Good read for those interested in UX, economics, and policy. ( )

http://pro-libertate.net/20090527/77-read-nudge-improving-decisions-about-health... ( )

The first few chapters are golden. The rest of the book is for those who cannot apply the first chapters on their own. ( )

The short version: Humans have cognitive biases that affect their decision making. Using what we know about these biases, we can design choice architectures that make it easy for people to make good choices without taking the freedom to choose away from those who want to do so. Thaler and Sunstein describe these principles and give examples of how they can be applied to saving money, health care, and preserving freedoms.

Nudge acknowledges both the failures of one-size-fits-all government solutions and why cognitive biases cause the market to fail as a mechanism for providing social good.

Details on the later since the former seems more obvious to me. The purpose of the market is to maximize profit. Ideally, this goal lines up with the goals of general social good. This is often the case because competition allows people to go with the solution that best meets their goals.

However, cognitive biases can throw a wrench in this system. Advertising is the most obvious way. The whole purpose of marketing departments is to figure out how to provide information in a way that takes advantage of cognitive biases.

Things still work out for the most part for choices that are frequent and give good feedback. No amount of marketing is going to make people like a bad candy bar. This is less true for decisions that are rare or have no feedback (e.g., health care, marriage, retirement investing, buying a house). Good decisions are hard because information is lacking, feedback is slow, and educating yourself can be difficult and confusing.

The authors suggest, and I agree, that a fruitful compromise is to use nudges. A choice architecture structured around nudges allows users to make choices but ensure that the easy decision is good enough for most users*.

An example: Many companies provide 401k plans with automatic enrollment. Getting out of these plans is easy enough, and this nudge has greatly increased 401k plan enrollment. Wonderful! The market is working all on its own**. But we can still make things better. When automatic enrollment is used, some default investment must be chosen. The default is often overly conservative because companies do not want to be liable for losses. Employees will often stay with this plan, even if they increase their contribution, because they assume the default choice is a good choice. A useful nudge here would be for the government to give best practices guidelines that suggest better investments and remove liability for losses for defaults which follow those guidelines.

That is just one example. The point is that by changing the choice architecture, we can create decisions that allow for choice while still making it easy to make a decision that is good enough. These nudges may come from the government or from the market, but both are necessary because they both have their own strengths and weaknesses.



* Yes, nudges could be used for bad as well as for good and you have to trust those making the choice architecture to make the nudged decision a good one without making alternatives too difficult. Given that, I still think nudges are better than one-size-fits-all solutions. I also believe that we already have nudges used for (sometimes) bad; it is called marketing. We may as well give the same tools to those who would use them to get rid of one-size-fits-all solutions.

** Not strictly true. There are laws that incentive companies to offer 401k plans, but we will ignore those for now. ( )

Addresses psychology, cognitive flaws and biases and behavioral economics, but the recommendations are more skewed toward social science and government/public policy (issues like pension schemes, climate change, organ donation etc.)

This was probably ground-breaking in 2008 but not especially impressive now compared to the host of behavioral economic books out there. The main value-add for me was probably the concept Libertarian Paternalism?

What I liked:
1. There were quite a few fresh examples (unlike some of the more commonly-used examples already found in other books).
2. The focus of the book is skewed toward government policies which can be extremely complex, and the authors did a credible job in presenting the host of consideration and nuances. [There were also some discussions on personal decisions].

What I didn’t like:
1. A lot of facts and details that often didn’t lead to a clear point. Maybe the message is eventually made somewhere, but it’s not always clear where the rambling was headed.
2. Given the sheer amount of nuances involved in the case studies, it would've been helpful if the authors made the points easier to sieve out. In SOME places they added short summaries to recap what they were trying to say. But the points didn't always gel directly with the details presented before.
3. They spoke about Covid-19 nudges and mistakes without going into detail....I found that disappointing as I thought it would have been a great case study.

In short, the book comes with some great ideas. BUT it could've been written in a way that makes it much more compelling. In the authors’ own words “We have tried to clear up some of the examples of imprecise writing in this version….” And they did it partially by adding a concluding chapter to clarify what they were trying to say in the initial chapters…. why not making the writing clear and precise in the whole book in the first place?

What it covers:
• Key behavioral economics principles to understand why people behave the way they do. Find out about our 2 cognitive systems, common mental heuristics or biases, and why we make bad decisions;
• How you can help people to make better decisions yet retain freedom of choice using the Libertarian Paternalism approach;
• What “choice architecture” involves, when you should use nudges, and the tools you can use to design effective nudges;
• How sludge can create the opposite outcomes as nudges, and why/how to de-sludge; and
• Detailed real-world case studies to understand how nudges can be applied to address various challenges/goals including financial well-being (including retirement savings, debt management and insurance) and national/global issues (e.g. organ donation and climate change).

Book summary at: https://readingraphics.com/book-summary-nudge-improving-decisions-about-health-w... ( )