Nudging our Way to a Better World
By Gregg Miller
August 18, 2009
Richard Thaler and Cass Sunstein wrote Nudge with optimism and dedication as primary tools while arguing for ways which we could improve our world. And there’s no government policy shift necessary – we only need to pay closer consideration to how we present decisions to individuals.
The authors show how small changes in such “choice architecture” can produce big results. You might be surprised, but just by changing the order of food items in a cafeteria can increase or decrease the frequency which certain foods are selected by as much as 25%. Imagine, just from placing the vegetables at eye level in a prominent position in our school cafeterias and placing the Hostess delicacies on a hard-to-reach shelf (or even more sinister, hide them in a cupboard where students must open a door to access them), we could significantly improve our children’s diets. With such a simple change we could make quick progress against the overwhelming level of American overeating and obesity which, surprise!, often begins at a young age. Other examples include how making enrollment in a 401(k) or organ donor program the default (rather than the current opt-in voluntary system most of America uses) could instill positive, durable values in society. Research shows that doing so would passively increase personal saving and the number of lives saved that are currently extinguished every year waiting on the donor list.
Although the authors’ characteristic optimism and enthusiasm for their system of nudges is for the most part agreeable and convincing, such a tone is disagreeable when it leads Thaler and Sunstein to inadvertently disregard the actual complexity of their suggestion. One exhibit of this behavior is their proposal of a reformed health care system where individuals would be able to purchase plans that waived their right to sue for malpractice. Such plans would wipe out the enormous costs of multimillion dollar settlements, lawyer and court salaries, and all the overhead involved in malpractice litigation; in turn, these savings for the system would be passed on to the consumer in the form of a cheaper plan.
The authors explain in detail that this kind of health plan, although attractive for many consumers, is currently prohibited by the American legal system, and this is where their argument becomes problematic. Creating this nudge for health insurance consumers (lower prices for waived rights) lacks the operational ease of rearranging a cafeteria’s items or creating a default condition for a 401(k) policy. To reform health-care law would require many heated debates in courts and Congress and exhaustive research to determine the pros and cons of such a reform, not to mention the necessity of educating the American people on the implications of forfeiting their right to sue.
This process would take months, if not years, to complete, and those responsible for making the decision are small in number and sitting in distant, lofty seats in Washington. This scenario lacks any kind of facilitated expediency or ability for individual implementation that make many of the other proposed nudges so appealing. In the end, this and other large-scale policy changes proposed by the authors (touching on the subjects of education, the environment, and marriage) don’t feel anything at all like a “nudge;” it takes more than a gentle push for political reform in these hot topics.
What is more appealing about the nudges described that are implementable on an individual level is that they hold much more potential, and in many ways are “obvious.” Readers of Nudge can take these examples as a foundation from which they can think about how the decisions they offer people in their own lives can be improved through careful choice architecture. Parents that give their children allowances, for instance, could create a default method to encourage their kids to save. The new default condition would be an increased allowance where 30% of the money would be automatically deposited into a savings account monitored by the adults. If the children decided to opt out, they would still receive an allowance, but it would be of a smaller magnitude and future increases would be smaller. If the parents did this on their own and told their son or daughter that it was the new norm, but could be opted out of simply by request, it is likely that the child (like the 401(k) participants) would go with the flow. Better yet, the parents could even make the condition into a small challenge. For example, to opt out of the required-savings-but-better-allowance program, the child would have to increase their GPA by a small percentage or perform more chores around the house to demonstrate responsibility and commitment. This example, though not particularly creative or too distinct from nudges suggested by Thaler and Sunstein, serves to show that Nudge offers empowerment to choice architects whether they are an average parent or esteemed politician.
And what are marketers if not the front-line choice architects of business? Just a few more hours of thought on how careful consideration of what choices we present to consumers and how our established framework influences their decision-making process could have much greater benefits than many weeks or months spent on a new ad campaign. People like easy decisions that improve their lives. Nudge offers a novel philosophy on how to give the people what they want, and often without them even knowing it.
