Nudge

Nudge: Improving Decisions about Health, Wealth and Happiness

Authors: Richard H. Thaler and Cass R. Sunstein

Synopsis

The basic concept that gives rise to nudge is the observation that people want to make the best choices but, because of their inherent human nature, they often end up making irrational decisions (page 8). The authors developed the insightful solution to this paradox by arguing that ‘it is legitimate…to try to influence people’s behaviour in order to make their lives longer, healthier, and better’ (page 5). The book supports this ‘libertarian paternalism‘ which is underpinned by ‘a good understanding of how humans behave’ and which does not forbid any options (pages 93). The book strongly urges people who are in the position to offer alternative options, so-called choice architects, to use nudge principles to fashion their policies (page 3). It justifies this by saying ‘so long as people are not choosing perfectly, some changes in the choice architecture could make their lives go better’ (page 10).

Chose your way. Alex Yosifov on Flikr. https://www.flickr.com/photos/sashomasho/719787088

The authors reviewed the science of heuristics and biases which supports their strong argument that human decision-making is flawed (pages 19-42). In doing this, they refer extensively to the works of Daniel Kahneman, Amos Tversky, Roger Shepard, and Tom Gilovich. They discuss the classic heuristics such as availability, representativeness, anchoring, framing, optimism, overconfidence, status quo, and loss aversion. They illustrate how these biases result in poor choices, for example when they said ‘unrealistic optimism can explain a lot of individual risk-taking, especially in the domain of risks to life and health’ (page 35). Loss aversion on the other hand ‘helps produce inertia and a tendency to stick with default options (pages 37-38).

By Tony Webster from Portland, Oregon, United States – Choose, CC BY 2.0, Link

A key plank supporting the concept of nudge is the role social influence plays in driving irrational decision-making. The book shows several examples of how our judgments are easily swayed by what other people think. The authors show how social influence promotes conformity in decision-making, and how these group-think decisions are facilitated by pluralistic ignorance-the unawareness of what others really think (pages 57-61). The authors also show how the choices made under the influence of conformity eventually create deeply entrenched behaviours, what the authors call collective conservatism (page 62-63). The authors also demonstrated how social influence may create social contagion in areas such as music downloading (page 67), restaurant menu choices (page 69), and investment decisions (page 70). To support their arguments, the book refers to the works of many psychologists such as Solomon Asch and Muzafer Sherif.

Conformity. Caleb Roenigk on Flikr. https://www.flickr.com/photos/crdot/6863664186

The authors gives a whirlwind tour of other diverse concepts that influence decision-making behaviour. One example is the ‘two-system conception of self-control‘: this describes the contradictory or dynamically inconsistent decisions people make when they are in two distinct emotional states: these are the hot, aroused, emotionally charged state, and the cold, rational state (page 44-47). Other relevant concepts are the spotlight effect (page 66), the boomerang effect (page 74), priming (page 76), diversification heuristic (page 134), mandated choice (page 189), and the publicity principle (page 244).

Irrational cookies. Fdecomite on Flikr. https://www.flickr.com/photos/fdecomite/11591550195/

The book stresses that nudge principles can make a difference in all domains and fields of life such as savings, organ donations, and marriage (page 12). Of particular interest to the authors is health care. They showed how nudge principles may be applied to issues such as health insurance, anaesthesia, drug compliance, patient decision-making, and pharmaceutical control (page 200). The book makes many suggestions for formulating appropriate nudges, for example using good defaults and directing people’s attention to incentives (pages 93-108). The authors dedicate a chapter to ‘a dozen nudges‘, recommendations which include mental accounting strategies which overcome irrational decision-making. The authors make the point that implementing nudge policies ‘cost little or nothing‘ (page 14).

£ coins. images Money on flikr. https://www.flickr.com/photos/59937401@N07/5474205269

Opinion

This book is well written and addresses the potential of libertarian paternalism to positively influence a variety of social issues including health care. The authors refer to the research supporting their views, and give many practical examples of how nudge promoted good behaviour. The authors make many clear recommendations on how to implement nudge principles. The book has an emphasis on financial matters but it covers health care extensively. The influence of nudge has now been officially recognised by the award of the 2017 Nobel Prize for Economics to the co-author, Richard Thaler

Overall assessment

This authors explore a topic which is important to healthcare where choices, incentives and behaviour are constantly at play. The concept of nudge improves our understanding of how decision-making may be positively influenced. The book has resonance for healthcare, and I recommend it to all doctors.

Book details

  • Publisher, Place, Year: Penguin Books, London, 2008
  • Number of chapters: 16
  • Number of pages: 306
  • ISBN: 978-0-141-04001-1
  • Star rating: 5
  • Price: £4.99

3 thoughts on “Nudge

  1. Reblogged this on Words Become Works and commented:
    I am currently reading ‘Nudge’, co-authored by Richard Thaler who won the 2017 Nobel prize for Economics. This is a succint review.
    I am interested in nudge principles because I hope to apply them to student learning. What can be put in place to nudge students to constantly do the things that encourage learning?
    This review will come in handy after reading as I suck at taking notes.

    Like

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