Nudge

Richard H. Thaler & Cass R. Sunstein
2008

There’s one more best-selling psychology book that’s worth a look, one that claims more gravitas and exerts much more influence than The Psychopath Test or Outliers.

That book is Nudge: Improving Decisions About Health, Wealth, and Happiness, by Richard H. Thaler and Cass R. Sunstein.

In “The Anatomy of Influence,” a Chronicle Review glamour profile of Daniel Kahneman, Kahneman calls Nudge the “bible of behavioral economics.” And Kahneman, co-founder of Prospect Theory, the basis of behavioral economics, should know if anyone does, shouldn’t he?

I picked up a copy of Nudge after reading the Chronicle Review article. Nudge is a readable presentation of many of the better known experiments of recent behavioral psychology. It’s accurate enough, but its greatest flaw, in my view, is that it understates the incompleteness of some of the science, and seldom states at all the possible limits to how — or if — some of the often small sample size test results should be applied to practical problems.

The fundamental argument of the book is that the representation of the rational consumer known as homo economicus, the darling of libertarians and free market capitalists, is wrong. Instead, as every other neuroscience book in recent years has also claimed, we are fundamentally emotional creatures, and economic, social, and political policies based on the false paradigm of people as rational actors are doomed to failure.

Certainly, recent brain science supports the idea that we are often unconscious and non-rational. There are numerous articles on this blog and just about everywhere else summarizing this research, and there’s no need to go into repetitive detail here. Let’s just grant that the basic psychological premise of Nudge is true.

Thaler and Sunstein call their tactic of “nudges,” or choice frames, or voluntary decision incentives, or whatever you wish to call them, “libertarian paternalism.” In essence, it’s the widespread implementation of the idea behind putting the fruit at eye level in the school cafeteria. Free choice, yes, but not choice without influence.

Since, the authors argue, all choice is influenced anyway, intentionally or not, economic and social planners should work to provide choice frameworks that maximize constructive choices without requiring them. You can still choose the french fries over the fruit (“libertarian”), but I’m going to put the fruit where you’ll see it first and maybe choose an apple before you even see the fries (“paternalism”).

In one sense, it’s an attractive way of manipulating without direct coercion. Policymakers can frame your choices in the ways they prefer, but since with enough determination you can resist the good option, you’re still a free agent. It’s an ideal situation for those who want to direct your choices without any accusations of unpopular compulsion.

Again, there’s nothing blatantly inaccurate about the authors’ presentation of the psychology behind the ways that context influences choices. Their short descriptions of “anchors” and “status quo bias” and the rest are clear enough.

Where the book loses me a little is its “Therefore … ” sections, the chapters on specific policy recommendations that occupy most of the book’s second half and unashamedly apply handfuls of behavioral studies to the most complicated and intractable problems faced by politicians and their advisers.

In the authors’ view, fixing everything from financial markets to Social Security to public education to global warming is largely a matter of determining and implementing the correct “nudges.”

If you’re interested in their specific policy recommendations for these and other issues, you’ll have to read the book. For my purposes here, it’s enough to say that their ideas are relentlessly market-driven and remarkably uncritical of the broad economic assumptions at the base of our late capitalist society. And we all know how well that‘s been going lately.

In some cases, it’s fairly obvious what constitutes a “good” choice. Quitting smoking is good for you, and it’s good for the rest of us who are likely to have to spend less on your medical care. But in many areas, what’s good for me — say, cleaner air — might not be as good for you, especially if you’ve put your retirement money into coal futures.

And if your mindless consumption is good for my online marketing company, if I have greater access to advertising or greater influence with relevant government officials, whose “good” will prevail? Is it “good” that capital speculators determine which workers in which countries have factory jobs?

OK, so I’m getting a bit off the topic here. Nevertheless, issues like the ones raised in the last paragraph are relevant to any discussion of the best ways to promote public policy.

The authors acknowledge the problems, but their solution is insubstantial:

… we should be worried about all choice architects, public and private alike. We should create rules of engagement that reduce fraud and other abuses, that promote healthy competition, that restrict interest-group power, and that create incentives to make it more likely that the architects will serve the public interest.

OK, that sounds good. How do we do all that?

Maybe we should ask a psychologist.

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