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Nudge

Improving Decisions About Health, Wealth, and Happiness

Richard H. Thaler - Author

Cass R. Sunstein - Author

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ISBN 9781101655092 | 320 pages | 24 Feb 2009 | Penguin | 18 - AND UP
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Summary of Nudge Summary of Nudge Reviews for Nudge An Excerpt from Nudge
For fans of Malcolm Gladwell’s Blink and Nobel Prize winner Daniel Kahneman’s Thinking Fast and Slow, a revelatory new look at how we make decisions
 
More than 750,000 copies sold
 
New York Times bestseller
An Economist Best Book of the Year
Financial Times Best Book of the Year


Nudge is about choices—how we make them and how we can make better ones. Drawing on decades of research in the fields of behavioral science and economics, authors Richard H. Thaler and Cass R. Sunstein offer a new perspective on preventing the countless mistakes we make—ill-advised personal investments, consumption of unhealthy foods, neglect of our natural resources—and show us how sensible “choice architecture” can successfully nudge people toward the best decisions. In the tradition of The Tipping Point and Freakonomics, Nudge is straightforward, informative, and entertaining—a must-read for anyone interested in our individual and collective well-being.


Common "Nudges"

  1. The design of menus gets you to eat (and spend) more. For example, lining up all prices on either side of the menu leads many consumers to simply pick the cheapest item. On the other hand, discretely listing prices at the end of food descriptions lets people read about the appetizing options first… and then see prices.
  2. "Flies" in urinals improve, well, aim. When Amsterdam's Schiphol Airport was faced with the not uncommon issue of dirty urinals, they chose a unique solution: by painting "flies" in the (center of) commodes, men obligingly aimed at the insects, reducing spillage by 80 percent.
  3. Credit card minimum payments affect repayment schedules. Among those who only partially pay off credit card balances each month, the repayment level is correlated with the card's minimum payment — in other words, the lower the minimum payment, the longer it takes a consumer to pay off the card balance.
  4. Automatic savings programs increase savings rate. All over the country, companies are adopting the Save More Tomorrow program: firms offer employees who are not saving very much the option of joining a program in which their saving rates are automatically increased whenever they get a raise. This plan has more than tripled saving rates in some firms, and is now offered by thousands of employers.
  5. "Defaults" can improve rates of organ donation. In the United States, about one–third of citizens have signed organ donor cards. Compare this to Austria, where 99 percent of people are potential organ donors. One obvious difference? Americans must explicitly consent to become organ donors (by signing forms, for example) while Austrians must opt out if they do not want to be organ donors.
Nudge Acknowledgments
Introduction

Part I: Humans and Econs

1. Biases and Blunders
2. Resisting Temptation
3. Following the Herd
4.When Do We Need a Nudge?
5. Choice Architecture

Part II: Money

6. Save More Tomorrow
7. Naive Investing
8. Credit Markets
9. Privatizing Social Security: Smorgasbord Style

Part III: Health

10. Prescription Drugs: Part D for Daunting
11. How to Increase Organ Donations
12. Saving the Planet

Part IV: Freedom

13. Improving School Choices
14. Should Patients Be Forced to Buy Lottery Tickets?
15. Privatizing Marriage

Part V: Extensions and Objections

16. A Dozen Nudges
17. Objections
18. The Real Third Way
19. Bonus Chapter: Twenty More Nudges
Postscript: November 2008
Notes
Bibliography
Index
"Fundamentally changes the way I think about the world. . . . Academics aren't supposed to be able to write this well."
-Steven Levitt, co-author of Freakonomics

"[An] utterly brilliant book. . . . Nudge won't nudge you-it will knock you off your feet."
-Daniel Gilbert, author of Stumbling on Happiness

"Nudge is as important a book as any I've read in perhaps twenty years. It is a book that people interested in any aspect of public policy should read. It is a book that people interested in politics should read. It is a book that people interested in ideas about human freedom should read. It is a book that people interested in promoting human welfare should read. If you're not interested in any of these topics, you can read something else."
-Barry Schwartz, The American Prospect

"This book is terrific. It will change the way you think, not only about the world around you and some of its bigger problems, but also about yourself."
-Michael Lewis, author of Moneyball

Q: You say that people have biases and make blunders. Why? Is there something wrong with us?

A: No, there is nothing wrong with us, we are just human and fallible. We have to make thousands of decisions every day, from what to wear in the morning to which article to read first in the newspaper, and we cope with this complexity by devising mental shortcuts. Some of the most exciting research over the last decades shows that while these shortcuts work well most of the time, they can also lead us astray. As a result, we make terrible mistakes about how health, our money, and our happiness. And because we are so busy, we can be manipulated by seemingly tiny changes in the way our options are described or "framed." You're much more likely to to choose to have an operation if you're told that "90 percent survive" than if you're told "10 percent die," even though the two statements mean the same thing! Since the frame influences the choice, it acts as what we call a "nudge."

Q: What are some of the situations where nudges can make a difference?

A: Well, to name just a few: better investments for everyone, more savings for retirement, less obesity, more charitable giving, a cleaner planet, and an improved educational system. We could easily make people both wealthier and healthier by devising friendlier choice environments.

Q: Can you describe a nudge that is now being used successfully?

A: All over the country, companies are adopting the Save More Tomorrow program. Firms offer employees who are not saving very much the option of joining a program in which their saving rates are automatically increased whenever they get a raise. This plan has more than tripled saving rates in some firms, and is now offered by thousands of employers. Here's an intriguing possibility: If you want to increase charitable giving, and help people who need help, consider asking people if they'd like to join a Give More Tomorrow Plan.

Q: You are very adamant about allowing people to have choice, even though they may make bad ones. But if we know what's best for people, why just nudge? Why not push and shove?

A: Government is fallible! Those who shape our decisions can overreach or make mistakes, and freedom of choice is a key safeguard. One of our goals in writing this book is to show that it is possible to help people make better choices while retaining or even expand freedom. If people have their own ideas about what to eat and drink, and how to invest their money, they should be allowed to take their own path.

Q: Some of your proposals seem to be "liberal" and others "conservative." Does this book come from the left or the right?

A: Neither. We respect freedom, but we also think that it is possible to help people. In our highly polarized society, we can make great progress by working in the gaping hole between the left and the right. We like to think of our positions as "radically moderate" – and of our basic framework as something you've never seen before.


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