and clearly presented disclosure. I know I complained that Ariely's book didn't take his theories far enough because he didn't talk about the implications of people's predictable irrationality, but now I'm going to complain that this book focused too much on the practical application of what behavioral economics has taught us without laying a solid theoretical or moral foundation. (Ok, so maybe I'm a little hard to please.)

In fact, I don't know if such a foundation is even necessary. This book would have worked best as a series of individual essays or empirical articles. The ideas alone are great - automatic enrollment is a clever way to get people to save for retirement by not giving them the option of succumbing to inertia, and I'm all for companies making public their carbon output. The problem with putting all these great ideas together in a book is that you have to develop an overarching theory that encompasses all your great ideas, coin it, and prove that you can generalize your theory to many other areas you may not know much about. And this is how we end up with "libertarian paternalism."

When the authors try to apply this theory to things like privatizing marriage and school choice, it comes across that they are using their nifty theory to solve complex problems, whose solutions in reality need to take into account much more than just practical considerations. Since they coined their theory with such a politically-charged term (not an oxymoron, they insist), I was expecting a more thoughtful discussion of government's responsibility to nudge people in the right direction or to let people make their own mistakes. Actually, this term kind of muddled what they were trying to say - they didn't seem to be arguing for smaller or no government (libertarians go much farther than just wanting the ability to opt out of a government's default decision, from what I gather), and paternalism just sounds scary, so they make a great effort to try to defend the parternalism part of their theory. And a lot of what they talk about actually has nothing to do with government or politics - the automatic enrollment plan has been adopted by private employers without any government mandate.

In a nutshell, this book has a lot of interesting and clever ideas that I really believe can work, but the grand theory of libertarian paternalism was not a good umbrella under which to throw all the random interesting and clever ideas the authors have. (less)

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Nov 28, 2008

Seth rated it

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This is one of those rare combinations of a book that is both banal and ennervating. It is not ennervating because it is popular, but rather because it is based on a flawed premise for how we should go about improving the world. Its banality stems from the fact that it seems to circumscribe the improvement of the world within such themes as getting people to quit smoking, invest in solid 401(k)s, and choose items on the cafeteria menu that will not make them too fat.

I could spend a v...moreThis is one of those rare combinations of a book that is both banal and ennervating. It is not ennervating because it is popular, but rather because it is based on a flawed premise for how we should go about improving the world. Its banality stems from the fact that it seems to circumscribe the improvement of the world within such themes as getting people to quit smoking, invest in solid 401(k)s, and choose items on the cafeteria menu that will not make them too fat.

I could spend a very long time critiquing the 'behavioral economics' approach to research upon which this book bases its policy agenda; however, because the book is much more about policy, I will hold off on the behavioral econ issues and just point out the fundamental failure of an approach that terms itself 'libertarian paternalism.' The oxymoronic nature of this term should be immediately obvious. In its broadest sense, it stems from Thaler and Sunstein's observation that some people are in positions to be 'choice architects,' which for them is like being the framer of the 'default setting' of a given decision (one of their analogies is to the engineer who decides what the initial ringtone and display settings of a cellphone will be). Who gets to be a choice architect and how they come to get there is of little concern to the authors. They believe that their libertarian paternalistic approach will utilize minimal coercion in pursuit of maximum individual choice. In fact, most of their attempts to defend their philosophy stem from exactly this defense, as if to assuage all fears that they are happily presenting us with a slippery slope to authoritarianism.

My main complaint with their approach is entirely different - I take issue with their separation of process from outcome. They seem to think that as long as the outcome appears to involve choice, and the process to reach that outcome was based on ethical principles, then we are all square. In this way their view recalls that of Walter Lippmann, who famously debated against John Dewey in the 1920s over what structure of public discourse and democracy would best suit the United States. Like Lippmann, Thaler and Sunstein aver that the complexity of modern society, and its confounds for sound, fully informed decisionmaking compel the individual to make 'shortcuts.' Because the cumulative effects of this shortcut-based thinking may produce negative outcomes, the argument is for there to be a set of people with expert knowledge to structure the array of choices for the less knowledgeable. Notably, Dewey's argument against this approach is not at all one that Thaler and Sunstein anticipate. Thaler and Sunstein think that their approach is most offensive to economists and serious libertarians who think either a) people are fully rational and need no help with their choices, b) any paternalism is a step too far, or both. Quite apart from these, Dewey's argument (in very brief form) is that your outcome is entirely inseparable from your process: that the process of discourse - who is talking about the decisions being made, and what their relationships are to each other in that conversation - actually has important effects on what choices are POSSIBLE. I think this is a very serious critique of the Thaler/Sunstein approach which cannot be ignored. This, plus the historical argument that I mentioned above (who are the choice architects? how do they get to be there?), seriously call into question the applicability and desirability of any quick resort to 'libertarian paternalism.'(less)

