Nudge: Improving Decisions About Health, Wealth, and Happiness

This is an interesting book to read, with some decent ideas on how things come to happen, It reads a little dry at times but overall it is worth the time spent and does make one think of a differnet approach to persuasion and public influence.

What I expected were interesting perspectives on a series of examples that would illustrate various aspects of their thesis. The examples would start off with promise, but the authors nattered on until it was just too irritating. I would then jump to the next example - either immediately or when I next picked up the book - but each one failed in the same way.

I still can't explain how such interesting topics were rendered so trite.

Before I get to the book review, note that Thaler has done an excellent 1-hour talk about this book for Authors@Google, which is well worth your time whether or not you actually read Nudge. It's much better than the videos on Amazon.

The book. Thaler & Sunstein define their use of the word "nudge" on page 6: "A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predicable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not." The authors then go on, in the first part of the book (roughly 100 pages) to give examples of situations in which nudges can and should be used. Some of the examples are trivial: people eat 53% more old and stale popcorn if you serve it in a big bucket (the popcorn was stale enough that it squeaked when chewed). But many of the examples are significant, and concern people's persistent inability to make good decisions (as defined by themselves) in areas like eating and saving.

Part II of the book (roughly 55 pages) has 4 chapters focused specifically on money. The first of these chapters discusses a program of theirs called "Save More Tomorrow" in which employees can fill out a form to increase their retirement savings in sync with future pay rises. In the example the authors give, those in the program went from a savings rate of 3.5% to 13.6% in under four years. This quadrupling was achieved with nothing more than a nudge. The other three chapters in this part are about: the naivite of many people (even nobel prize winning economists) in making their investment decisions, credit cards and credit generally, and a brief case study of the Swedish social security privitization.

Part III ("Health", 40 pages) has three chapters. The first is about the well-intentioned but badly-designed medicare "Part D" prescription drug program in the US; this will not be very interesting to non-Americans. Next is an 8-page chapter on using nudges to increase organ donation (by changing the default to donation and requiring the person to opt-out). The third Health chapter, somewhat oddly, is about the environment, and Thaler & Sunstein present some examples of nudges, such as an orb that glows red when you use a lot of electricity, which can help people to be more energy efficient. To me, it seems that the world's environmental problems are unlikely to be solved by mere nudges, but I guess they won't actually hurt.

Part IV ("Freedom" 30 pages) is a bit of a misfit. It has three chapters, the first of which is about school vouchers, the second of which advocates a change in the law which would allow patients to sign away their ability to sue doctors for medical malpractice, and the third advocates a redefinition of government involvement in sanctioning marriage. These three together read like general interest libertarian essays, strangely disconnected from the rest of the book. They're good, but a reader could skip them without losing the thread of the book.

Finally, there is Part V ("Extensions and Objections", 25 pages). Every book of serious nonfiction should contain something like Nudge's Part V. Thaler & Sunstein address criticisms of their positions in a serious and thoughtful manner. My impression is that the authors are really putting up the most serious objections that they've faced at seminars and talks, rather than mere straw man arguments. There's no point in my describing these in this review, but I think that the existence of this part says good things about the intellectual tone of the book, and I enthusiastically recommend it.

If you've never hear of "choice architecture," it isn't because you haven't experienced it. From your 401(k) enrollment form to the location of food at the company cafeteria (heck, even the menu design), every choice you make (or don't make) results partly from a decision someone else (the choice architect) has made for you. Even while I was still reading Nudge, I found new ways of viewing day-to-day activities which have created both new opportunities and interesting challenges for me personally and professionally.

Nudge is the rare book that keeps you thinking after you read it. Rarer still for a book that is inherently academic. But, with its real world examples, Thaler and Sunstein bring libertarian paternalism to life. Wouldn't it be a hoot of those who could take advantage actually did so? I know I am going to try.

Beyond Paycheck to Paycheck: A Conversation About Income, Wealth, and the Steps in Between (Total Candor)

The idea that good government -- effective, productive, protective -- is possible, and even desireable, seems to drive libertarians and certain conservatives up the wall. It may have something to do with an overweening devotion to liberty, but I think it might have most to do with the fact that some people profit from the mistakes of others, and anti-governmental types want more individual profit. They enjoy the chaos and competition of an unfettered marketplace, which is particularly beneficial to those who depend on investments rather than a salary.

But when we consider the damage done to our society over the past eight years by a government that doesn't intervene when health and safety and livelihoods are at stake, we realize that liberty must be limited to some extent. The authors of this book are not necessarily suggesting we limit liberty, yet their critics have wasted no time decrying their liberal pedigrees and accusing them of promoting governmental intrusion into spheres of life that should remain private.

The authors are simply showing that when governments and companies help citizens and employees make better decision, when taxpayer dollars and corporate profits are channeled into such programs, everyone benefits, just as families do when parents present better choices to their children. I realize this statement will trigger another howl from libertarian conservatives about political elitists and do-gooders and the nanny state and the infantilization of our culture, but these generalizations are both selfish and cynical. Even good people need help at times, and we are morally bound to help them whether or not you may wish to.

The authors' detailed examples and reasoning provide excellent arguments for the kind of government we need. I hope everyone will read this useful, positive, and important book.