103 of 113 people found the following review helpful
4.0 out of 5 stars Applying behavioural economics
Whilst I don't know if this book is quite as significant as is being made out, it's a nice and straightforward primer on behavioural economics and some of its applications.
The first section sets the scene for why nudges - policy interventions that encourage rather than mandate certain types of behaviour - may be necessary. So it builds up the argument for why...
Published on 31 July 2008 by tomsk77
199 of 208 people found the following review helpful
3.0 out of 5 stars Interesting and opinionated but with some serious flaws
I can't help thinking that the authors could very easily written the book in less than 5 pages. Much of it is little more than a collage of work which you can find in the likes of 'The Tipping Point' by Malcolm Gladwell (namely, the story about the Yale students who were more likely to go get vaccinated against tetanus if the brochure showed the map to the medical office)...
Published on 3 Aug 2009 by Norberto Amaral
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199 of 208 people found the following review helpful
3.0 out of 5 stars Interesting and opinionated but with some serious flaws,
This review is from: Nudge: Improving Decisions About Health, Wealth and Happiness (Paperback)I can't help thinking that the authors could very easily written the book in less than 5 pages. Much of it is little more than a collage of work which you can find in the likes of 'The Tipping Point' by Malcolm Gladwell (namely, the story about the Yale students who were more likely to go get vaccinated against tetanus if the brochure showed the map to the medical office) and 'Undercover Economist' and 'The Logic of Life' by Tim Harford (since most of both books rave about free markets and response to incentives) as well as many others of that 'genre'.
No new concepts are introduced in this work - okay, I hadn't heard about 'libertarian paternalism' but even that is only a new name for a very old concept - think about Milton Friedman and you're not far - and 'choice architect' is nothing but a fancy name for what designers do since forever - be it store designers, systems analysts or commercial managers.
You don't believe me? Well, here's a list of topics from the book. See if they really sound new to you:
1. Arrangement of items in a cafeteria (read: any restaurant or shop) influences the choices made by customers. Doesn't explain how, though it's perfectly obvious that it does.
2. Although 'pure' free market followers believe that perfect information will be used by people to make perfect choices, many people just can't or won't. The authors call these people 'Humans' and 'Econs' to those people who make perfect decisions.
3. Biases such as anchoring, availability, representativeness, status quo, framing (think about lawyers) and the feeling of loss being higher than if you win something.
4. Clocky is a vicious little wake-up clocks that runs around your bedroom until you get up and shut it down. This was an internet meme a long time before this book came along.
5. We are influenced by what other people around us do or think about us. I always thought this was called 'peer pressure' and see no reason to rehash it into this book as though it's something new.
6. The fact that we make terrible decisions in large part because the costs of that decision are far into the future - medical insurance, pensions, mutual funds - or because they occur very infrequently - such as buying a house or choosing your university degree.
7. If you are designing something that a lot of people will use and you want to ensure enrollment by as many people as possible just set sensible defaults and make it easy for people to change if they need to.
8. Expect mistakes by people, who are Humans, not Econs, and design whatever you need to design having in mind these mistakes. It's called usability but the authors didn't mention it. Do they ignore the existence of the concept?
I could go on, but I think you get the picture. If you're new to that genre of books that seem to cover everything under the sun (Business/Economics/Politics/Sociology/Psychology), then Nudge is all very interesting. But if, like me, you already follow the genre, you will find very little here. I suggest you borrow it from a friend, and skim it.
10 of 10 people found the following review helpful
3.0 out of 5 stars A nudge in time,
This review is from: Nudge: Improving Decisions About Health, Wealth and Happiness (Paperback)Nudge: Improving Decisions About Health, Wealth, and Happiness
Drinking Pernod in Paris watching the Seine and the world flowing by makes you feel good enough to take a whole duty free bottle of the stuff home with you. Which if you've ever tried it, you'll know is a big mistake. Pernod tastes good in Paris, or maybe elsewhere in France, because we Brits like not so much the actual drink as the context in which we consume it. But at home...
Context is the main theme of Thaler and Sunstein's `Nudge'. The authors believe that by organising the context of a situation or environment where choices have to be made that those choices can be influenced in positive (or negative) ways. Enough has already written about this book for me not to go on for too long about it. Published mid-2008, it's become the book for public service and care organisations to read and quote from - and act upon, no doubt - liberally.
But for me it's the sort of book that agency planners will have on their desks and from which they'll stick neat little quotes on their PowerPoint presentations. Like something from Gladwell's Tipping Point or Blink.