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Feb 17, 2009

Terry rated it

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Recommends it for: policy wonks

Recommended to Terry by: I think it was Ars Technica

The book focuses on cases where simple changes in choice architecture (how people are exposed to options) can create significant changes in behavior. The authors immediately recognize this could be used "for evil" as it were or against the chooser such as arranging food in a cafeteria so kids buy more high margin foods but most of the cases revolve around "stove" examples. Stove cases are where slight changes in presentation create a good situation for the user like stove b...more

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Jan 02, 2012

CaterinaAnna rated it

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Shelves: bookcrossing

An interesting look at how the way in which choices are presented - or not - affects the decisions we make. It is written as a reasoned manifesto for what the authors refer to as libertarian paternalism. Many of their suggestions relate to individual economic choices, but other things are considered from the trivial (how to keep men's loos cleaner) to the fundamental (the role of marriage in modern society). Existing systems come in for praise where it is due, as well as criticism, and there is ...more

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Sep 06, 2011

Bryan Kim rated it

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A must for anyone involved with public policy, public health, public safety... pretty much anything public. The eminently economic authors offer a dispassionate debunking of the tattered economic notion of society as a sum total of many rational units of self interest. They offer several major biases and short comings of the typical human decision making processes, offering convincing arguments from the latest research in neuro-science, sociology, evolutionary biology, etc.

Authors ...more

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Jun 12, 2011

Amber rated it

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Although I enjoyed reading this book, ultimately I found it not to have that much new material, relative to the collection of (libertarian) blogs I read, which have covered the authors' work in some detail.

However, I did really like the framing of "libertarian paternalism"--constructing default choices to be helpful, but still giving people choices--which is that there is no neutral choice architecture. That is, people buy stuff on the higher shelf more...but something has to go on the...more

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Apr 30, 2011

Ensiform rated it

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Shelves: non-fiction

The authors, both economists at University of Chicago, advocate what they call “paternal libertarianism” in order to improve an equal footing for all in the areas of health care, marriage, taxes, and so on, without impinging on freedom any more than absolutely necessary. They argue, reasonably, that everyone with a stake in an issue or a semblance of power is, whether they like it or not, a change architect – that even not interfering and allowing totally laissez-faire markets to evolve is stil...moreThe authors, both economists at University of Chicago, advocate what they call “paternal libertarianism” in order to improve an equal footing for all in the areas of health care, marriage, taxes, and so on, without impinging on freedom any more than absolutely necessary. They argue, reasonably, that everyone with a stake in an issue or a semblance of power is, whether they like it or not, a change architect – that even not interfering and allowing totally laissez-faire markets to evolve is still doing something (“If you choose not to decide, you still have made a choice,” as Neil Peart says) – so governments and free markets should do their nudging in a positive and helpful way. For example, making a simple and high-returning investment the default option on a retirement package the default is a nudge that helps those who would be otherwise lost in a sea of legal and economic mumbo-jumbo if the default were “find your own damn retirement package.”

The authors write in a pleasing, non-preachy, conversational style, and make their points clearly, requiring no economic understanding to follow their ideas, many of which are more or less common sense (and thus will never be implemented by our government) while others are intriguing possibilities, such as Save More Tomorrow, which ties savings plan deposits to future raises. Although I enjoyed reading the book, for me it was basically preaching to the converted, without the necessary punch behind the ideas to ever convince any Republican big-government corporate-nanny-state lover. Actually I was expecting it to be more focused on personal, psychological nudges of the kind the authors discuss at the beginning, the way perceptions can deceive, the way self-control strategies can be used to hack one’s own mind, and the values that humans give to losses and gains. When the book hit its political and social manifesto stride, I was slightly disappointed, but the authors’ chummy style and practical ideas kept me interested. (less)

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Apr 26, 2011

Heather rated it

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Recommends it for: Everyone

Recommended to Heather by: Cari Rottman

Nudge: Improving Decisions about Health, Wealth, and Happiness, is a book describing how humans are often influenced by contextual variables which often lead to poor decision making. However, by structuring choices differently and changing these contextual elements, it is possible to “nudge” people towards making better decisions, those that they would choose themselves if we were completely rational creatures.

The authors state the purpose of their book quite eloquently on their web...moreNudge: Improving Decisions about Health, Wealth, and Happiness, is a book describing how humans are often influenced by contextual variables which often lead to poor decision making. However, by structuring choices differently and changing these contextual elements, it is possible to “nudge” people towards making better decisions, those that they would choose themselves if we were completely rational creatures.

