Bookhuddle - Nudge: Improving Decisions About Health, Wealth, and Happiness

Actions

Book Info

Authors: Richard H. Thaler, Cass R. Sunstein
Binding: Hardcover; 293 pages
Publication Date: 5/25/09
Publisher: Yale University Press
ISBN: 0300122233
Bookhuddle Average Rating: (4.0)
Amazon.com^® Average Rating: (4.0)

Similar Books

The most similar books

Reviews

There are no reviews. Be the first to add a review!

Number of Reviews: 86, Amazon.com^® Average Rating:

(4.0)

(4) Nudge, not noodgie

I found the general ideas of nudges useful in my field of medicine. Though I had a vague idea before of these principles, the book sharpened the way I thought and planned many of my activities.

The book is a bit repetitious but the repetition sort of consolidates the ideas.

(1) contexts are required....

Firstly I need to state that I see a corporo-fasctic, dystopian country (if not world) we live in today. We have a veneer of "capitalism" over a Statist structure. Concepts such as those in this book do nothing to change this viewpoint. And the concepts expressed in this book aren't merely theoretical, they are currently being implemented at the Federal level.

To conceive that there is anything libertarian with the oxymoron of "paternal libertarianism" is nonsense. To state that people are at liberty by having to TAKE ACTION to NOT have something happen that is man made is inherently false. The real idea here is that "GIVEN THE DEGREE THAT CHOICES ARE ALREADY MUDDLED UP BY STATIST INVERVENTION, ISN'T PREFERABLE TO TILT THE TABLE THIS WAY"?

Basically the vast confusion that laborers face as to how to dispose of their "gains", whether to consume or save/invest is State made. It is the State that seeks to tax above and beyond providing collective defense from aggressors, and even well beyond simple co-operative services (garbage collection, signage etc etc). It is the State that says "save in this way, or we will take it". It is the State which lies and says that IT provides a "safety net" which makes for an environment wherein moral hazard EXPANDS. If people were confronted by the reality that their lives are bounded by what they create, which has to be allocated between consumption and investing (if allowed at all), then they will act very much differently than they do today - where they are led to believe someone will always be there to bail them out.

So to have and "end game" rigged wherein people are allowed a small decision in a complex leviathan and call THAT freedom or liberty is nonsense. And it doesn't take a clairvoyant to see that whatever "choice" is left will soon be legislated out as a rider to a bill recognizing the state reptile of Mississippi. The inexorable expansion of the State works just this way - it trumpets the the small chinks left in the Statist wall that will be bricked up later when you're paying even less attention since you don't have any control over your life anyway.

More practically I recently met with the rather parasitical gentleman who "consults" my company on our 401k plan. It has reached a point where it feels a lot less like he is providing an intellectual service to us (which is what he is paid for) than as a mouthpiece for the Corporo-Fascistic Apparatus. He cautions us that even though the market lost 45% over the last year and our profit sharing portion (that which he doesn't consult over) lost only 16% we are still exposed since we don't have his nifty "analyses" nicely bound up. If ERISA doesn't have one of those we are prima facie exposed for sanctions. And of course this fellow is all guns for the "automatically in unless actively opt out" conceptions, the fact that if there's going to be unthinking people in the world then the ruts might as well work in the direction that increases the base assets that he takes his skim out of. The result is an obstensibly capitalistic service which exists in the Statist/Beaurucratic vacuum forged by the State.

It needs to be understood that people need to invest a portion of what they create. Eating all your "seed corn" isn't the mode by which civilization advances. But the economy and markets and human behaviors are mind bogglingly complex. But that never stops macro-economists and Statists from believe that they somehow have tapped into the Ether, somehow managed a more insightful understanding of All and Everything with their 24 hour days and 7 day weeks than the rest of humanity. And they trot out their "findings" in books such as this. And the State gets more fuel for the fire of its Good Works.

No, we need to reject such thinking. We need to educate children on how to be productive and how to balance consumption and savings/investing. Let's make rational thinkers out of our children instead of unthinking lemmings. "Nah! We'll keep putting out financial idiots and tax them into oblivion and beat back all this nasty complexity that we've created for our engrandizement by doing even more thinking for them. That'll work."

More philosophically put - life is an absurdity. Life is thrust upon us unasked for. We advance out of the primordial haze of infancy and eventually become self-possessed. We navigate through the complexities of limited resources and a bevy of other self-possessed, self-interested people all with the purpose of staving off pain and death, knowing full well we will sometimes painfully stumble and eventually die. We can either progress through this absurdity free and at liberty or let people who have convinced themselves of their superiority put us in chains. Just because they give you a small choice as to how those chains are applied isn't Liberty.