There are some lovely opening touches in this book. Such as the default setting on phones which leads most people to believe this is the `best one', the one which the manufacturer `recommends', so they leave the settings be. In the same way, a default option which automatically enrolls workers into an employee healthcare scheme or pension fund, rather than through coercion, also works well. It demonstrates the innate inertia that human beings have at heart. And why we - as an agency or any other organisation - always struggle when it comes to doing our job: changing human behaviour.
Briefly summarising, if you don't know the book, the authors, argue that big changes can come from small `nudges'. Such as those above. And that these changes can be for better (or for worse, they stress) depending on the motivations of the person responsible for any communication. Be those communications to parents with young children, doctors advising their patients, employers informing their employees about health insurance or pensions, and financial institutions offering consumers mortgages or loans. And more.
Because we're mostly all fallible humans who need help and advice, Thaler and Sunstein label anyone responsible for devising communications that advise or inform others to act as `choice architects' (I love that) and that, against the normal rule of everything that we argue, `more is more'. By which the authors mean choice should not be restricted to achieve a positive outcome: that should be the preserve of design architecture working effectively.
They have a lovely term for allowing inclusiveness of choice rather than a mediated, shortlist of possibilities to channel people in particular directions: libertarian paternalism. This, the authors argue, embodies the dual principles of freedom to choose as the guiding ideology which should be made available to everybody; and the notion that no encroachment or leaning on individuals in any way must intrude at any point. In this way coercion or `requirements' and `bans' are off limits while incentives and nudges are rooted in free choices. You can see why organisations such as COI would love this book.
So libertarian paternalism encourages freedoms and more choices, the authors say, but delivered through a self-conscious design architecture that nudges individuals to act in their own best interests by changing their behaviour in a predictable way.
This is a great read, but it's a flawed argument. It's also a book in two halves. The first `half' of the book sets up great situations, relates them to our experiences, looks at how experiments by psychologists and behaviouralists have tested human behaviour in certain situations and then draws conclusions about human activity and how it can be modified and improved upon by choices, nudges, feedback and incentives. The anecdotal and chummy writing style and the wide range of human activities it covers makes it entirely absorbing and the conclusions are generally thought provoking. Especially if you work in our business where we are continuously looking to understand and explain human behaviour. And to change it.
Where the book didn't work for me was in its assumptions. Firstly, choice architecture is set up as the basic method by which better decisions from having to choose from a greater number of (supposedly libertarian) options can be made. Unfortunately, framing these choices - in linguistic, sequential and especially contextual terms - can be highly interventionist and hugely influential. Anyone who's ever devised a questionnaire knows how important language, tone and word choice can be in driving different outcomes. Thaler and Sunstein never allow that choice architecture may be selective or censorious; rather that it will always be neutrally benign.
And then there's the book's second half. This is largely devoted to dealing with how American institutions deal with a very wide range of personal, social and economic issues. Each topic is described in slightly formulaic detail by setting up the issue and then providing a number of well documented but very localised and lengthy examples to show how libertarian paternalism can provide the nudges which help Americans improve such things as their financial choices, healthcare, education and welfare entitlements, pensions contributions and more.
Yet for all its lengthy and localised but still positive detail in the latter part of the book, the authors have done a great job in looking at how major institutions need to keep their sights firmly set on what is best for the individual rather than what's best for the state. The authors acknowledge, gladly, that technological advances and access to global information precludes simple state-organised edicts from limiting an individual's precious right to choose. And that ultimately it is that `gentle nudge' which will help inform and improve the fallible human's ultimate best choice.
Maybe. Now where's that bottle of Pernod...?
103 of 113 people found the following review helpful
4.0 out of 5 stars Applying behavioural economics,
The first section sets the scene for why nudges - policy interventions that encourage rather than mandate certain types of behaviour - may be necessary. So it builds up the argument for why we aren't the rational self-maximizers that economics has tended to assume we are. This section includes a useful run-through of some of the key heuristics and biases that have been identified and what kind of outcomes they result in. This does provide a pretty good overview of some of the major factors like anchoring, availability, representativeness, loss aversion and so on. It also stresses the importance of the design of choice, or choice architecture, and that in many cases there is no option to be 'neutral' - some kind of structure of choices has to be offered.
The second section is about financial issues, so much of this is familiar ground if you know much about recent pension reform. Still the points are worth reiterating. If you auto-enrol people into a pension most tend not to opt-out. Whereas if you don't auto-enrol many don't join. This, combined with what non-savers say themselves, suggests that non-savers aren't making a rational choice not to save. People also adopt naive diversificaton strategies - the equity content of their asset allocation (if they have made an active choice) will be heavily influenced by the allocations of the funds on offer (and what stocks are popular at the time) and what's more people don't tend to shift their initial allocation. Also it seems pretty clear less in more in fund choices - too many options puts us off choosing.