The authors state the purpose of their book quite eloquently on their website: “Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions. The person who creates that environment is, in our terminology, a choice architect. The goal of Nudge is to show how choice architecture can be used to help nudge people to make better choices (as judged by themselves) without forcing certain outcomes upon anyone, a philosophy we call libertarian paternalism. The tools highlighted are: defaults, expecting error, understanding mappings, giving feedback, structuring complex choices, and creating incentives” (http://nudges.org/).

It’s kind of scary to think about how all the things that shouldn’t affect our decisions but do anyway. Defaults, for instance – A majority of the population says they would gladly donate their organs in the event of an untimely demise. Yet, the numbers of people who indicate their consent to donate organs on the back of their drivers license does not even come close to the numbers who claim they would donate. Why the discrepancy? Because here individuals have to opt in if they wish to donate… the default is to not. In other places where the default is to donate, the numbers who indicate they would not are far less. The examples go on and on – nearly every decision we make is influenced by the architecture of the choice. I definitely side with the authors that if we can use these tactics to nudge people towards making better decisions, why shouldn’t we?

While the topic of the book in itself is very interesting, I felt somewhat removed from this book, despite the very visible practical implications. I think part of it is just because at this point in my life, when I am riding home from school or work, I want to listen to something light that doesn’t require me to think (**cough – Tina Fey’s Bossypants—cough**) I think this book will be very helpful to come back to at a later date though. I definitely want to read up on good investing practices, because I am not at all well-versed in that area and I think I would be able to get more out of the sections on money after I am a bit more knowledgeable.

In conclusion, this book is definitely worth a read through, especially if you are looking for a book to “better yourself” by understanding the extraneous variables which unduly impact our decisions, and learning to consequently make better ones. However, I would recommend the text version and not the audio, because this narrator’s voice verged on monotone (to the point of being Kristen Stewart annoying) and he had a much harder time sustaining my attention than I’m sure reading it myself would have.
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Feb 28, 2011

Christen rated it

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I probably shouldn't rate and review a book I didn't make it all the way through, but I found myself getting more and more angry the further I went into this book. I liked the first part, where the authors discussed choice architecture generally. However, they then went on to discuss many choice architecture issues in a manner I found confusing. Two examples seem appropriate to consider. The authors seem to find fault with the way student loans are done. They seem to criticize schools for se...more

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Dec 31, 2010

Vince Wu rated it

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The central idea of the book is simple: People should be free to choose, but it's also desirable to influence people's choices for the better. In fact, the authors pretty much explain the concept soup to nuts in the introduction. The rest of the book felt a bit tedious as such... I would summarize the rest as a refresher on human fallibility and extensive examples of how choice architecture could be applied to wide ranging aspects of life.

This quote summarizes the central idea of the b...moreThe central idea of the book is simple: People should be free to choose, but it's also desirable to influence people's choices for the better. In fact, the authors pretty much explain the concept soup to nuts in the introduction. The rest of the book felt a bit tedious as such... I would summarize the rest as a refresher on human fallibility and extensive examples of how choice architecture could be applied to wide ranging aspects of life.

This quote summarizes the central idea of the book:

[...] in general, people should be free to do what they like - and to opt out of of undesirable arrangements if they want to. [...] we argue for self-conscious efforts, by institutions in the private sector and also by government, to steer people's choices in directions that will improve their lives.

A few examples were quite good:
- illustrating the power of social norms: Add a frown/smiley face to electricity bills based on average usage. The big energy users used less. Remarkably, the energy efficient users didn't use more (vs. another experiment that showed how much less they were using).
- illustrating the power of priming: simply asking "Do you plan to vote?" increased the voter turnout by 25%.
- illustrating "loss aversion": Split a group of people in half. Give one half something (e.g. a mug). Ask first half to mark how much they are willing to sell to the second half. Ask the second half how much they'd be willing to buy from the first half.
- "Save more tomorrow": an automatic saving rule (e.g. auto save a portion of future raises) that ends up helping people save more without removing any choices.
- Make donating organs the default. People can opt out.
- School cafeteria: load up the first section with fruits and vegetables. The "unhealthy" food is still around, but not as easily discoverable.

There were a few examples that I thought were quite odd. For example, there was a chapter on privatizing marriage which I thought was simply shifting the problem around. The authors suggested that the government could get out of the legalizing marriages business altogether, and provide the expected marriage benefits (e.g. tax savings) and enforce responsibilities (e.g. child support) via other means. Churches and other private institutions would give people the "marriage" label according to whatever rules they see fit. While this does remove the government from the debates (e.g. is gay marriage legal?), it doesn't remove any of the debates. The goal isn't clear to me.

