Nudge (book)
Encyclopedia
Nudge: Improving Decisions about Health, Wealth, and Happiness is a book written by Richard Thaler
and Cass Sunstein
. The book draws on research in psychology
and behavioral economics to defend libertarian paternalism and active engineering of choice architecture
.
The book received mixed reviews. The Guardian described it as "never intimidating, always amusing and elucidating: a jolly economic romp but with serious lessons within." But The Sunday Times called it a "very, very dull read" and others contended that the many policy proposals it contained became "a bit wearisome". It was named a "Best Book of the Year" by The Economist
.
view of human beings "that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists."
They cite many examples of research which raise "serious questions about the rationality of many judgments and decisions that people make". They state that, unlike members of homo economicus, members of the species homo sapiens make predictable mistakes because of their use of heuristics, fallacies, and because of the way they are influenced by their social interactions.
The other system of thought is the Reflective System. This system is deliberate and self-conscious. It is the one at work when people decide which college to attend, where to go on trips, and (under most circumstances) whether or not to get married.
These include:
Because human beings are subject to these various errors and flawed thinking patterns, Sunstein and Thaler endorse libertarian paternalism.
and paternalism
.
Sunstein and Thaler state that "the libertarian aspect of our strategies lies in the straightforward insistence that, in general, people should be free to do what they like-and to opt out of undesirable arrangements if they want to do so". The paternalistic portion of the term "lies in the claim that it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better".
Choice architecture
describes the way in which decisions are influenced by how the choices are presented. It is in arranging the choice architecture in a certain way that individuals can be nudged in a certain way without taking away their freedom of choice. A simple example of a nudge would be placing healthy foods in a school cafeteria at eye level, while putting less healthy junk food
in harder to reach places. Individuals are not prevented from eating whatever they want, but the arranging of the food choices in that way has the effect of decreasing consumption of junk food and increasing consumption of healthier foods.
, health
, the environment
, schools, and marriage
. They believe these problems can at least be partially addressed by improving the choice architecture.
. They state that "in 2005 the personal savings rate for Americans was negative for the first time since 1932 and 1933-the Great Depression
years".
One change they offer is creating better default plans for employees. Employees would be able to adopt any plan they like, but, if no action is taken, they would automatically be enrolled in an expertly designed program. They also propose what they refer to as the "Save More Tomorrow" plan. This is to address the issue of people having the desire to save more, yet procrastinating on actually doing so. This program would invite "participants to commit themselves, in advance, to a series of contribution increases timed to coincide with pay raises".
. Thaler and Sunstein state that "on some dimensions Bush was on the right track" with the plan, but that, "as a piece of choice architecture...it suffered from a cumbersome design that impeded good decision making". Specifically, they think that default choices for programs should not have been random, and that beneficiaries of the program were not given adequate resources to deal with the number of choices they were faced with. They think that seniors who did not sign up for a program should have one assigned to them, and that, yearly, they should be mailed an itemized list of all drugs they had used and all of the fees they incurred. This information would be freely available online, where beneficiaries could easily compare their programs with other similar ones.
Sunstein and Thaler also propose a way to increase organ donation
rates in the United States. They argue that a mandated choice program should be put in place, where, in order for someone to renew their drivers license, they must say whether or not they would like to be an organ donor. They also advocate the creation of websites which would suggest that the wide community supports organ donation in order to nudge people into becoming organ donors themselves.
, in a review for Newsweek
magazine, stated that "nudges have the additional virtue of annoying those busybody, nanny-state liberals who, as the saying goes, do not care what people do as long as it is compulsory".
British journalist Bryan Appleyard
, in a review for The Times
, was critical of the book, describing it as a "very, very dull read, a dogged march through social policies with boring lists of what nudges should be imposed and how" and that "what the book needs is not more examples but more elaboration of the central idea".
Christopher Shea, for The Washington Post
wrote that "In the end, it must be said, the profusion of proposals in Nudge, however worthy, and the countless summaries of studies supporting them grow a bit wearisome. As influential as the book is likely to be, it's hard to imagine it pushing its way alongside Malcolm Gladwell
's Blink
(inferior social science, far breezier style) on the bestseller list".
Elizabeth Kolbert
writing for The New Yorker
held reservations about some of the book's conclusions when she wrote that
In July 2011, a subgroup of the UK House of Lords
Science and Technology Committee concluded a year-long review of behavioral change based on 148 written submissions and evidence from 70 witnesses. The review was led by Baroness Neuberger
. In an interview with The Guardian
newspaper Baroness Neuberger reports finding “precious little” evidence for effective impact of “Nudge”:
Richard Thaler
Richard H. Thaler is an American economist and the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business...
and Cass Sunstein
Cass Sunstein
Cass R. Sunstein is an American legal scholar, particularly in the fields of constitutional law, administrative law, environmental law, and law and behavioral economics, who currently is the Administrator of the White House Office of Information and Regulatory Affairs in the Obama administration...
