Jeanne's Reviews > Nudge: Improving Decisions About Health, Wealth, and Happiness

Change is hard, yet there are things that can make it easier – or more difficult. I don't buy potato chips, as I can't just eat just one, and a quart of ice cream sitting quietly in my freezer is not quiet and, instead, seems to scream my name.

There are also things that we can do at the institutional or governmental level to facilitate good decision-making. Absence of intentional influence is not the same as no influence.

Nudge: Improving Decisions about Health, Wealth, and Happiness was written by Richard Thaler, who won the Nobel Prize in Economics, and Cass Sunstein, an attorney and director of Harvard's Program on Behavioral Economics and Public Policy. Both come from the school of thought, behavioral economics, which believes that we are not Econs (rational beings slavishly following economic principles), but Humans. We Humans are often misled by cognitive and perceptual biases, overconfident about our abilities (most of us believe ourselves above average), and loss averse in irrational ways. Fundamentally, we are not Computers, but irrational beings.

We are also beings faced with making many very difficult decisions: choosing health insurance plans, saving energy (and the planet), eating in health-promoting ways, investing wisely, and choosing a home mortgage are among the choices discussed in Nudge.

Thaler and Sunstein describe themselves as libertarian paternalists. They want to preserve choice and the freedom to choose (libertarian), while also believing "it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier, and better" (p. 5). Nudges are helpful, but Thaler and Sunstein believe we should be allowed to ignore nudges.

Better governance requires less in the way of government coercion and constraint, and more in the way of freedom to choose. If incentives and nudges replace requirements and bans, government will be both smaller and more modest. So, to be clear: we are not for bigger government, just for better governance. (p. 14)

Here are places where a nudge might be useful. Rather than making me make my retirement choice at random – should I contribute more to stocks or mutual funds? – why not recommend an option based on my age at hire, the number of years I expect to work, and the degree of risk I believe acceptable? When my employer annually asks me what charities I would like to automatically donate to, why not repopulate these fields with last year's choices (my employer leaves these blank)? I could still change my charities or amounts donated. Why not tell my parents which prescription drug plan would be best for them based on their current medications, expected future health, and willingness to accept risk? Why not tell college students that they tend to overestimate the amount that other students drink, thus drinking more themselves?

Although I was curious about the various kinds of nudges that Thaler and Sunstein would prescribe, I was also interested in their descriptions of politics, especially as I have been confused and dismayed by our present administration and why they attracted any votes. I haven't found Jonathon Haidt's books on political values terribly convincing or helpful. Thaler and Sunstein helped:

Democratic Party has shown a great deal of enthusiasm for rigid national requirements and for command-and-control regulation. Having identified serious problems in the private market, Democrats have often insisted on firm mandates, typically eliminating or at least reducing freedom of choice. Republicans have responded that such mandates are often uninformed or counterproductive—and that in light of the sheer diversity of Americans, one size cannot possibly fit all. (pp. 255-256)

Of course, Thaler and Sunstein are right, but also wrong. Democrats put limits on pollution; increase taxes to support education, the arts, and anti-poverty programs; and support gun control and affirmative action. Although Republicans want no part of the above – at least as Democrats frame solutions – Republicans focus on other types of control, more social as opposed to environmental (e.g., abortion, feminist issues, stem cell research, three strikes prison terms).

In other words, Thaler and Sunstein's delineation doesn't really hold up.

In sum, though, Nudge was clear, interesting, and helpful. Time well used.