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Dec 21, 2010

Lorna added it · review of another edition

Shelves: reading-group-jo-jody-and-hannah

Very easy to read, conversational in places between the two authors. On reflection there is much in it which seems to spell out in length things that we know to be true. I like the practical examples, especially those around the environment, saving money and so on. Discussing the book with book group friends raised lots of interesting issues. For example the danger of individualising social issues and making individuals responsible for social problems. There are other influences which the author...more

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Dec 06, 2010

Richard White rated it

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Recommends it for: progressives, conservatives who want to understand the progressive tactics

Recommended to Richard by: Glen Beck Reading list

Sunstein and Thaler build the situation the reader needs to have in order to accept the general theories and practices put forth in this book. The new term "Liberatarian Paternalist" is coined to ease a more conservative person into acceptance of a "Choice Architect".

People are grouped into "Econs" (Smart people) and "Humans" (everyone else including all us dumb little people). Humans are continuously being shown as not able to make decisio...more

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Oct 28, 2010

Jeremy Kauffman rated it

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This is not a well-written book. The writing is prosaic. The pacing is meh. You will almost certainly have no trouble putting it down. It is, however, a book almost everyone should read - especially politicians, technocrats, and others in positions of public policy.

Sunstein and Thaler argue that dramatic changes in human behavior can be effected through sensible changes in "choice architecture". Choice architecture is the orchestration of options. It can range from how choi...more

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Sep 20, 2010

Viola rated it

As an economist, Nudge was a book that I desperately wanted to like. Unfortunately, I was disappointed. Perhaps my low rating of the book stems from my high expectations of a book co-authored by the well-regarded behavioral economist Richard Thaler. Without such expectations, my rating might have been higher. But at the same time, without such expectations, I might not have bothered to read the book at all.

The only interesting part of the book is the first part, which consists of the...moreAs an economist, Nudge was a book that I desperately wanted to like. Unfortunately, I was disappointed. Perhaps my low rating of the book stems from my high expectations of a book co-authored by the well-regarded behavioral economist Richard Thaler. Without such expectations, my rating might have been higher. But at the same time, without such expectations, I might not have bothered to read the book at all.

The only interesting part of the book is the first part, which consists of the first five chapters. Here, the authors lay out the main premise of the book. The decisions humans make are affected by "nudges." Since nudges are not easy to define, they are best explained through examples. The clearest example of a nudge is a default. When you register online at a site, you are often asked, "Would you like to receive future emails?" By default this box could be either checked or not checked. The default matters; that is, different results emerge under different defaults. The main point of the book is that nudges matter and thus should be carefully designed.

The rest of the book presents a laundry list of policies to which we should apply this principle. For me, this got boring fast. For some reason, the authors seem to be obsessed with identifying every possible nudge and offering their nudge design suggestions. The end of the paperback version of the book became really ridiculous - a bonus chapter of twenty more nudges. I think that the hardcover version is saved from this madness, because the bonus chapter was added after the publication of the hardcover version.

Many may find Nudge overly political. The authors weigh in on what they believe to be good nudges on a large number of hot political issues such as Medicare and same-sex marriage. I personally didn't mind their political stances as much as I minded the lack of economics.

The book is also poorly written. I felt that the publishers gave the authors complete free reign since the authors were well-regarded academics, and obviously academics don't need editors. One problem with the writing was the lack of a targeted audience. The book is supposed to be targeted towards a mass audience; or at least, that is the target of the book's marketing efforts. It is not a textbook or standard teaching material targeted towards undergraduate economics majors. It is also not a serious academic discourse targeted towards other economists. And yet, although it's supposed to be targeted towards the layman, the writing is oftentimes confused about its audience. Additionally, I didn't care for the writing style. While I do enjoy a casual and conversational tone, this book suffered from unnecessary tangential remarks that detracted from the main point. All of the writing issues in this book could have been easily rectified with a good editor. I don't fault the authors as much as I do the publishers for that oversight.

I weakly recommend Part I of Nudge to the intellectually curious layman. The rest of the book I recommend only to those want to read a laundry list of political suggestions. (less)

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Jul 09, 2010

Harkinna rated it

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Who couldn’t use a little help accomplishing a pesky goal every now and again? I know I need help sometimes to get going on a story or making it to the gym. Nudge, by Richard Thaler and Cass Sunstein (of the University of Chicago) wrote the book as a manifesto to “improve decisions about health, wealth, and happiness.” Seeking to foster what they call a new movement of “libertarian paternalism,” the idea of the book melds individual freedom with the promotion by government of socially optimal de...moreWho couldn’t use a little help accomplishing a pesky goal every now and again? I know I need help sometimes to get going on a story or making it to the gym. Nudge, by Richard Thaler and Cass Sunstein (of the University of Chicago) wrote the book as a manifesto to “improve decisions about health, wealth, and happiness.” Seeking to foster what they call a new movement of “libertarian paternalism,” the idea of the book melds individual freedom with the promotion by government of socially optimal decisions, so that the citizen and the society both benefit.

