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on 3 August 2009
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.
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on 13 April 2010
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...?
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on 31 July 2008
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 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.
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on 28 July 2008
Everyone seems to be talking about this book, and the Tories like it a lot (which may not necessarily be a good sign). The book shows how people often behave in irrational ways and offers some gentle 'nudging' techniques for making them behave more responsibly and sensibly. There are some very entertaining illustrations and examples - I love the story about the urinals at the airport (but I won't go into any more detail here or else I'll spoil it for you.) Sometimes, however, the strategies seem to be a little less subtle than the authors suggest - for example, the idea that there should be a waiting period before people get married. Surely that's a little too much interference? Nevertheless, the book is an excellent and stimulating - and optimistic - read.
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on 3 March 2011
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.
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on 30 August 2013
Although the species of "Humans" are not irrational there is a body of behavioural research that makes substantiated claims that they need help to make more accurate judgements and better decisions. Good governance with its far reaching policies contained within institutions are best suited for this role because they have been set up to think more slowly and have the power - democratically invested by society (a collection of Humans) - to impose orderly procedures. However, now in the world of corporate affairs the influence of design management too aims to maximise utility and create outcomes that are in the best interest of its consumers in achieving a resonance in what is meaningful for people and what is profitable.

So it would seem that there is now a wholesale trend to shift attitudes through "nudging" cognitive biases in a preferable direction (e.g. the default bias) via the application of good design rather than for a legacy goal of traditional exploitation. The real challenge in the 21st century is in solving the human problem not the technical one, as Steve Jobs so advocates - people want to be surprised and delighted, and good design is actionable: it just does and you know it when it happens.

Easier said than done of course as the relationship between choice architecture and shaping and shifting attitudes is tenuous and complex; it no longer defines the the form of products, creates a user experience or communicates brand values. Instead it focuses first on positive outcomes that align to our values and beliefs in an ethical framework which have been names as self-reliance, life long learning, timelessness, happiness, citizen engagement, liberty, cross cultural empathy, promoting mastery, social inclusion, dignity, autonomy, universal access, health and well being. The subject of choice architecture described in this book sits very squarely aforedescribed ethical framework.

However this rather beneficent view in improving lives by service design and good governance is clearly an anathema to the more libertarian minded such as a species of "Econs" at the Chicago School of Economics who state that people should be free to choose their own mistakes - unless they harm others - so that the market can purely self-regulate; any tinkering from the outside would so the theory goes reduce the overall efficiency in allocation of scarce resources and effectiveness in feeding back the necessary hard knocks of life, or put rather cynically the world needs suckers to channel wealth.

Nudge attempts to address this dilemma by presenting a solution of helping people make good decisions without curtailing their freedom. It does this by capitalising on our growing understanding of persuasive techniques taken from the emerging sciences of behavioural/neuroeconomics and cognitive psychology. The idea of libertarian paternalism (i.e. compassionate capitalism) is at the heart of the movement and is not viewed as an infringement upon any freedom of choice (neoliberalism). It allows considerate shapers to look out for peoples' best interests. For instance, UK employees of a younger age but earning above a certain threshold are now required by law to opt-in to a pension scheme 'by default'. This is considered to be for 'everyone's' advantage - not the least for those at the opposite end of retirement. By employing choice architecture in the setting up of default opt-outs rather than opt-ins the State is acting like your mum who has your best interests at heart. In order to go against her best wishes requires effort and it is this focus on the power of the default and the effort or positive intention required to force a change from the norm that choice architects use to construct the presentation of their decisions points.

However there is a slippery side to choice architecture in the way information is framed which leaves Humans susceptible to manipulation. Unscrupulous firms can obfuscate the true nature of the choice with complex language and small print. Therefore, possibly consider the polite nudge of the default position of thoughtful administration as the antithesis of running the gauntlet of commercially orientated choices and options - the ones that want to extract your money. These can be sometimes slightly bewildering and in the world of internet marketing are the electronic equivalent of a pushy sales person. When making a booking on a Ryan Air flight for example it might be wondered why certain screens pop up like an annoying bug? Ryan Air with its over-reliance on the default bias, was recently voted the worst brand for customer service. This is partly due to a low cost infrastructure business mode, though it cannot go unnoticed that such a model has become at the expense of customer satisfaction - where quality value resides (rather than cost value).