. The book draws on research in psychology
Psychology
Psychology is the study of the mind and behavior. Its immediate goal is to understand individuals and groups by both establishing general principles and researching specific cases. For many, the ultimate goal of psychology is to benefit society...
and behavioral economics to defend libertarian paternalism and active engineering of choice architecture
Choice architecture
Choice architecture describes the way in which decisions are influenced by how the choices are presented , and is a term used by Cass Sunstein and economist Richard Thaler in the 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness...
.
The book received mixed reviews. The Guardian described it as "never intimidating, always amusing and elucidating: a jolly economic romp but with serious lessons within." But The Sunday Times called it a "very, very dull read" and others contended that the many policy proposals it contained became "a bit wearisome". It was named a "Best Book of the Year" by The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
.
Human behavior
One of the main justifications for Thaler's and Sunstein's endorsement of libertarian paternalism in Nudge draws on facts of human nature and psychology. The book is critical of the homo economicusHomo economicus
Homo economicus, or Economic human, is the concept in some economic theories of humans as rational and narrowly self-interested actors who have the ability to make judgments toward their subjectively defined ends...
view of human beings "that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists."
They cite many examples of research which raise "serious questions about the rationality of many judgments and decisions that people make". They state that, unlike members of homo economicus, members of the species homo sapiens make predictable mistakes because of their use of heuristics, fallacies, and because of the way they are influenced by their social interactions.
Two systems of thought
The book describes two systems that characterize human thought. Sunstein and Thaler refer to these as the "Reflective System" and the "Automatic System". The Automatic System is "rapid and is or feels instinctive, and it does not involve what we usually associate with the word thinking". Instances of the Automatic System at work include smiling upon seeing a puppy, getting nervous while experiencing air turbulence, and ducking when a ball is thrown at you.The other system of thought is the Reflective System. This system is deliberate and self-conscious. It is the one at work when people decide which college to attend, where to go on trips, and (under most circumstances) whether or not to get married.
Fallacies and biases
Because of these differences and conflicts between these systems, people are often subject to making mistakes that are the result of widely occurring biases, heuristics, and fallacies.These include:
- AnchoringAnchoringAnchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.-Background:...
: a cognitive bias wherein one relies too heavily on one trait or piece of information. An example would be a resident of ChicagoChicagoChicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
who is asked to guess the population of Milwaukee. Knowing that Milwaukee is a major city, but certainly not as large as Chicago, the person would take the population of Chicago (roughly 3 million) and divide it by, say, three (arriving at one million). A resident of Green Bay (which has a population of around 100,000) might know that Milwaukee is larger than Green Bay, and triple the population of their home city to arrive at a guess (of 300,000). The difference in guesses of people because of their geographical location is an instance of anchoring. The real population of Milwaukee is about 580,000.
- Availability heuristicAvailability heuristicThe availability heuristic is a phenomenon in which people predict the frequency of an event, or a proportion within a population, based on how easily an example can be brought to mind....
: when people predict the frequency of an event based on how easily an example can be brought to mind. The authors state that this could help explain why people think that homicides occur more than suicides, as examples of homicides are more readily available. The availability heuristic can have negative effects in business and politics, because people will overstate risks, resulting in people purchasing unnecessary insurance, or governments pursuing social goals at the expense of other more fruitful ones.
- Representativeness heuristicRepresentativeness heuristicThe representativeness heuristic is a psychological term describing a phenomenon wherein people judge the probability or frequency of a hypothesis by considering how much the hypothesis resembles available data as opposed to using a Bayesian calculation. While often very useful in everyday life, it...
: where people judge the probability or frequency of a hypothesis by considering how much the hypothesis resembles available data. An example would be perceiving meaningful patterns in information that is in fact random. These include false accounts of "cancer clusters" and the common belief in basketball that players can get "hot". Due to the number of shots taken, players are bound to have times when they score many shots in a row, but basketball fans wrongly believe that a player that has just made a series of shots is more likely to make their next shot.
- Status quo biasStatus quo biasThe status quo bias is a cognitive bias for the status quo; in other words, people tend not to change an established behavior unless the incentive to change is compelling...