If this sounds a bit different from the University of Chicago’s reputation as a libertarian, free-market school, the authors have no trouble admitting their lone-wolf status in the Economics department. According to them, because the people are only “nudged” into making better choices, their personal liberty (a paramount concern for economists) is preserved. The authors apply the Nudge model to a host of complex and seemingly intractable issues like Social Security, prescription drug coverage, and preserving the environment. For each issue, an alternative solution is explored and the reader is giving a glimpse of what life would be like if only we could be nudged into doing the right thing.

For example, how to get American workers to save more for retirement? Forget the intricate discussions on how people understand their disposable income or how America’s retirement system allocates costs to take care of the elderly; Nudge world simply makes retirement savings automatic, and forces people to opt out of the plans. Presumably, those too lazy to save (note the assumption) now would be too lazy to opt-out under the Nudge system.

The authors also show how people can use the Nudge model in their own lives. My personal favorite is their advocacy of the website stickk.com. It allows people to effectively nudge themselves. Say you want to lose 10 pounds and you think it will take a month to do so. Well, you go to stickk, sign-up for free, and set up your nudge. To motivate yourself, you offer to pay a friend of yours $10 week every week that you don’t hit your weight loss goal. After setting up a profile and putting $40 in your Stickk account, you weigh in once a week. If you make your goal, you get $10. If not, your friend gets a nice gift. Naturally, there are many permutations of this nudge. The key is making the nudge hurt enough so you feel beholden to it.

A quick read, the book offers some new and innovative ways at looking at public policy problems. Take this as your nudge to check it out from your library. (less)

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Jun 06, 2010

Ben Johnson rated it

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Our last camping trip gave me a chance to finish up Nudge, a social economics book by Richard H. Thaler and Cass R. Sunstein. The first part of the book lays out the subject of choice architecture and ways that influence can, or even has to be asserted by system designers and policy makers. The authors promote "libertarian paternalism," which seeks desirable results using nudges that largely maintain freedom of choice for participants. The remainder of the work presents numerous exampl...more

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May 23, 2010

Angie rated it

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This book was recommended as an introduction to libertarian paternalism in a lecture on behavioral economics by Nobel-prize winner Daniel Kahneman. Per wikipedia, libertarian paternalism is "a
political philosophy that believes the state can help you make the choices you would make for yourself—if only you had the strength of will and the sharpness of mind. But unlike 'hard' paternalists, who ban some things and mandate others, the softer kind aims only to skew your decisions, w...more
This book was recommended as an introduction to libertarian paternalism in a lecture on behavioral economics by Nobel-prize winner Daniel Kahneman. Per wikipedia, libertarian paternalism is "a
political philosophy that believes the state can help you make the choices you would make for yourself—if only you had the strength of will and the sharpness of mind. But unlike 'hard' paternalists, who ban some things and mandate others, the softer kind aims only to skew your decisions, without infringing greatly on your freedom of choice". It was a new concept to me, and I wanted to learn more. Based on Kahneman's recommendation and a column by George Will in Newsweek, I had expected something a bit more sophisticated---more political philosophy and less practical psychology. Although the authors mention libertarian paternalism frequently and devote the last third of the book to ways to affect social choices, there is little discussion of the basis for libertarian paternalism. . This is not a criticism, but readers should be alerted that this is not a book about libertarian paternalism. Disappointingly, the practical applications of libertarian paternalism discussed were pretty obvious once the concept is defined, although the authors seemed to dwell on them much too long, as if they needed extensive explanation.

Nudge is really more about improving decisions of all types, as the subtitle says. Judged on this basis, if you are new to the subject of how to make or influence decisions, you may enjoy it. It covers just about all the most famous experiments and the work on biases in decision-making of people like Tversky and Kahneman. It is a fascinating subject, but the discussions are so protracted that even if the material is new, I would suspect you might get as impatient as I did. The type of person who is likely to be attracted to this book is also likely to be intelligent enough not to need the implications of each idea spelled out in the detail provided here.

Readers with a long-standing interest in intelligent layman-level books on how we make decisions, such as Predictably Irrational or The Invisible Gorilla, are not likely to find much that is new in Nudge. I think there was one study in the book that was new to me. The applications to government "nudges" were not clever enough to sustain interest.