The section on health has a bit of a US focus, but there is interesting stuff in there. The example of the Part D prescription drugs system is useful if only to demonstrate why a random choice for non-choosers is a bad idea. Also the section on organ donations is worth a read - I think I still favour the assumed consent approach, but the idea of mandatory choice (ie having to state your position on your driving liscence) is at least worth thinking about. Also in this section are some fairly interesting suggestions for nudging people to reduce energy consumption. These are definitely worth a look since they involve, for example, being able to make peer group comparisons. I think this would work on two levels - firstly simple self-interest, wouldn't you be annoyed to know you are spending more on energy than comparable households? Secondly I think it would give people smug points for being more energy efficient.
The fourth section I probably found the least interesting, as it deals with ideas I'm not that impressed by, such as school vouchers. Having said that the idea of privatising marriage is intriguing, if unlikely to happen. Basically they argue that the state should restrict itself to civil partnerships and the legal rights that flow from them, but that 'marriages' could be arranged by other groups. That way churches could choose whether or not they want to carry out same-sex marriages. Equally other organisations could carry them out anyway. That way, the authors argue, no-one's values get compromised but neither are anyone's rights denied.
The final section sketches out some further ideas for nudges, as well as combatting some of the counter arguments that have been put forward. This latter chapter is well worth a read as the authors do a pretty good job at arguing back at some of the half-decent arguments there are out there that challenge them. Some good pro-nudge points here include the one I've already mentioned that often there isn't a neutral option - so the absence of a nudge is a kind of nudge itself. Also it is important that nudges are made explicit, so there is no sense that Government (or whoever else is doing the nudging) is being underhand.
Thaler and Sunstein argue that their approach offers a real 'third way' since it seeks an alternative to both state mandated paths on the one hand and complete laissez-faire on the other. This they call Libertarian Paternalism. That's obviously an Americanism, since in the UK libertarianism of any stripe is not a strong theme in our political culture. As such I don't expect the label to catch on here. However overall the book does provide quite a few ideas for how we could achieve some beneficial behavioural changes without being too heavy-handed. And if you want to get into behavioural economics this probably isn't a bad place to start.
3 of 3 people found the following review helpful
4.0 out of 5 stars An applaud for liberal paternalism,
The authors, professors Thaler and Sunstein, make a strong case that it is not enough just to maximize the amount of alternatives. It also needs to be easy and practical to navigate the waters of abundant choices. I believe this is the type of insightful common sense idea that in a near future will be considered a self-evident policy principle widely adopted by political parties, policy makers and businesses.
Personally the only slightly negative aspect about the book, and the reason I gave only four stars, was that the examples were very US specific (which of course is only natural as the authors are from the states). Nevertheless, some of the policy suggestions raised in the book are very topical in my country, Finland, such as assuming by default consent for organ donations and for the biggest state church to relinquish its right to official marry people and rather just give a ceremonial blessing limited to opposite sex partners. Recommended reading for anyone who needs to think about how users make choices.
54 of 62 people found the following review helpful
5.0 out of 5 stars engaging and thought-provoking,
8 of 9 people found the following review helpful
2.0 out of 5 stars Kindle edition is poorly implemented,
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This review is from: Nudge: Improving Decisions About Health, Wealth, and Happiness: Improving Decisions About Health, Wealth and Happiness (Kindle Edition)Whilst I found this to be an interesting and thought provoking book, I found the implementation of it on kindle to be most unsatisfactory. The key issue is that all the important foot notes have been placed at the end of the book, completely out of context. There is no way to find out where in the text the foot notes belong. Most readers will only find these important footnotes after reading the whole book - and will then doubtless feel as frustrated as I did. The Index is also worse than useless, as the kindle edition (at least at the time I read it) does not preserve page numbers. This mangling seems to be typical of kindle books. I am increasingly looking to source PDF versions of books which preserve the text and layout as the author intended.
2 of 2 people found the following review helpful
4.0 out of 5 stars Who sets the frame sets the game,
This review is from: Nudge: Improving Decisions About Health, Wealth and Happiness (Paperback)This is a good book, but a bit dry to read. It took me a while to get through it, and I'm normally a quick reader. I read several other books whilst I trudged my way through this one.
The content is good, being well described, with relevant examples. The style is serviceable but a bit like a text book.
