Thaler and Sunstein develop libertarian paternalism as a middle path between command-and-control and strict-neutrality choice architectures. Libertarian paternalism protects humans against their damaging psychological traits (inertia, bounded rationality, undue influence) by exploiting those habits to nudge people into making better choices.
A Good Review of Behavioral Economics Research and Applications
4 stars
The final edition is updated with some more recent examples, and beyond the standard behavioral economics/psychology research review there's great perspective on the necessity of nudging. Even with including a final chapter addressing some criticisms, it falls into the same behavioral economics trap of failing to interrogate how systems are originally set up under which one engages in nudging. The book itself is up front about its neoliberal bent, but given the glaring failure of that model and the inherent limit on time/focus that regulators and companies have, more grappling with these tradeoffs would've been appropriate. That being said, this is an excellent book, especially if you're unfamiliar with foundational work in this area. Highly recommend
Nudge and its ideas have been well known for 10+ years now. So my experience with it was slightly skewed, having seen the book's ideas discussed in other books, and heard Thaler speak about it on podcasts and lectures. Some of Nudge's ideas have become common, like the 401(k) auto-enroll and opt-out organ donation (in some countries). Paying for the privilege to be the default option has long been a nudge that businesses vie for, like search engines paying browsers hundreds of millions to be their default search. But overall I think the ideas in this book have been a net positive for both people and business.
Thaler and Sustein equate heuristics to nudges, and have coined their heuristics theory as libertarian paternalism. LP is the process of designing choice architecture to help the majority, while still keeping their full freedom of choice in tact. I find heuristics and behavioral …
Nudge and its ideas have been well known for 10+ years now. So my experience with it was slightly skewed, having seen the book's ideas discussed in other books, and heard Thaler speak about it on podcasts and lectures. Some of Nudge's ideas have become common, like the 401(k) auto-enroll and opt-out organ donation (in some countries). Paying for the privilege to be the default option has long been a nudge that businesses vie for, like search engines paying browsers hundreds of millions to be their default search. But overall I think the ideas in this book have been a net positive for both people and business.
Thaler and Sustein equate heuristics to nudges, and have coined their heuristics theory as libertarian paternalism. LP is the process of designing choice architecture to help the majority, while still keeping their full freedom of choice in tact. I find heuristics and behavioral economics very interesting, and their idea of an unintrusive-yet-guiding hand compelling. Our mental bandwidth can use all the assistance (nudges) it can get, and choice architecture is always present—one option has to be listed before another. So I like the idea of setting people off in the right direction, especially when it comes to important yet uncommon decisions like insurance or investing.
But—big but—the best option for individuals, businesses, and short-sighted governments often don't align. Yes putting a fly sticker on a urinal, or providing fruit instead of junk food, are pretty easily agreed upon nudges for most. But beyond that, you need to make a solid and compelling case for your policy nudges. Framework for this wasn't discussed much. The authors offered their policy suggestions many times in the reading, and I would definitely want most of those ideas to be revised before they're enacted.
I really enjoyed the pages on choice architecture and human psychology. Discussion of incentives, priming, post-completion errors, and contagious thoughts were all fascinating. I would have enjoyed more depth on the concept of choice architecture, and the psychological side of decision making.
The practical() side of [b:Thinking, Fast and Slow|11468377|Thinking, Fast and Slow|Daniel Kahneman|http://photo.goodreads.com/books/1317793965s/11468377.jpg|16402639]. This is what the future should be like: recognizing that there is just Too Damn Much for us all to know, and that proper Choice Architecture can help us.
The () asterisk next to "practical" is, alas, due to unfortunate realities in the USA. It may be a while before our dysfunctional government accepts these realities. Thankfully other countries are more intelligent.
