Aug

25

Nudge by Richard Thaler & Cass Sunstein

Filed Under Reading Room 

I first heard about Nudge after reading a Time article earlier this year that said it was on Obama’s reading list, along with Influence by Robert Cialdini. I’m always interested to know the influences behind the people who influence me.

Nudge: Improving Decisions About Health, Wealth, and Happiness by University of Chicago professors and longtime buds Richard H. Thaler and Cass R. Sunstein, is a beginner’s guide to understanding how to influence behavior. Or, more specifically, in the words of the authors, this is a book about “libertarian paternalists” developing the right “choice architecture.”

“Libertarian paternalism” says that we should all have individual freedom of choice, and it is okay for private and public institutions to affect behavior.

“Choice architecture” is the title given to the people who affect our choices. For example, those who design a voting ballot, grocery store aisles or retirement applications. “A choice architect has the responsibility for organizing the context in which people make decisions.”

My Highlights From Nudge
“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”

“Setting default options, and other similar seemingly trivial menu-changing strategies, can have huge effects on outcomes, from increasing savings to improving health care to providing organs for lifesaving transplant operations.”

“In the language of this book, anchors serve as nudges. We can influence the figure you will choose in a particular situation by ever-so-subtly suggesting a starting point for your thought process.”

“A good way to increase people’s fear of a bad outcome is to remind them of a related incident in which things went wrong; a good way to increase people’s confidence is to remind them of a similar situation in which everything worked out for the best.”

“Setting the best possible defaults will be a theme we explore often in the course of this book.”

“Collaborative filtering is an effort to solve a problem of choice architecture. If you know what people like you tend to like, you might well be comfortable in selecting products you don’t know, because people like you tend to like them.”

“Structuring choice sometimes means helping people to learn, so they can later make better choices on their own.”

“If the underlying decision is difficult and unfamiliar, and if people do not get prompt feedback when they err, then it’s legitimate, even good, to nudge a bit.”

“Framing matters: people are more likely to engage in self-examinations for skin and breast cancer if they are told not about the reduced risk if they do so but about the increased risk if they fail to do so.”

“Random default plan assignment is a terrible idea.”

“The harder it is to register your unwillingness to participate, the less libertarian the policy becomes.”

“Recall that people like to do what most people think it is right to do; recall too that people like to do what most people actually do.”

The authors summarize six principles of good choice architecture; the acronym spells “NUDGES.”

iNcentives
Understand mappings
Defaults
Give feedback
Expect error
Structure complex choices

Overall, the book is a decent read, and it should be a must-read for leaders in government.

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