Nudge: Improving Decisions About Health, Wealth, and Happiness

Nudge: Improving Decisions About Health, Wealth, and Happiness | Richard H. Thaler, Cass R. Sunstein | Our economic system thrives on poor choices by consumers

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Nudge: Improving D...

	Nudge: Improving Decisions About Health, Wealth, and Happiness Richard H. Thaler, Cass R. Sunstein Yale University Press, 2008 - 304 pages average customer review:based on 31 reviews view larger image
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highly recommended

Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself.

Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful ?choice architecture? can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take?from neither the left nor the right?on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years.

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Designing Choice Architecture

This book provides insights to those who need to move people to make good decisions and if they cannot, then the default would do them the least harm. Many of the examples that they have provided are not new, e.g. Singapore has adopted the opt-out model for organ donation years ago. The idea on privatising marriage by the authors is an interesting one.

Our economic system thrives on poor choices by consumers

According to the authors, man is not the hard, cold rationalist, or economic man, who is often described in free market postulations, but is instead quite fallible, despite being designated as a homo sapien. The thinking and perceptions of man are constantly being waylaid by subtle influences which result in bad choices. The authors propose "libertarian paternalism," a catchall term for the subtle persuasion of people to make decisions that are helpful to them. However, if one examines our economic system, the authors' fears that their paternalism is freedom stifling pale next to the realities of consumer manipulation by large economic entities.

The first section of the book describing the various influences on erroneous thinking are fairly basic, much of it demonstrated in psychological experimentation. Unfortunately, life is a good bit more complicated than merely making so-called correct decisions about trivial or contrived matters. There are many areas in our lives where powerful institutions have created a situation where there are no good choices for most of us.

Take retirement savings, 401k plans, and investment decisions. Workers did not choose for corporations to abandon defined benefit plans and put the onus on workers to save for retirement. Many workers don't contribute to 401k plans because they have insufficient income - not that they cannot make a decision, a fundamental fact not mentioned by the authors. It is simply disingenuous to criticize workers for the performance of mutual funds in today's stock markets, for their investment "choices." Stock markets have been captured by financial elites who use others' investments as money to play with. The ordinary 401k contributor absolutely does not have the tools or the means to manage their investments on a minute-by-minute basis aided by sophisticated computer software.

The idea that parents don't correctly choose a good school for their children is absurd. Let's say in a school district of 100,000 students that there are five good schools with total enrollment of 10,000. Of course, all parents want their children to go to those five schools, or could easily be so persuaded - an obvious impossibility. This is a problem of poor schools, not a failure of parents to choose. Or take the new Part D of Medicare, the Prescription Drug Plan - this plan was designed by insurance companies to be completely incomprehensible with all kinds of loopholes where benefits do not have to be paid. Do the authors really want to use this as an example of choice failure? This is a scam that has been perpetrated on the American public.

On the surface, there can hardly be anything wrong with the idea of improving choices; who advocates making poor choices. However, let's consider our environment. We live in a capitalistic economy - profits are all that matters. Giving good information to people is not a priority; in fact, it could be argued that giving disinformation is, especially if it positively affects the bottom line. It is simply amazingly disingenuous to write a book about poor choices without situating those choices. There are many powerful players who are successful because they count on poor choices and ensure that those choices continue. That is the book that needs to be written.

If and when we ever empower the citizens of this nation to control the nature of our institutions, then criticize the result and the choices. Now the choices we have are not really choices.

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Nudge: Improving Decisions About Health, Wealth, and Happiness

The subject matter is good but like so many books of this type, it would have been a much better read at 1/3 its length.

reviews: page 1, 2, 3, 4, 5, 6, 7

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