(4) Behavioural Psychology/Economics best for government officials and policy makers

Despite the many behavioural economic top sellers in recent years, this book easily stands out as a practical guide for all (dubbed by the authors as choice architects) responsible for organizing the context in which people make decisions, particularly government officials and policy makers to which the authors try to pitch with plenty of suggestions on public health, safety, money .....issues. Well organised and written with vivid real life examples. In short, recommended!

p.s. Below please find some of my favorite passages for your reference.

The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it. (illustrating Kurt Lewin's "channel factors" by experitment of Leventhal, Singer and Jones (1965) on the campus of Yale University) pg70

If certain objects are made visible and salient (priming), people's behaviour can be affected. Objects characteristics of business environments, such as briefcase and boardroom tables, make people more competitive, less cooperative, and less generous....People's judgements about strangers are affected by whether they are drinking iced coffee or hot coffee! Those given iced coffee are more likely to see other people as more selfish, less sociable, and, well, colder than those who are given hot coffee. pg 71

iNcentives, Understand mappings, Defaults, Give feedback, Expect Error, Structure complex choices. Voila: NUDGES pg 100

When asked about how he allocated his retirement account, Harry Markowitz confessed: "I should have computed the historic covariances of the asset classes and drawn an efficient frontier. Instead...I split my contributions fifty fifty between bonds and equities." pg 123

Amazon.com

Amazon Best of the Month, April 2008: Debit or credit? Paper or plastic? Lease or buy? Public or private school? Have you made the right choices? Probably not, according to the important new research on the science of choice. In clear and entertaining style, Nudge: Improving Decisions About Health, Wealth, and Happiness provides a crash course on how and why humans are prone to make bad choices, and what we can do about it. Through dozens of eye-opening examples, authors Richard Thaler and Cass Sunstein demonstrate how "choice architecture"--a fancy term for the particular scenario or context in which we are asked to make a decision--can actually nudge us toward making better decisions. More importantly, the authors show that by putting the right "nudges" in place, choice architects (who range from cafeteria managers to divorce lawyers) can substantially improve just about everything important to us, from our retirement savings to the health of our planet, without removing our range of options. Recommended for fans and foes of Freakonomics and Predictably Irrational. --Lauren Nemroff

Bonus Excerpts from Nudge

Who Needs to Nudge?
Just what are "nudges"? And who needs to know about them? Learn more in this special excerpt.

Ready for More?
Read a sample chapter to see which dozen nudges the authors would most recommend for improving everyday life.

Questions for Richard Thaler and Cass Sunstein

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 good diets by putting the healthiest foods at front. We think that it's time for institutions, including government, to become much more user-friendly by enlisting the science of choice to make life easier 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 investments 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 healthier by devising friendlier choice environments, or architectures.

Amazon.com: Can you describe 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 rates are automatically increased whenever the employee gets a raise. This plan has more than tripled saving rates 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 display 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 designing the choice architecture, we can make dramatic improvements in the decisions people make, without forcing anyone to do anything. For example, we can help people save more and invest better in their retirement plans, make better choices when picking a mortgage, save on their utility bills, and improve the environment simultaneously. Good choice architecture can even improve the process of getting a divorce--or (a happier thought) getting married in the first place!

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

Thaler and Sunstein: Those 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 ideas 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 picking out a new TV or audio device than they do choosing their health plan or retirement investment strategy? Why do most people go into what you describe as "auto-pilot mode" even when it comes to making important long-term decisions?

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

Second, our world has gotten a lot more complicated. Thirty years ago most mortgages were of the 30-year fixed-rate variety making them easy to compare. Now mortgages come in dozens of varieties, and even finance professors can have trouble 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 bad deal.

Third, although one might think that high stakes would make people pay more attention, instead 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 instead, like stare at the television or think about baseball. So, much of our lives is lived on auto-pilot, just because weighing complicated decisions is not so easy, 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 making sound judgments in an increasingly fast-paced and complex world? What can we do to position ourselves better?

Thaler and Sunstein: The human brain is amazing, but it evolved for specific purposes, such as avoiding predators and finding food. Those purposes do not include choosing good credit card plans, reducing harmful pollution, avoiding fatty foods, and planning for a decade or so from now. Fortunately, a few nudges can help a lot. A few small 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) plan. A final hint: Read Nudge.

Product Description

Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself.

Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful “choice architecture” can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take—from neither the left nor the right—on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years.