: this is when people are very likely to continue a course of action since it has been traditionally the one pursued, even though this course of action may clearly not be in their best interest. An example of the status-quo bias at work would be when magazine companies offer trials of their magazines for free, but then, after the trial has ended, continue to send magazines and charge the customer until he or she actively ends the subscription. This leads to many people receiving and paying for magazines they do not read.
- Herd mentalityHerd mentalityHerd mentality describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. Examples of the herd mentality include stock market trends, fashions in apparel, cars, taste in music, home décor, etc...
: people are heavily influenced by the actions of others. Sunstein and Thaler cite a famous study by Solomon AschSolomon AschSolomon Eliot Asch , also known as Shlaym, was an American Gestalt psychologist and pioneer in social psychology.-Early life and education:...
where people, due to peer pressurePeer pressurePeer pressure refers to the influence exerted by a peer group in encouraging a person to change his or her attitudes, values, or behavior in order to conform to group norms. Social groups affected include membership groups, when the individual is "formally" a member , or a social clique...
, answer certain questions in a way that was clearly false (such as saying that two lines are the same length, when they clearly are not).
Because human beings are subject to these various errors and flawed thinking patterns, Sunstein and Thaler endorse libertarian paternalism.
Libertarian paternalism
Libertarian paternalism is the union of two political notions that are commonly viewed as being at odds: libertarianismLibertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
and paternalism
Paternalism
Paternalism refers to attitudes or states of affairs that exemplify a traditional relationship between father and child. Two conditions of paternalism are usually identified: interference with liberty and a beneficent intention towards those whose liberty is interfered with...
.
Sunstein and Thaler state that "the libertarian aspect of our strategies lies in the straightforward insistence that, in general, people should be free to do what they like-and to opt out of undesirable arrangements if they want to do so". The paternalistic portion of the term "lies in the claim that it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better".
Choice architecture
Choice architecture
Choice architecture describes the way in which decisions are influenced by how the choices are presented , and is a term used by Cass Sunstein and economist Richard Thaler in the 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness...
describes the way in which decisions are influenced by how the choices are presented. It is in arranging the choice architecture in a certain way that individuals can be nudged in a certain way without taking away their freedom of choice. A simple example of a nudge would be placing healthy foods in a school cafeteria at eye level, while putting less healthy junk food
Junk food
Junk food is an informal term applied to some foods that are perceived to have little or no nutritional value ; to products with nutritional value, but which also have ingredients considered unhealthy when regularly eaten; or to those considered unhealthy to consume at all...
in harder to reach places. Individuals are not prevented from eating whatever they want, but the arranging of the food choices in that way has the effect of decreasing consumption of junk food and increasing consumption of healthier foods.
Policy recommendations
Sunstein and Thaler use their notions of nudges within the context of choice architecture to propose policy recommendations that they believe are in the spirit of libertarian paternalism. They have recommendations in the areas of financeFinance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, health
Health
Health is the level of functional or metabolic efficiency of a living being. In humans, it is the general condition of a person's mind, body and spirit, usually meaning to be free from illness, injury or pain...
, the environment
Environmental policy
Environmental policy is any [course of] action deliberately taken [or not taken] to manage human activities with a view to prevent, reduce, or mitigate harmful effects on nature and natural resources, and ensuring that man-made changes to the environment do not have harmful effects on...
, schools, and marriage
Marriage
Marriage is a social union or legal contract between people that creates kinship. It is an institution in which interpersonal relationships, usually intimate and sexual, are acknowledged in a variety of ways, depending on the culture or subculture in which it is found...
. They believe these problems can at least be partially addressed by improving the choice architecture.
Retirement saving
Thaler and Sunstein point out that many Americans are not saving enough for retirementRetirement
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to...
. They state that "in 2005 the personal savings rate for Americans was negative for the first time since 1932 and 1933-the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
years".
One change they offer is creating better default plans for employees. Employees would be able to adopt any plan they like, but, if no action is taken, they would automatically be enrolled in an expertly designed program. They also propose what they refer to as the "Save More Tomorrow" plan. This is to address the issue of people having the desire to save more, yet procrastinating on actually doing so. This program would invite "participants to commit themselves, in advance, to a series of contribution increases timed to coincide with pay raises".
Health care
The book contains an analysis of the Bush administration program Medicare Part DMedicare Part D
Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and went into effect on January 1, 2006.- Eligibility and...
. Thaler and Sunstein state that "on some dimensions Bush was on the right track" with the plan, but that, "as a piece of choice architecture...it suffered from a cumbersome design that impeded good decision making". Specifically, they think that default choices for programs should not have been random, and that beneficiaries of the program were not given adequate resources to deal with the number of choices they were faced with. They think that seniors who did not sign up for a program should have one assigned to them, and that, yearly, they should be mailed an itemized list of all drugs they had used and all of the fees they incurred. This information would be freely available online, where beneficiaries could easily compare their programs with other similar ones.
