Are you making good decisions these days? Perhaps you read last month’s selection, “Predictably Irrational” by Dan Ariely, and have made positive changes in your day-to-day decision making. Perhaps not, especially if your to-do list includes “read books on decision making” and you haven’t gotten around to that yet! If “Improving Decisions About Health, Wealth, and Happiness” is on your current to-do list, you’re in luck as this month we feature “Nudge” by Richard H. Thaler and Cass R. Sunstein, and you’ve just read the subtitle of their bestseller. A nudge is a polite suggestion, a push in the direction of making positive change. If your electric company includes with your monthly bill a chart showing how your usage compares with that of your efficient neighbors, well, consider yourself nudged. And if your motivated to not only keep up with the Joneses but take them to the mat in heated competition of energy conservation, that’s the positive effect of nudging.
The authors split the population into two types of folks: Humans and Econs (or so-called economic man). Humans are influenced by the gentle power of nudges, whereas Econs are more likely to react to incentives. “By properly deploying both incentives and nudges,” they write, “we can improve our ability to improve people’s lives, and help solve many of society’s major problems.” From a libertarian perspective, the key for all of this is to never impede people’s freedom to choose. Take organ donation as an example. One could argue that the government could step in and solve a huge societal need by making everyone a donor upon his/her passing, but forced participation won’t fly, right? Illinois does a particularly good job of nudging its citizens to voluntarily sign up for the program by noting on its website that 87% of the state’s adults agree that organ donation is the right thing to do (and a remarkable 60% are actually registered). Thaler and Sunstein note that people like to do what most people think is right to do. Even hard-core, Chicago-area Econs can be swayed by such a powerful statistic.