A real disappointment was the writers' inattention to precision in their writing, which grew to the point where I became reluctant to accept their facts. As an example, in the discussion of the Medicare Part D plan, the authors cited the low participation rate when the plan was introduced and said it would have been even worse except that federal retirees and many retirees of large corporations were "easily or automatically" enrolled. On the contrary, federal retirees and many retirees from large corporations already have prescription drug coverage and therefore Part D would not even be appropriate for them. I do not know if the authors did not know this or were simply imprecise on their writing, but the reader will come to the wrong conclusion in any case.

George Will's Newsweek column is a good summary of the book that can help you decide if you want to try it. However, I cannot recommend the audio version to anyone. The reader has a pleasant, clear voice, but too often he annoys with a Valley Girl-style intonation, ending factual statements with a rising questioning inflection. He also mispronounces words such as "mischievous", "laissez-faire", and "err". Both of these failings I consider inexcusable in a commercial recording.(less)

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Apr 03, 2010

Andrea rated it

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The latest fashion round town, I have to say I mostly liked it! Of course the authors and I have very different frameworks, they like capitalism and I do not. This is certainly not about bold change, equality, or preventing environmental disaster. But that said, their points about human behaviour were thought-provoking and useful I think, particularly in how to structure choice thoughtfully and in a way that the default leads to a good outcome, while ensuring that freedom to choose is not limite...more

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Mar 12, 2010

Jamie rated it

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The full title here is Nudge: Improving Decisions about Health, Wealth, and Happiness, and between them the two authors, Richard Thaler and Cass Sunstein, can claim a substantial amount of expertise in psychology, economics, law, and public policy. The stated goal of the book is to take lessons from these four areas and squish them into a concept that the authors dub "libertarian paternalism." The idea is that as libertarians the two believe in free information and free choice in all t...moreThe full title here is Nudge: Improving Decisions about Health, Wealth, and Happiness, and between them the two authors, Richard Thaler and Cass Sunstein, can claim a substantial amount of expertise in psychology, economics, law, and public policy. The stated goal of the book is to take lessons from these four areas and squish them into a concept that the authors dub "libertarian paternalism." The idea is that as libertarians the two believe in free information and free choice in all things public and private, but as students of behavioral economics and psychology they know that most people, most of the time, simply make bad decisions on account of our human nature. This is a book about how to fix that. Or at least improve things relative to the status quo.

Specifically, Thaler and Sunstein propose a series of "nudges" that spring from the way that choices are presented, framed, and informed. Early on they give the example of Carolyn, a fictional director of food services for a public school. Carlyn wants the students at her school to eat healthy, but she has limited control over menus so she can't just ban unhealthy food --nor does she necessarily think she should. But what she can do is nudge children into making healthier choices by changing how food is presented and what information kids are given about their choices. Putting carrots at eye level while chips are relegated to the bottom shelf, for example, would translate to more carrots being eaten. Or including milk with the value meal by default, even if kids can request to substitute soda for free. It's not a matter of forcing (read: legislating) students to eat their damn carrots, but rather creating what the authors call a helpful choice architecture that encourages the students to make better decisions on their own by side stepping (or even capitalizing on) well known foibles in human decision-making.

After a few introductory chapters to explore these foibles (think anchoring, framing, availability heuristic, loss aversion, status quo bias, etc.), Thaler and Sunstein run with the idea by showing how to create choice architectures that favor their libertarian paternalism approach to public policy and personal choices in everyday life. Specifically, they show how to nudge people into saving more money for retirement, investing money better, choosing a better prescription drug plan, increasing organ donation, protecting the environment, choosing the right school for their kids, and more. I have to admit that I enjoyed the early chapters on psychology and behavioral economics more than the later chapters, which became more nakedly political, but there are a lot of really solid ideas in here, even if they are of varying levels of practicality.

The authors also have a great style. They keep things friendly, funny, and engaging, with the occasional vignette, figure, or photograph to illustrate their points as needed. I was rarely bored, even when talk turned to traditionally tiresome subjects like 401(k) savings, prescription drug plans, and fuel economy. And the book is full of thoughtful insights on how human psychology plays into everyday decisions and, more importantly, how to avoid those kinks in the human brain that often lead to poor decisions about things that really matter.(less)

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Feb 14, 2010

Allisonperkel rated it

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Shelves: economics, design, non-fiction, social-science

Nudge was not what I expected. I was looking for something about marketing, personal impulse, and more on how the brain can fool you. However I got something much more compelling: Nudge.

