Nudge: Improving Decisions About Health, Wealth, and Happiness
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Contents
Summary
(borrowed from http://en.wikipedia.org/wiki/Nudge_(book)#Summary)
See also the website at http://nudges.org/
Two systems
The book describes two systems that characterize human thought. Sunstein and Thaler refer to these a
- the Reflective System
- the Automatic System
Biases
Because of these differences and conflicts between these systems, people are often subject to making mistakes that are the result of widely occurring biases, heuristics, and fallacies. These include:
Libertarian paternalism
Libertarian paternalism is the union of two political notions that are commonly viewed as being at odds (to the point of oxymoron) libertarianism and paternalism. Sunstein and Thaler state that
- the libertarian aspect of our strategies lies in the straightforward insistence that, in general, people should be free to do what they like-and to opt out of undesirable arrangements if they want to do so".
- the paternalistic portion of the term "lies in the claim that it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better"
Choice architecture
Choice architecture describes the way in which decisions are influenced by how the choices are presented. It is in arranging the choice architecture in a certain way that individuals can be nudged in a certain way without taking away their freedom of choice.
Policy recommendations
Sunstein and Thaler use their notions of nudges within the context of choice architecture to propose policy recommendations that they believe are in the spirit of libertarian paternalism.
They have recommendations in the areas of finance, health, the environment, schools, and marriage
Retirement saving
Thaler and Sunstein point out that many Americans are not saving enough for retirement. They state that "in 2005 the personal savings rate for Americans was negative for the first time since 1932 and 1933 - the Great Depression years". One change they offer is creating better default plans for employees. Employees would be able to adopt any plan they like, but, if no action is taken, they would automatically be enrolled in an expertly designed program [such as social security]. They also propose what they refer to as the "Save More Tomorrow" plan. This is to address the issue of people having the desire to save more, yet procrastinating on actually doing so. This program would invite "participants to commit themselves, in advance, to a series of contribution increases timed to coincide with pay raises".
Health care
The book contains an analysis of the Bush administration program Medicare Part D. Thaler and Sunstein state that "on some dimensions Bush was on the right track" with the plan, but that, "as a piece of choice architecture...it suffered from a cumbersome design that impeded good decision making". Specifically, they think that default choices for programs should not have been random, and that beneficiaries of the program were not given adequate resources to deal with the number of choices they were faced with. They think that seniors who did not sign up for a program should have one assigned to them, and that, yearly, they should be mailed an itemized list of all drugs they had used and all of the fees they incurred. This information would be freely available online, where beneficiaries could easily compare their programs with other similar ones.
Sunstein and Thaler also propose a way to increase organ donation rates in the United States. They argue that a mandated choice program should be put in place, where, in order for someone to renew their drivers license, they must say whether or not they would like to be an organ donor. They also advocate the creation of websites which would suggest that the wide community supports organ donation in order to nudge people into becoming organ donors themselves.
