Book Review of Nudge by Richard Thaler
I was pleasantly surprised by this book. It starts out like many other pop psychology books, describing an array of psychology experiments that are so often in the literature. But, at some point in the book, the story takes a turn in a direction that few other books seem to touch. Nudge is really about the small, subtle pushes that our modern-day world makes to sway one’s opinion or real-world choices.
The book devotes a separate chapter to each of several real-world scenarios. When a company gives employees a choice among investment plans, how should they be described? Should there be a default plan such that, if no explicit choice is made, gets chosen automatically? What about health plans--they are very complex, and is there one that is best for everyone? (Probably not.) Then there are mortgage plans, organ donation, college funds, and on and on.
People are often lazy, and they make a choice once and then forget about it. But, should a company or a government give a subtle nudge by intelligently designing a form, an intelligent default, and so on? Or should the choice be left 100% to the customer?
The authors of this book argue that libertarian paternalism may be the answer. Give people the full cast of choices, and give people the freedom to make the wrong choices. But, also give people a default choice that may be better than most of the choices.
Some choices are fixable. If you take your clothes to a dry-cleaning establishment and they do a poor job, then the next time it is easily correctable; in the future just take your clothes somewhere else. But other choices are not correctable. How many chances do you have in choosing a spouse? While in theory, it is a correctable choice, it is not one that my people make over and over again. And, by the way, why should the government have any say at all about marriages? If there are any government benefits to marriage, say taxes, laws, etc., why not distribute those benefits to everyone? The authors argue that there is no reason for the government to be in the marriage business at all.
This book is a quick and easy read. I recommend it to people who are trying to formulate policies, design forms for public use, or simply want to understand human behavior.