Ironically then, after the infuriating process of working one's energies against "the system" of corporate companies there is a commonality between the experience of private economics and the bureaucracy of government. In merging these two worlds in a somewhat paradigmatic shift the main thrust of Nudge economics is to move the free line of vested interests towards the citizen's well being and shared ethical framework which in some ways is demonstrated in the freemium model of business economics that is revolutionising internet trade.

However if Nudge economics is to counter the skim, scam and intentionally neglectful "priming" of the tawdry sometimes witnessed in commercialism it will have to not only make inroads into public sector think tanks but also change the way hard nosed business is conducted per se (rather than service economies) which will clearly not suit certain sensibilities promulgated by certain political tribes. Which makes the concept of Nudge a rather special proposition.

'Nudge' IS very grey matter provoking and has no doubt become influential for this reason especially in centre ground politics. It also seems to have a wide political spectrum, and must be congratulated at getting to the heart of the private-public debate which rages amongst and within western democratic market economies.

On this note a couple of closing remarks that suggest my own alternative realities might not go amiss:

a) A question for the most capitalised energy market in Europe: instead of the "uswitch if you want to but this lady is not for switching you model" doled out by energy companies each year, what if our inexorable winter price rise change-over to save money on fuel is actually carried out for the consumer instead? By corollary, in the moral interests of libertarian paternalism, if such a request cannot be acheived for the majority, why not for those who are financially vulnerable?

b) What if the freemium model of a modest free service is the basic model spooned up by local councils and those who want to be "nudged further" pay more?

In these changing times where within the UK the dominant ideology is to shrink the public sector as the traditional bastion of service mindedness, this book does provide an alternative take on the notion of how to address the public good in the world of economics and public administration and for this reason alone is somewhat seminal and a valuable read.
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VINE VOICEon 9 November 2008
Though there is little in this book that is completely new, it draws together many of the key current ideas on how people make decisions. In particular it shows that people may make very different decisions depending on how information about the decision is presented.

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.
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on 10 December 2013
Most of the content of this book is covered elsewhere - ("Thinking, fast and slow by Daniel Kahneman" is a better read) but the book brings together some interesting points about nudges for behaviour change. As with most books about human behaviour, it's a question of looking for the interesting nuggets rather than expecting a solid block of fascinating material but it's worth a go. If I were to buy again I'd get the paper version not the Kindle one: the indexing doesn't make it easy to flick between sections and that's what you need to do when you're nugget-trawling.
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on 15 April 2014
(This review is of the Kindle edition) When the book first emerged in the UK it was taken up by professional politicians - seeking what Winston Churchill called "the art of the possible". What one doable thing can you execute that enables a broader/deeper social phenomenon?

And the authors do it well. Clear writing, effective examples, and a gradual build towards a strong understanding of what makes societies and individuals tick, and why they make the decisions they do. I found it a good read alongside Kahneman's "Thinking, Fast and Slow" which goes more into the psychology side; Thaler and Sunstein are more practitioners. Definitely worth reading.
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on 28 September 2013
If you're looking for a novel take on some newly revealed social process look elsewhere. This is a particularly badly structured 'discussion' of something that your average citizen can work out for themselves stuck in traffic on the way to work. The authors give away their partisan points of view throughout and insert themsleves into to their 'dialoguing' in such an intrusive way one is tempted to swear at them to 'pipe down for heavens sake and and on with the subject at hand'. Often, they leave their ideas hanging - getting diverted by their own 'cleverness' and conceit. Frankly, unless you have nothing else to read and you need a diversion, I wouldn't bother with this tripe. It seems to have been written by a couple of teenagers with egos as big as their gel-styled hair-dos.
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