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branch_c 's review for:
Nudge: Improving Decisions About Health, Wealth, and Happiness
by Richard H. Thaler, Cass R. Sunstein
The concept of this book is a good one: because people have to make difficult decisions, society should be arranged to help them make the best decisions possible. The authors introduce the term “libertarian paternalism” to describe how to do this, and acknowledge that “We are keenly aware that this term is not one that readers will find immediately endearing.” (p. 4). This is true, but they do effectively defend the use of the term throughout the book. The point is that people can be encouraged to do the right thing in ways that are not oppressive or intrusive.
In particular, the recognition that capitalism doesn’t always result in the best incentives is important. A number of interesting conclusions result from this when combined with the psychology of human decision making, such as “the extended warranty is a product that simply should not exist.” (p. 81) And as noted later in the context of financial advisors, “The opportunity to fleece confused customers is valuable.” (p. 143). Businesses that exploit that value are of course unethical, but apparently some people value money over ethical behavior, which is unacceptable.
The discussions of the role of government and of businesses in creating proper incentives is excellent, and the authors present numerous ideas that are clearly rational, including proposals for default 401k options, suggested requirements for disclosures by mortgage lenders and credit card companies, and improved choice architecture for investments and health care. The somewhat radical suggestions for school choice, medical costs, and marriage (Part IV) are well-stated and logical, though I’m not convinced that there isn’t a better way to handle each of these cases.
But it seems clear to me that the authors’ sensibilities are in the right place; when addressing potential objections to their ideas, they conclude that “the evaluation of nudges depends on their effects—on whether they hurt people or help them.” (p. 312)
Although the overall “pop” science tone struck me as somewhat cutesy and occasionally a bit condescending compared to a more serious science book, there is plenty of interesting data presented and discussed.
In particular, the recognition that capitalism doesn’t always result in the best incentives is important. A number of interesting conclusions result from this when combined with the psychology of human decision making, such as “the extended warranty is a product that simply should not exist.” (p. 81) And as noted later in the context of financial advisors, “The opportunity to fleece confused customers is valuable.” (p. 143). Businesses that exploit that value are of course unethical, but apparently some people value money over ethical behavior, which is unacceptable.
The discussions of the role of government and of businesses in creating proper incentives is excellent, and the authors present numerous ideas that are clearly rational, including proposals for default 401k options, suggested requirements for disclosures by mortgage lenders and credit card companies, and improved choice architecture for investments and health care. The somewhat radical suggestions for school choice, medical costs, and marriage (Part IV) are well-stated and logical, though I’m not convinced that there isn’t a better way to handle each of these cases.
But it seems clear to me that the authors’ sensibilities are in the right place; when addressing potential objections to their ideas, they conclude that “the evaluation of nudges depends on their effects—on whether they hurt people or help them.” (p. 312)
Although the overall “pop” science tone struck me as somewhat cutesy and occasionally a bit condescending compared to a more serious science book, there is plenty of interesting data presented and discussed.