Nudge, Richard Thaler and Cass Sunstein **** / 4 of 5 stars
Enjoyable Reading: 4/5
Applicable to Business: 4/5
Behavioral Insight: 4/5
The authors show how small changes in such “choice architecture” can produce big results. You might be surprised, but just by changing the order of food items in a cafeteria can increase or decrease the frequency which certain foods are selected by as much as 25%. Imagine, just from placing the vegetables at eye level in a prominent position in our school cafeterias and placing the Hostess delicacies on a hard-to-reach shelf (or even more sinister, hide them in a cupboard where students must open a door to access them), we could significantly improve our children’s diets. With such a simple change we could make quick progress against the overwhelming level of American overeating and obesity which, surprise!, often begins at a young age. Other examples include how making enrollment in a 401(k) or organ donor program the default (rather than the current opt-in voluntary system most of America uses) could instill positive, durable values in society. Research shows that doing so would passively increase personal saving and the number of lives saved that are currently extinguished every year waiting on the donor list.
Although the authors’ characteristic optimism and enthusiasm for their system of nudges is for the most part agreeable and convincing, such a tone is disagreeable when it leads Thaler and Sunstein to inadvertently disregard the actual complexity of their suggestion. One exhibit of this behavior is their proposal of a reformed health care system where individuals would be able to purchase plans that waived their right to sue for malpractice. Such plans would wipe out the enormous costs of multimillion dollar settlements, lawyer and court salaries, and all the overhead involved in malpractice litigation; in turn, these savings for the system would be passed on to the consumer in the form of a cheaper plan.
The authors explain in detail that this kind of health plan, although attractive for many consumers, is currently prohibited by the American legal system, and this is where their argument becomes problematic. Creating this nudge for health insurance consumers (lower prices for waived rights) lacks the operational ease of rearranging a cafeteria’s items or creating a default condition for a 401(k) policy. To reform health-care law would require many heated debates in courts and Congress and exhaustive research to determine the pros and cons of such a reform, not to mention the necessity of educating the American people on the implications of forfeiting their right to sue.
This process would take months, if not years, to complete, and those responsible for making the decision are small in number and sitting in distant, lofty seats in Washington. This scenario lacks any kind of facilitated expediency or ability for individual implementation that make many of the other proposed nudges so appealing. In the end, this and other large-scale policy changes proposed by the authors (touching on the subjects of education, the environment, and marriage) don’t feel anything at all like a “nudge;” it takes more than a gentle push for political reform in these hot topics.
What is more appealing about the nudges described that are implementable on an individual level is that they hold much more potential, and in many ways are “obvious.” Readers of Nudge can take these examples as a foundation from which they can think about how the decisions they offer people in their own lives can be improved through careful choice architecture. Parents that give their children allowances, for instance, could create a default method to encourage their kids to save. The new default condition would be an increased allowance where 30% of the money would be automatically deposited into a savings account monitored by the adults. If the children decided to opt out, they would still receive an allowance, but it would be of a smaller magnitude and future increases would be smaller. If the parents did this on their own and told their son or daughter that it was the new norm, but could be opted out of simply by request, it is likely that the child (like the 401(k) participants) would go with the flow. Better yet, the parents could even make the condition into a small challenge. For example, to opt out of the required-savings-but-better-allowance program, the child would have to increase their GPA by a small percentage or perform more chores around the house to demonstrate responsibility and commitment. This example, though not particularly creative or too distinct from nudges suggested by Thaler and Sunstein, serves to show that Nudge offers empowerment to choice architects whether they are an average parent or esteemed politician.
And what are marketers if not the front-line choice architects of business? Just a few more hours of thought on how careful consideration of what choices we present to consumers and how our established framework influences their decision-making process could have much greater benefits than many weeks or months spent on a new ad campaign. People like easy decisions that improve their lives. Nudge offers a novel philosophy on how to give the people what they want, and often without them even knowing it.
Nudge, Richard Thaler and Cass Sunstein **** / 4 of 5 stars
Enjoyable Reading: 4/5
Applicable to Business: 4/5
Behavioral Insight: 4/5
