Nudge

By | February 26, 2018

Nudge is a book that investigates the philosophical questions around influencing people. Although it was first published in 2008, it is still as relevant today. And it’s made an impact on how organisations think. Organisations such as governments.

I’ll paraphrase their example to explain. Let’s pretend that you run your local secondary school’s self-service canteen. You discover that the placement of products affects the sales: let’s say that the products students see first are the most frequently purchased. What food items do you put at the start? You have to choose something. Do you choose the healthiest? The items with the highest profit margins? Do you place them randomly? Whatever choice you make, you are making a choice that will influence other people. You are, what the authors Thaler and Sunstein would call, a choice architect. A choice architect “has the responsibility for organising the context in which people make decisions.”

Image courtesy of U.S. Department of Agriculture

The book inspects the many ethical questions around nudging people towards one option over another. But, in summary, it makes two claims.

Firstly, that seemingly small factors can have a significant effect on people’s behaviour, that we cannot get away from making and being influenced by nudges, and these nudges affect our decisions. Get over it. It’s life.

Secondly, that nudges should be used when they will help someone to a better position. Thaler and Sunstein propose that the approach should be, what they call, Libertarian Paternalism. “Libertarian” in that people should always be free to choose what they want to do. “Paternalist” because the choice architect should steer people’s behaviour in order to help people make a good choice. So choice architects should nudge someone in order to make that person’s life better, whilst maintaining that person’s freedom of choice.

Nudge came back to mind because I’m hearing the debates from Nudge come up frequently. For example, if a government knows that most parents will be better off going to mediation (rather than court) to discuss their separation, should the government encourage parents to go to mediation? Or should they merely provide information about all options? Libertarian Paternalism would argue that the government should nudge the parents, but “in a way that promotes freedom of choice.”

Thaler and Sunstein’s focus ranges from simple nudges to complex ones. Having started my career in finance, I was excited by their ideas around helping users understand complex value mapping. They say that the more choices you give people, the more help they need making a decision. Financial products such as mortgages, credit cards and utility products have to be examples of such. How do I know if Lender A’s fixed rate is better for me than Lender B’s discounted product? How do I know if TelCom A’s offer of free weekend calls is better for me than TelCom B’s offer of discounted calls throughout the week to anywhere in the world? How do I know if Credit Card A’s offer of 1% cash back is better than Credit Card B’s offer of points that I can exchange for restaurant vouchers?

Nudge’s solution to such complex scenarios is RECAP. In short, the concept is that information would be made public in order to allow third parties to run comparison calculations to help the user. This information would be generic tariff information, as well as giving individuals their annual consumption information which they could easily run through third party comparison sites. RECAP stands for Record, Evaluate, Compare, Alternative Prices. Nudge proposes that this transparency should be made mandatory across industries. Sounds good to me.

So where do I stand on people intervening in other people’s affairs? I’ll agree with Thaler and Sunstein: “[if the] underlying decision is difficult and unfamiliar, and if people do not get prompt feedback when they err, then it’s legitimate, even good, to nudge a bit.”


“Nudge: improving decisions about health, wealth and happiness” (2008), written by Richard H. Thaler & Cass R. Sunstein, is available on Amazon for £6.79

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