Here our two authors take a general theory; choice architecture, and present it in a very simple, easy to understand package. At times the writing is humorous (other times their jokes fall pretty flat) but the meanings were never lost. Quite simply, with a little bit of retooling, we could have a pot...moreNudge was not what I expected. I was looking for something about marketing, personal impulse, and more on how the brain can fool you. However I got something much more compelling: Nudge.

Here our two authors take a general theory; choice architecture, and present it in a very simple, easy to understand package. At times the writing is humorous (other times their jokes fall pretty flat) but the meanings were never lost. Quite simply, with a little bit of retooling, we could have a potentially huge impact on how our society works (within certain realms). This is powerful and heady stuff indeed. And not being a fan of the Chicago School of Economics, I personally was blown away by the simple fact that I agreed with these two professors so very much.

At the 50,000 foot view, a nudge is a simple change that gently pushes the odds of someone doing, or not doing something, in the direction that the choice architect wants. A great example, not from this book, is placing items a store wants to move on the isle end caps. A better example, from this book, is having an opt-in organ donor policy in order to get more people to become donors and thus save more lives.

Sometimes the authors really hit home run after home run for example when they talk about the benefits of cap and trade and on increasing taxes on polluters. Bonus, they are all for complete transparency (yay!). Even better, they give examples of how complete transparency has helped in the past! This all pushes the reader toward seeing their point of view on the subject.

However other parts lost a little of the choice architecture luster. One chapter that I believe is brilliant was a stretch for choice architecture - and that was the chapter on same sex marriage. They argue that the states should get rid of marriage, create simpler, civil unions for all and let religious groups (or scuba groups) marry whomever they want. Now I'm all for this - government should not be in the business of marriage and everyone, gay, straight, etc should be able to have a civil union - a legally binding contract together, if they so chose. With all that goes with it (taxes, the right to visit each other in the hospital, etc). however this was a stretch for the main topics of the book. Still it was great to see a rational argument for giving everyone the same rights. As someone wise once said, everyone should have the right to marry the person they want to annoy (in a loving way) for the rest of their life!

Past that, the book also gave me some food for thought on school programs (so called vouchers) and the medicare drug option program (and how we could make it better). The latter is actually something that I'm starting to look at as my mom is trying to figure out what to do. She's a former pharmacist so if she's having trouble, you know the design is pretty bad! The simple proposals in Nudge would make life a ton easier. Simply import your current drug regime and get a breakdown on which plan best fits your needs. How much easier could you ask for? Total transparency with an easy mechanism to make things work.

Overall this was a great, quick read that left me wanting to read a little more deeply on this topic. This book, by design, only skims the surface. That's both its blessing and its failure. There were too many topics covered, briefly, and not enough meat at times. This left a few of the ideas feeling half formed; which I think is a disservice to the authors. I don't agree with all their ideas but their presentation was fair, well thought out and articulated from the position of wanting to help everyone - especially those who don't know what their best interests are (and we all fit into that category sometimes). An excellent read.(less)

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Nov 30, 2009

Shaun rated it

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Suppose that you were in charge of a school district and you were given the responsibility of making the students healthier. Thus, you have a few options:

1. Take away all of the candy and soda from the vending machines.
2. Serve the desserts in the lunch line first instead of last.
3. Make the students eat in the cafeteria instead of an off-campus period during lunch hour.
4. Close the vending machines down during the lunch hour.
5. Make a separate...more

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Nov 23, 2009

Ilana rated it

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Very interesting behavioral economics stuff in here, written in very lay terms. Ultimately, however, I found myself thinking again and again the concept of libertarian paternalism as a public policy option is extremely limited.

In terms of retirement security, for example, the last 20 years have pretty much proven that individuals cannot and will not prepare for retirement adequately on their own. Even with auto everything -- enrollment, escalation, investments, annuitization -- the D...more

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Oct 18, 2009

Anya rated it

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I don't understand why this is a runaway bestseller--it's just not that enthralling. I've been reading lots of books lately about behavioral psychology and economics: why people make the decisions we do, economically and in other life areas. But Predictably Irrational and Made to Stick both explore these questions in a much more engaging way.

"Nudge" is mostly concerned with how companies and governments can practice what the authors term "libertarian paternalism"-...more

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Oct 06, 2009

Matt rated it

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I'm a little torn-- I feel like I've read a lot of the stories from the psych section before, probably in _Freakanonics_ because I'm not a regular reader of pop economics texts, and it creates a(n unfounded?) suspicion that if you need to refer to one anecdote whenever you try to demonstrate a point, that one story is more exceptional than representative. I also felt like the actual wonky policy sections of this book-- the section on school choice, malpractice reform, and marriage-- were the wea...more

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Aug 07, 2009

Orton Family Foundation rated it

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If you’re like most Americans, chances are you made a New Year’s resolution to hit the gym, lay off the smokes or eat more green vegetables. And again, if you’re anything like most Americans, chances are you and your resolution parted ways sometime around Valentine’s Day. Take heart: you’re not alone, and it’s not that you actually want to spend more hours watching sitcom reruns—you just need a nudge.

