Book 535: Nudge – Richard H. Thaler and Cass R. Sunstein

I’m really taking to heart all of the articles I read about the most successful people and I’m trying to read one nonfiction book that will teach me something every month this year. I just looked back on all my stats from the last year and I’ve averaged 16 nonfiction books a year.

I’m still not 100% sure what list I saw this on, but I picked up a copy back in August of 2016. It was probably when I started reading about the importance of mental acuity and keeping your mind sharp and constantly learning how to do new things. That or it was when I was dealing with some craziness at work and needed all the advice I could get! Pick any number of these professional development books and you’ll see what I mean, specifically those dealing with conflict.

Overall, I found this book incredibly enjoyable, and not just because they spent a section writing about what I wrote my Master’s Thesis on (next to last block quote below). I didn’t find anything to be incredibly earth-shattering or paradigm shifting, but that being said I work very closely/often times within the marketing field so a lot of this stuff is standard practice, just not explained the same way.

I really liked that Thaler and Sunstein used simple language to explain sometimes rather complex topics like healthcare or retirement portfolio options. In addition, I really enjoyed that they had a sense of humor. Seriously, this footnote

“Silverstein had personally given Thaler permission to use the poem in an academic paper published in 1985—he said he was tickled to see his work appear in the American Economic Review—but the poem is now controlled by his estate, which, after several nudges (otherwise known as desperate please), has denied us permission to reprint the poem here. Since we would have been happy to pay royalties, unlike the Web sites you will find  via Google, we can only guess that the managers of the estate (to paraphrase the poem) don’t know that some is more than none.” (79)

had me laughing on the beach as I read it. Any academic that can throw shade and get their point across in simple terms makes me very happy. There’s also a fun fact about ties (see the last block quote) they threw in which again just made me want to go to lunch with these guys.

The premise of this book is the title, a nudge,

“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates.” (6)

Again, because of the work I do I found this to be easy to comprehend. They took it from simple placement of food in a cafeteria line to highly complex like marriage and the separation of church and state.

“We acknowledge that many couples may benefit, in one or another way, from public statements of their commitments to each other. Many people believe that the official institution of marriage helps to secure people’s commitments in a way that is both an individual and a social good. But if commitments are important, why not rely on civil unions and private institutions, including religious ones? Is government licensing with the term marriage necessary at all? Many commitments are stable without licenses from the state. People stay tied to their friends, their churches, their co-authors, and their employers for a long time. And even without a government licensing scheme or legal sanction, people take their private commitments seriously. Members of religious organizations, homeowners associations, and country clubs all feel bound, sometimes quite strongly, by the structures and rules of such organizations. Recall that if some kind of commitment is desirable, nothing in our proposal prevents people from making commitments through the civil union form or purely through private institutions.” (224-225)

They explained how providing a pre-selected choice, not providing choices, providing too many choices, or any other number of things can lead to various outcomes. Their arguments for Libertarian paternalism (Wikipedia link) strangely spoke to me. I’m all for hands off, but I’m also all for people not being allowed to be total idiots and getting some sort of help for a common sense option, but still having the option to be somewhat idiotic if that makes sense.

The other thing that truly spoke to me about this book was the delineation of people between Humans and Econs.

“Econs (and some economists we know) are pretty unsociable creatures. They communicate with others if they can gain something from the encounter, they care about their reputations, and they will learn from others if actual information can be obtained, but Econs are not followers of fashion. Their hemlines would not go up and down except for practical reasons, and ties, if they existed at all in a world of Econs, would not grow narrower and wider simply as a matter of style. (By the way, ties were originally used as napkins; they actually had a function.) Humans, on the other hand, are frequently nudged by other Humans. Sometimes massive social changes, in markets and politics alike, start with a small social nudge.” (52)

I thought it was very interesting that they wrote about Econs as if they actually exist. I’m sure there are people who are 95% or even 99% Econ, but there is no way that a person is 100% removed. I mean I’m more Econ than Human so I was like duh to a lot of this, but I just don’t know if a pure Econ has ever, or will ever exist, it would be taking all emotion, society and desire out of a human being. It was almost like the spherical cow joke (Wikipedia link), in that “in a perfect world and situation.” Basically they were saying these type of people (Econs) would always do “x” because it’s the rational/methodical/reasonable choice, but humans with all their human-ness will do some form of “a” through “w” or “y” or “z”, and some may even do “x”, but they need to be nudged toward it. I also don’t know if the authors take into account enough of the stubbornness of humans. If many people figure out that they’re being nudged one way they may rebel and reject the nudge as being over-reaching, especially here in the US. This didn’t necessarily rub me the wrong way or even lessen the impact of the book, but it did make me wonder more statistically about whether those who actually do “x” all, or even most of the time, are like as people. Do you have to be within a certain range of intelligence to be nudged without questioning or rebelling?

Have you read the book? What about Malcolm Gladwell’s books like The Tipping Point or Blink that are more pop-science than social science? (I have his books on my shelf to read at some point.)

Recommendation: I would definitely recommend this if you have any interest in business, sociology, politics, marketing, fundraising, entrepreneurship or anything tangentially connected to these. It’s a fascinating look into how people’s brains work and how our brains work within a society. I think it would be very interesting to see an update of this book now that it’s almost 10 years old.

Opening Line: “A friend of yours, Carolyn, is the director of food services for a large city school system.”

Closing Line: “‘Too pissed to drive? Take a taxi instead,’ the final screen reads, followed by the Frankfurt Taxi Services phone number.” (Not whited out as this is a work of nonfiction.)

Additional Quotes from Nudge: Improving Decisions About Health, Wealth, and Happiness
“Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventative steps. If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.” (33)

“And of course, we libertarian paternalists do not favor bans. Instead, we prefer an improvement in choice architecture that will help people make better choices and avoid loans that really are predatory—loans that exploit people’s ignorance, confusion, and vulnerability. In fact, we think that the entire mortgage market could benefit from a major upgrade in choice architecture.

“Although nudges are often unavoidable, we enthusiastically agree that required (or strongly encouraged) active choosing is sometimes the right route, and we have no problem with providing information and educational campaigns (we are professors, after all). But forced choosing is not always best. When the choices are hard and the options are numerous, requiring people to choose for themselves might be preferred and might not lead to the best decisions. Given that people would often choose not to choose, it is hard to see why freedom lovers should compel choice even though people (freely and voluntarily) resist it. If we ask the waiter to select a good bottle of wine to go with our dinner, we will not be happy if he says that we should just choose for ourselves!” (246)