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Improving Decisions About Health, Wealth, and Happiness
By Richard H. Thaler & Cass R. Sunstein
Yale University Press, 2008

With its snappy one-word title, this book calls to mind recent releases like Blink, Sway, and Flip. And in the spirit of bestsellers like The Tipping Point and Freakonomics, books that purport to reveal the "hidden dimensions" of this or that, this work is targeted at a broad general audience. But unlike so many books in the genre, this one tries to do more than just inform and entertain. It takes a serious academic subject and makes a strong case for more enlightened social and economic policies.

Cass Sunstein and Richard Thaler contend that the way public choices are framed and presented goes a long way toward determining the kinds of decisions people make. Summarizing some four decades of research in what they call "the emerging science of choice," they show that people do not always act logically or in their own best interests. They eat more from large plates, care twice as much about losing money as gaining it, and agonize about rare events like plane crashes instead of common ones like auto accidents.

We like to think of ourselves as rational creatures, they point out, but studies show that the choices we make tend to be unrealistically optimistic, biased toward the status quo, and undercut by a subtle and unthinking conformity.

What the research suggests, Sunstein and Thaler say, is that "choice architecture — like the architecture of a well-designed public space — can guide, or "nudge," people toward making better choices. A nudge is a way of organizing and presenting choices "that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives," according to Sunstein and Thaler. To count as a nudge, the intervention must be easy and cheap to avoid. "Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not."

By understanding the power of nudges, they argue, "choice architects" — those charged with the responsibility of organizing the context in which people make decisions — can help to coax people into making decisions that serve them better.  Much of the book is given to practical examples of how this can be done, such as taking advantage of people's propensity to expend a minimum of effort (ensure the default option serves the greatest good for the greatest number), or making use of subtle social influences (suggest how other people are inclined to choose under similar conditions).

Many of the examples in the book are not only persuasive but quite engaging to read. For example, they describe how etching a small black fly in a urinal — first tried in men's restrooms at Amsterdam's Schiphol Airport — turns out to be amazingly effective at getting men to pee straight, reducing spillage by 80 percent.

Sunstein and Thaler acknowledge that nudges might be viewed by some as an infringement on people's liberties. But at bottom, they say, there is no such thing as a context-free choice. Knowing this we can either leave the framing to chance (or, perhaps, to advertising and PR firms), or we can consciously decide on it. What is needed is an approach that both preserves freedom of choice and guides people to make decisions that are in their personal and collective best interests.

Sunstein and Thaler use the word "libertarian paternalism," a deliberate oxymoron, to describe this philosophy. The term is usefu, in their view, because it sums up the underlying rationale for nudges — to influence people's behavior in order to make their lives longer, healthier, and happier while, at the same time, preserving their basic freedom to choose as they please.

If people want to smoke cigarettes, eat unhealthy foods, pick an unsuitable health care plan, or fail to save for retirement, libertarian paternalists will not stop them, or even make the choice difficult for them, Sunstein and Thaler write. "Still, the approach we recommend does count as paternalistic, because private and public choice architects are not merely trying to track or to implement people’s anticipated choices. Rather, they are self-consciously attempting to move people in directions that will make their lives better. They nudge."

Copyright 2009 by Scott London. All rights reserved.