Most humans are remarkably bad at making choices in their own best interest. We make...more

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Apr 26, 2009

Gordon rated it

Part of the flood of books on behavioral economics that have come out in the last few years, this book synthesizes a lot of excellent research in the field – including research by the authors themselves. The fathers of this whole field, based on research that first published in the 1970’s, are two Israeli-born academics, Amos Tversky and Daniel Kahneman. Kahneman won the Nobel prize in Economics in 2002 for this work (Tversky died in 1996). The authors of Nudge in fact co-authored a number of ...morePart of the flood of books on behavioral economics that have come out in the last few years, this book synthesizes a lot of excellent research in the field – including research by the authors themselves. The fathers of this whole field, based on research that first published in the 1970’s, are two Israeli-born academics, Amos Tversky and Daniel Kahneman. Kahneman won the Nobel prize in Economics in 2002 for this work (Tversky died in 1996). The authors of Nudge in fact co-authored a number of papers with Kahneman. The gist of their message is that human beings are not rational in their economic decision-making, but are irrational in some very predictable ways. Thaler and Sunstein take this knowledge about predictable errors, explain it further, and propose ways that people can be “nudged” into making better decisions. They call this approach “libertarian paternalism”. It’s libertarian because it allows choice. It’s paternalistic in that it structures those choices and/or presents those choices in a way that is judged to be “better” for the chooser.

Example: Left to their own devices about saving for retirement, most Americans mess it up. Unless they’re lucky enough to have an employer with a “defined benefit” pension plan, they are very likely to end up with not much more than Social Security when they retire. The reasons are that they:
• Save too little
• Invest in low return assets like money market funds
• Allocate their assets poorly so that, if they do stray into investing in higher return assets like equities, then they typically diversify too little (investing it all in their employer’s stock is a common mistake) and chase yesterday’s hot performer (which is probably next year’s dog)
• Run up big expenses and tax bills by trading too much or investing in mutual funds with high management expenses
• Fail to take advantage of retirement programs offered to them by their employers, such as 401K’s with a matching employer contribution

All of these errors are predictable, say Thaler and Sunstein. We save too little because saving involves pain today for gain tomorrow – in contrast with, say, eating ice cream, which is gain today for pain tomorrow. We make bad asset allocation decisions because it’s complicated as a result of having too many choices and a lot of uncertainty about what outcomes those choices will result in. We chase yesterday’s hot performer because we assume tomorrow will be just like yesterday and also because we want to run with the crowd. We fail to take advantage of employer-provided retirement matches because if the default choice in the program is choosing “no thanks”, then we stick with that choice because of our persistent inertia.

The above behaviors are well-studied by economists, psychologists and sundry other social scientists. The causes of these behaviors have names like the availability heuristic (choosing outcomes that are easy to visualize), the status quo bias (inertia), social contagion (acting like lemmings) and so on. The labels may not be familiar, but the behaviors themselves are all very easy to recognize because we all suffer from them. Or to be more precise, the behaviors are easy to recognize in others, even if we fail to recognize them in ourselves.

Fortunately, there are some easy ways of working around these problems – if we recognize that the underlying behaviors are baked into all of us, but can be “nudged” into new directions. Take retirement saving. Instead of serving up a plan with so many choices that employees don’t even bother signing up, the default choice in these plans should be that the employee is automatically enrolled in a standard plan based on the employee’s age, which provides for a reasonable asset allocation (say, between stocks and bonds) based on the employee’s likely age of retirement. This plan would also have low management fees and be tax-exempt. Of course, employees would still have the ability to over-ride these default choices, but the vast majority would be unlikely to do so – due once again to the inertia factor.

The authors provide scores of these kinds of examples, from prescription drug programs to organ donation campaigns to predicting the outcome of sports games. Some of these examples are targeted at individual consumers, some are more relevant for business executives, and still others are about public policy. It’s very well-written, well supported by research, and relevant to just about anyone who ever has to make a decision. All of which makes for a pretty good page-turner of a book.
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Apr 25, 2009

Sarah rated it

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As someone who agonizes over some decisions, goes with my gut on others, and actively avoids making choices in certain areas in my life, I was intrigued by this book's premise. In essence, the authors explore the external forces guiding our decision-making and proposes ways to channel those forces into making wiser life choices.

Having finished it, I am not convinced that I am substantially better equipped to make wiser choices. However, I am glad to have read the book, if only for ...more

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