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Book Review: Nudge: Improving Decisions About Health, Wealth and Happiness

31st July
2008
written by kevindonovan

Nudge is a book which, in the 24 hours since I purchased it, has transformed how I think about the world. Co-authored by two University of Chicago professors, behavioral economist Richard Thaler and lawyer Cass Sunstein, Nudge brings a superb policy approach to the table. Although the name is unwieldy, “libertarian paternalism” has solved a major internal debate of mine.

Representative democracy is great. The devolution of power allows for freedoms which are often restricted in other forms of government. People’s ability to choose and influence government allows impersonal institutions to respond to personal needs. I’m a fervent believer in personal choice and support many civil libertarian causes.

At the same time, people can make some really dumb choices. Often, when I hear or witness some particularly uniformed opinions or decision, I’ll catch myself snottily thinking “…and these people get to vote? Great.” I’ll frequently voice support of a technocracy where the most skilled and brightest make decisions, insulated from the ignorant masses.

Yet, these two approaches are opposed to each other and I’ve struggled to make sense of my dual support. Luckily, Thaler and Sunstein have lent their considerable intellect to this problem and brought resolution in the form of libertarian paternalism which uses “architects of choice” to “nudge” people towards better decisions. The bad decisions people make are often the result of conditions outside their control: time restraints, financial limitations and a host of psychological phenomena which foster poor choices. Libertarian paternalism aims to create situations where it is easier to make the best choice while not limiting other options (as mandates would do).

Nudging recognizes that people respond to much more than incentives, as traditional economics would have you believe. Nudges recognize the complex array of options which make simple tax cuts or prison penalties unlikely to create the best outcomes. Nudges come down to designing systems which help people reach the best outcome. Full of examples, the book shows that seemingly innocent differences in order or defaults can have profound differences in outcomes.

Nudge is divided into three parts: an explanation of the theory, a series of policy recommendations, and responses to critics. The first portion is definitely my favorite as it lays the intellectual foundation for this idea which can play a part in many policy debates. Perhaps since I fall prey to a number of the blunders they outline (I’m young, I’ve got nothing to worry about!), I was not as enthralled with their discussions of how to improve credit markets or pharmaceutical plans, but I certainly hope that the right people do read those parts because the plans outlined to help millions are incredibly important additions to the national debate on issues as broad as environmental protection to investing to school choices.

Libertarian paternalism recognizes that humans are fallible and need help. It knows that experts have the experience to help. But it contrast to traditional paternalism, it recognizes the failings of government mandate and that knowledge is dispersed and people, if given appropriate settings, can make the best decisions for themselves.  So, allow me to nudge you towards their website or Amazon page where you can purchase it for yourself.

[Also by Sunstein is Infotopia.]

Tags: , , , ,
politics
  • http://nelson.freeculture.org Nelson

    In the last line, you mean Sunstein, not Sunstain. I would expect a sunstain to be something like a sunspot, only more permanent.

  • http://www.blurringborders.com Kevin

    Haha good point. Proofreading is boring and I often quit half-way through…

  • http://blog.georgetownvoice.com Will

    This sounds really appealing. Like you, I’m torn between a love for democracy and disappointment with what democracy sometimes produces.

  • chris kelley

    Thanks for blogging about this. Read a little piece about it in WSJ or Newsweek and thought it was fascinating how smart minds can do little things to educate the less educated. Your buddy from Indonesia was also recently mentioned in the WSJ from 7/30 or 7/31. It referenced the Gates foundation trying to imitate his successes with local banking, etc in developing nations as part of its efforts to eliminate poverty. Feature article in WSJ, don’t know if you have access though.

  • chris kelley

    *Bangladesh (not Indonesia)

  • http://www.blurringborders.com Kevin

    Can’t find anything at WSJ.com about Quadir… can you?

  • http://blurringborders.com/2008/08/19/a-better-way-for-the-iphones-kill-switch-nudges/ A Better Way for the iPhone’s Kill Switch: Nudges « Blurring Borders

    [...] think there is and I think it should draw on the scholarship of Cass Sunstein and Richard Thaler in their book I recently reviewed, Nudge. For the uninitiated, Nudge is a book about “libertarian paternalism” which aims [...]

  • http://www.globalstudentpoker.com/studentsnews/a-better-way-for-the-iphone-kill-switch-nudges.html A Better Way for the iPhone Kill Switch: Nudges

    [...] think there is and I think it should draw on the scholarship of Cass Sunstein and Richard Thaler in their book I recently reviewed, Nudge. For the uninitiated, Nudge is a book about “libertarian paternalism” which aims [...]

  • http://www.rocktheadored.com Johnny

    Nice review.
    best regards

  • http://www.eeaee.com PR5_Web_Directory

    well done. I'll definitely buy a copy sooner or later

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    nice article! nice site. you're in my rss feed now ;-)
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  • Cara B Levi

    great article!, grats for u site :)

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    i have read it and its really make me little happy with the content

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    udge is divided into three parts: an explanation of the theory, a series of policy recommendations, and responses to critics.

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    Thanks man, very good post.

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    i tell you. proofreading, though its boring, its the best thing to do..
    it explains everything..
    Offshore Disclosure

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  • Micheal

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    Libertarian paternalism aims to create situations where it is easier to make the best choice while not limiting other options

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  • http://digitalslrinfo.net/nikon_d3100/ Jack

    The book initially starts out very interesting in its theory. Once it starts moving on into its sections on how their theory could improve the different parts of our lives, to include money, health, and education, it just becomes very dull. For example, they go in depth into how to improve social security using in depth examples, when they could have gotten to the point. I beleive most of the book was written to fill enough pages to publish. The attempts at humor in this book are all directed at “econs”, and is not quite as entertaining to the rest of us as it is to the authors. The stars are given only because of the first part of the book,which explains choice architecture. The rest of the book is given a one star, it was not worth reading beyond part 1.

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