Book Review: Nudge

Who couldn’t use a little help accomplishing a pesky goal every now and again? I know I need help sometimes to get going on a story or making it to the gym. Nudge, by Richard Thaler and Cass Sunstein (of the University of Chicago) wrote the book as a manifesto to “improve decisions about health, wealth, and happiness.” Seeking to foster what they call a new movement of “libertarian paternalism,” the idea of the book melds individual freedom with the promotion by government of socially optimal decisions, so that the citizen and the society both benefit.

If this sounds a bit different from the University of Chicago’s reputation as a libertarian, free-market school, the authors have no trouble admitting their lone-wolf status in the Economics department. According to them, because the people are only “nudged” into making better choices, their personal liberty (a paramount concern for economists) is preserved. The authors apply the Nudge model to a host of complex and seemingly intractable issues like Social Security, prescription drug coverage, and preserving the environment. For each issue, an alternative solution is explored and the reader is giving a glimpse of what life would be like if only we could be nudged into doing the right thing.

For example, how to get American workers to save more for retirement? Forget the intricate discussions on how people understand their disposable income or how America’s retirement system allocates costs to take care of the elderly; Nudge world simply makes retirement savings automatic, and forces people to opt out of the plans. Presumably, those too lazy to save (note the assumption) now would be too lazy to opt-out under the Nudge system.

The authors also show how people can use the Nudge model in their own lives. My personal favorite is their advocacy of the website stickk.com. It allows people to effectively nudge themselves. Say you want to lose 10 pounds and you think it will take a month to do so. Well, you go to stickk, sign-up for free, and set up your nudge. To motivate yourself, you offer to pay a friend of yours $10 week every week that you don’t hit your weight loss goal. After setting up a profile and putting $40 in your Stickk account, you weigh in once a week. If you make your goal, you get $10. If not, your friend gets a nice gift. Naturally, there are many permutations of this nudge. The key is making the nudge hurt enough so you feel beholden to it.

A quick read, the book offers some new and innovative ways at looking at public policy problems. Take this as your nudge to check it out from your library. For a counter view of the Nudge theory, check out Brent's blog at: LookBehindUsJane.

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