Nudge: Improving Decisions About Health, Wealth, and Happiness

Book of the week

Nudge: Improving Decisions About Health, Wealth, and Happiness

by Richard H. Thaler and Cass R. Sunstein

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(Yale, 25.95)

People need a government that can help them make better decisions, say Richard Thaler and Cass Sunstein. Left to his own devices, John Q. Public can be counted on to drive too fast on winding roads, save less than he intends to for retirement, burn more energy than he needs, and commit to home mortgages that he can’t afford. It’s not that “average” folk are stupid. All people, no matter their education or IQs, are prone to fairly predictable biases in their decision-making. One of those is inertia. We may want to be organ donors, for instance. But simply having to check a box on our driver’s license application is frequently enough to keep us from doing it.

Thaler and Sunstein are both informal policy advisors to Sen. Barack Obama, and their book provides clues to how their candidate thinks about public policy, said Andrew Leonard in Salon.com. In the case of organ donation, they’d recommend modifying the organ donor procedure so that a checkmark is needed to opt out rather than opt in. This is social engineering so modest that the authors feel comfortable calling it “libertarian paternalism.” Besides being “one whopper of an oxymoron,” the label signals that the authors are staking a middle ground between big-government solutions and a blind reliance on the wisdom of markets. No one previously has used the findings of behavioral economics to guide public policy, said George Scialabba in The Boston Globe. Doing so would require that government pay attention to how it frames each choice that it presents to citizens. To make the most of good intentions regarding retirement savings, for instance, wage-earners should be allowed to commit to these programs starting in 12 months, rather than with the next month’s paycheck.

Even benevolent “nudges,” though, put policymakers on a slippery slope toward draconian interventions, said Evan R. Goldstein in The Chronicle of Higher Education. The health warnings on cigarette packages, for example, opened the door to punishing taxes and, finally, to today’s outright government bans on smoking in public places. Thaler and Sunstein explicitly oppose all bans, said John Cassidy in The New York Review of Books, but their libertarian paternalism is too cute by half. If the next president “wants to truly leave a lasting legacy’’ on such problems as global warming and health care, he or she “will have to do more than nudge the country in a different direction.’’