Nudge: Improving decisions about health, wealth and happiness

Amazon.com: What do you mean by “nudge” and why do people sometimes need to be nudged?

Thaler and Sunstein: By a nudge we mean anything that influences our choices. A school cafeteria might try to nudge kids toward excellent diets by putting the healthiest foods at front. We reflect that it’s time for institutions, including government, to become much more user-friendly by enlisting the science of choice to make life simpler for people and by gentling nudging them in directions that will make their lives better.

Amazon.com: What are some of the situations where nudges can make a difference?

Thaler and Sunstein: Well, to name just a few: better funds for everyone, more savings for retirement, less obesity, more charitable giving, a cleaner planet, and an improved educational system. We could easily make people both wealthier and in excellent health by devising friendlier choice environments, or architectures.

Amazon.com: Can you clarify a nudge that is now being used successfully?

Thaler and Sunstein: One example is the Save More Tomorrow program. Firms offer employees who are not saving very much the option of joining a program in which their saving excise are automatically increased whenever the employee gets a raise. This plot has more than tripled saving excise in some firms, and is now offered by thousands of employers.

Amazon.com: What is “choice architecture” and how does it affect the average person’s daily life?

Thaler and Sunstein: Choice architecture is the context in which you make your choice. Suppose you go into a cafeteria. What do you see first, the salad bar or the burger and fries stand? Where’s the chocolate cake? Where’s the fruit? These features influence what you will choose to eat, so the person who decides how to spectacle the food is the choice architect of the cafeteria. All of our choices are similarly influenced by choice architects. The architecture includes rules deciding what happens if you do nothing; what’s said and what isn’t said; what you see and what you don’t. Doctors, employers, credit card companies, banks, and even parents are choice architects.

We show that by carefully crafty the choice architecture, we can make dramatic improvements in the decisions people make, lacking forcing anyone to do anything. For example, we can help people save more and invest better in their retirement plans, make better choices when alternative a mortgage, save on their utility bills, and improve the environment simultaneously. Excellent choice architecture can even improve the process of getting a divorce–or (a more pleased thought) getting married in the first place!

Amazon.com: You are very adamant about allowing people to have choice, even though they may make terrible ones. But if we know what’s best for people, why just nudge? Why not push and shove?

Thaler and Sunstein: Persons who are in position to shape our decisions can overreach or make mistakes, and freedom of choice is a safeguard to that. One of our goals in writing this book is to show that it is possible to help people make better choices and retain or even expand freedom. If people have their own thoughts about what to eat and drink, and how to invest their money, they should be allowed to do so.

Amazon.com: You point out that most people spend more time alternative out a new TV or audio contrivance than they do choosing their health plot or retirement investment strategy? Why do most people go into what you clarify as “auto-pilot mode” even when it comes to building vital long-term decisions?

Thaler and Sunstein: There are three factors at work. First, people procrastinate, especially when a choice is hard. And having too many choices can make an information overload. Research shows that in many situations people will just delay building a choice altogether if they can (say by not joining their 401(k) plot), or will just take the simple way out by selecting the defaulting option, or the one that is being suggested by a pushy salesman.

Second, our world has gotten a lot more intricate. Thirty years ago most mortgages were of the 30-year fixed-rate variety building them simple to compare. Now mortgages come in dozens of varieties, and even finance professors can have distress figuring out which one is best. Since the cost of figuring out which one is best is so hard, an unscrupulous mortgage broker can easily push unsophisticated borrowers into taking a terrible deal.

Third, although one might reflect that high stakes would make people pay more attention, as a replacement for it can just make people tense. In such situations some people react by curling into a ball and thinking, well, err, I’ll do something else as a replacement for, like stare at the television or reflect about baseball. So, much of our lives is lived on auto-pilot, just because weighing intricate decisions is not so simple, and sometimes not so fun. Nudges can help ensure that even when we’re on auto-pilot, or unwilling to make a hard choice, the deck is stacked in our favor.

Amazon.com: Are we humans just poorly adapted for building sound judgments in an increasingly quick-paced and complex world? What can we do to position ourselves better?

Thaler and Sunstein: The human brain is incredible, but it evolved for point purposes, such as avoiding predators and finding food. Persons purposes do not include choosing excellent credit card plans, sinking harmful pollution, avoiding fatty foods, and preparation for a decade or so from now. Fortunately, a few nudges can help a lot. A few tiny hints: Sign up for automatic payment plans so you don’t pay late fees. Stop using your credit cards until you can pay them off on time every month. Make sure you’re enrolled in a 401(k) plot. A final hint: Read Nudge.

Review
“How regularly do you read a book that is both vital and amusing, both practical and deep? This gem of a book presents the best thought that has come out of behavioral economics. It is a must-read for anyone who wants to see both our minds and our society effective better. It will improve your decisions and it will make the world a better place.”-Daniel Kahneman, Princeton University, Nobel Laureate in Economics (Daniel Kahneman )

“In this utterly brilliant book, Thaler and Sunstein teach us how to steer people toward better health, sounder funds, and cleaner environments lacking depriving them of their inalienable right to make a mess of things if they want to. The inventor of behavioral economics and one of the nation’’s best officially authorized minds have produced the manifesto for a revolution in practice and policy. Nudge won”t nudge you-it will knock you off your feet.”-Daniel Gilbert, professor of psychology, Harvard University, Leader of Stumbling on Happiness (Daniel Gilbert )

“This is an engaging, informative, and painstakingly delightful book. Thaler and Sunstein provide vital lessons for structuring social policies so that people still have perfect choice over their own actions, but are gently nudged to do what is in their own best interests. Well done.”-Don Norman, Northwestern University, Leader of The Design of Everyday Things and The Design of Future Things (Don Norman )

“This book is terrific. It will change the way you reflect, not only about the world around you and some of its larger problems, but also about yourself.”-Michael Lewis, leader of The Blind Side: Evolution of a Game and Liar’’s Poker (Michael Lewis )

“Two University of Chicago professors sketch a new approach to public policy that takes into account the odd realities of human behavior, like the deep and unthinking trend to conform. Even in areas-like energy consumption-where conformity is beside the point. Thaler has documented the ways people act illogically.”-Barbara Kiviat, Time (Barbara Kiviat Time )

“Richard Thaler and Cass Sunstein’’s Nudge is a wonderful book: more fun than any vital book has a right to be-and yet it is truly both.”-Roger Lowenstein, leader of When Genius Failed (Roger Lowenstein )

“A manifesto for using the recent behavioral research to help people, as well as government agencies, companies and charities, make better decisions.”-David Leonhardt, The New York Times Magazine (David Leonhardt The New York Times Magazine )

“I like this book. It is one of the few books I”ve read recently that fundamentally changes the way I reflect about the world. Just as surprising, it is fun to read, drawing on examples as far afield as urinals, 401(k) plans, organ donations, and marriage. Academics aren”t supposed to be able to write this well.”-Steven Levitt, Alvin Baum Professor of Economics, University of Chicago Graduate School of Business and co-leader of Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (Steven Levitt )