Sunstein and Thaler also propose a way to increase organ donation
Organ donation
Organ donation is the donation of biological tissue or an organ of the human body, from a living or dead person to a living recipient in need of a transplantation. Transplantable organs and tissues are removed in a surgical procedure following a determination, based on the donor's medical and...
rates in the United States. They argue that a mandated choice program should be put in place, where, in order for someone to renew their drivers license, they must say whether or not they would like to be an organ donor. They also advocate the creation of websites which would suggest that the wide community supports organ donation in order to nudge people into becoming organ donors themselves.
Reception
George WillGeorge Will
George Frederick Will is an American newspaper columnist, journalist, and author. He is a Pulitzer Prize-winner best known for his conservative commentary on politics...
, in a review for Newsweek
Newsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
magazine, stated that "nudges have the additional virtue of annoying those busybody, nanny-state liberals who, as the saying goes, do not care what people do as long as it is compulsory".
British journalist Bryan Appleyard
Bryan Appleyard
Bryan Appleyard is a British journalist and author.- Career :Appleyard was educated at Bolton School and King’s College, Cambridge and after graduating with a degree in English, he became Financial News Editor and Deputy Arts Editor from 1976 to 1984 at The Times. Subsequently he became a...
, in a review for The Times
The Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...
, was critical of the book, describing it as a "very, very dull read, a dogged march through social policies with boring lists of what nudges should be imposed and how" and that "what the book needs is not more examples but more elaboration of the central idea".
Christopher Shea, for The Washington Post
The Washington Post
The Washington Post is Washington, D.C.'s largest newspaper and its oldest still-existing paper, founded in 1877. Located in the capital of the United States, The Post has a particular emphasis on national politics. D.C., Maryland, and Virginia editions are printed for daily circulation...
wrote that "In the end, it must be said, the profusion of proposals in Nudge, however worthy, and the countless summaries of studies supporting them grow a bit wearisome. As influential as the book is likely to be, it's hard to imagine it pushing its way alongside Malcolm Gladwell
Malcolm Gladwell
Malcolm Gladwell, CM is a Canadian journalist, bestselling author, and speaker. He is currently based in New York City and has been a staff writer for The New Yorker since 1996...
's Blink
Blink (book)
Blink: The Power of Thinking Without Thinking is a 2005 book by Malcolm Gladwell. It presents in popular science format research from psychology and behavioral economics on the adaptive unconscious; mental processes that work rapidly and automatically from relatively little information...
(inferior social science, far breezier style) on the bestseller list".
Elizabeth Kolbert
Elizabeth Kolbert
Elizabeth Kolbert is an American journalist and author. She is best known for her 2006 book Field Notes from a Catastrophe, and as an observer and commentator on environmentalism for The New Yorker magazine.-Youth and education:...
writing for The New Yorker
The New Yorker
The New Yorker is an American magazine of reportage, commentary, criticism, essays, fiction, satire, cartoons and poetry published by Condé Nast...
held reservations about some of the book's conclusions when she wrote that
"many of the suggestions in “Nudge” seem like good ideas, and even, as with “Save More Tomorrow,” practical ones. The whole project, though, as Thaler and Sunstein acknowledge, raises some pretty awkward questions. If the “nudgee” can’t be depended on to recognize his own best interests, why stop at a nudge? Why not offer a “push,” or perhaps even a “shove”? And if people can’t be trusted to make the right choices for themselves how can they possibly be trusted to make the right decisions for the rest of us?"
In July 2011, a subgroup of the UK House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
Science and Technology Committee concluded a year-long review of behavioral change based on 148 written submissions and evidence from 70 witnesses. The review was led by Baroness Neuberger
Julia Neuberger, Baroness Neuberger
Julia Babette Sarah Neuberger, Baroness Neuberger, DBE is a rabbi, social reformer and member of the House of Lords, where she takes the Liberal Democrat whip, although she will be resigning from the party and joining the Crossbenches from September 2011, once she becomes the full-time Senior...
. In an interview with The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
newspaper Baroness Neuberger reports finding “precious little” evidence for effective impact of “Nudge”:
"Ýou need more than just nudge ... Behavioural change interventions appear to work best when they're part of a package of regulation and fiscal measures ... all politicians love quick fixes ... one of the problems with all of this is if you really want to change people's behaviour it takes a very long time … you have to look at a 20- to 25-year span before you get a full change of behaviour."