The key ideas of the book are very useful, and come down to there being no such thing as a "neutral presentation of options" and no such thing as a neutral choice to do nothing. We cannot avoid choosing between options- we can either be architects of our own choices, or we can be shaped by someone else's preferences. In NLP work I think it was Richard Bandler who gave us the phrase, "Who sets the frame sets the game." This book explains why this saying is accurate.
I liked the ideas of safe settings for defaults- nudges that make you do something that is at least basically sensible. There may well be better options available, but for many choices we face we lack information, interest or the ability to interpret it well. And too many choices tend to make decisions harder as we get distracted by minor differences between products (e.g. several different house insurance products), rather than by basic questions about function and purpose. (e.g.my house must be insured so I need to buy an insurance policy.) And as for the future...well I try not to make predictions about it. But I'm glad I joined my pension scheme more or less by default...otherwise I would have spent the money.
Choice architecture will be a key idea for policy makers and sales people for many years to come. It will allow the state to give people a nudge in the right direction, without destroying their liberty to choose differently if they so wish. It allows some sensible persuasion whilst protecting our right to take our own road to hell if we so wish. The problem with the great rhetoric of "freedom to choose" is that many of us do not get around to exercising it well enough and often enough, or even at all. In many areas of our lives we need to be nudged to do something, and this book describes well how to set up the choice architecture to achieve this.
This is a good book, but you could pick up most of its key ideas from a good summary, or by scanning the reviews on here. So a partial nudge from me towards buying it on grounds that it is useful, but a partial nudge away from buying it as I cannot get fully enthusiastic about it.
20 of 24 people found the following review helpful
5.0 out of 5 stars Thought-provoking for anyone who helps other make important decisions,
It is illustrated throughout with excellent examples, which brings the book to life.
There is material in this book that I will apply directly in the work that I do in the pensions field. However it is useful in any field where people have difficult decisions to make that may have a huge impact on their life (for example what medical treatment to have, how to invest life savings, what mortgage to take out).
Its key overall theme is that there is no neutral way to present information. We should strive to present it in a way that leads people to make what we believe is the decision that is in their best interest. Paternalism, but with freedom of choice.
This is an excellent book and well worth reading.
1 of 1 people found the following review helpful
3.0 out of 5 stars Interesting look at human behaviour,
This review is from: Nudge: Improving Decisions About Health, Wealth and Happiness (Paperback)It's a nicely written book and a good one for anyone looking for an introduction to Behavioural Economics. The style reminds me a little of Malcolm Gladwell (which is a good thing!) in that they constantly use illustrative, engaging examples for the points they are making. Nice little read, if you can get over the somewhat patronising, moralising "we're pretending that we're not trying to dictate to everyone how to live their lives when actually,we're much smarter than you and we know what's good for you so we are really" tone. No wonder the Tories have lapped it up.
5 of 6 people found the following review helpful
4.0 out of 5 stars Not just for Tories,
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This review is from: Nudge: Improving Decisions About Health, Wealth and Happiness (Paperback)This book is not only on David Cameron's reading list, but also on President Obama's. Therefore its appeal obviously goes beyond the audience of political arrivistes who will clutch at any straw in order to get elected to genuine statesmen who are likely to make a difference to our world and our lives in years to come.
First off, either the story about the urinals at Schipol is derivative or apocryphal. Urinals used to depict a bee (a Victorian pun - the Latin for bee is apis - geddit?) long before there were airports, but it may be for the same reason.
Yes, the book is American in the sense that many of the examples given are specifically from the US - 401ks, IRAs, health care plans and so on - but it shouldn't take too much imagination or application to realise that these are directly relevant to, for example, defined contribution pension plans in the UK, to private health care plan, but more importantly and more widely, to any choice we make that involves electing (or not electing, equally to the point) for a one of a range of options that may be available.
For instance, if you have failed to change your bank, your electricity or gas supplier and any other provider even though you know there are better (for example cheaper) alternatives available, then this book will tell you why, and therefore may encourage you to do something about it (although I wouldn't bet on that last bit).
Well worth a read if you want to see what methods policymakers will be trying to influence your behaviour with in the future, or if you want to understand how modern marketing works.
The downsides? Well, it is a bit repetitive - the theory is comparatively simple, so to fill a whole book there are a lot of empirical and practical examples, but that does serve to reinforce the background. And it's not exactly rocket science. But it is well-written and well-presented.
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Nudge: Improving Decisions About Health, Wealth and Happiness by Cass R Sunstein (Paperback - 5 Mar 2009)