Home · Book Reports · 2018 · Nudge

designates my notes. / designates important.

Thoughts

The most important point, that is never discussed, is what is “better”? The book constantly talks about making good, bad, better, or worse choices, but only faintly expands upon what is good or bad. Generally it is taken that what most people would like is good, but that is a fallacy in and of itself. Then you enter the murky ground of trying to maximize the good for as many people as possible. This would lead to at least some people being unhappy. One example given is that a tax on cigarettes is good because most people don’t want to smoke cigarettes and people would love to stop but it is too addicting. Even if you accept this, what about the people that WANT to smoke cigarettes? Should they be punished because most people don’t want to smoke yet can’t exercise self control?

The other questionable claim is that people are unable to make knowledgeable decisions and subsequently make bad choices. The author says that most people are too busy living their lives to be able to educate themselves and make better choices. In some cases this may be true, I wouldn’t expect Joe Average to be able to make complex medical decisions, but when it comes to something like retirement saving everyone should take the time to educate themselves to the point where they can make responsible choices. Not having time because you are “living your life” is bullshit. How many hours do people spend in front of the tube or on Facebook? But they can’t dedicate a few hours a week for a few months to understand something as important as retirement savings? How many people can rattle off celebrity gossip or sports statistics yet choose to never give a second thought to the decisions that actually impact their lives.

This brings me to the last point: why can’t people make “good” decisions in the first place? It seems like an almost learned helplessness is present in most people. You are generally treated as if you should always defer to the professionals and this leads to the inability to think for yourself. I think this is much deeper than proper decision making ability and gets to the heart of our failing education system. A hundred years ago children that would only attend a one-room schoolhouse were seemingly better equipped to make decisions and, although we live in a different world with more data and more choices, the underlying structure of education and decision making have not changed one bit. Grammar, logic, and rhetoric of a trivium method based education allow anyone to tackle any problem, to make any decision. When we allow others to choose for us, through choice architecture or deferring to the professionals, we rob ourselves of what it is to be a cognisant being. This will lead to even less ability to manage decisions and more reliance on professionals, statistics, or the state.

Instead of manipulating people to make statistically better choices, we should be nurturing curiosity, life-long education, and personal growth. If there is an argument to be made for nudging people to make better decisions, does it not follow that instilling the ability to make better decisions (self/continuing education) should also be promoted? If this is the case, should we not tax television viewers and Facebook junkies for the very same reasons we tax cigarettes? Can people get tax breaks for every (nonfiction) book they read?

All in all this is nothing more than statist propaganda. Big Brother knows best, because science and case studies and statistics!

Exceptional Excerpts

“Small interventions and even coincidences, at a key stage, can produce large variations in the outcome."

“The effects of social influences may or may not be deliberately planned by particular people."

“learning to use a student loan recap spreadsheet might be an excellent assignment in a high school math class for seniors."

“As with a 401(k) plan, the average parents know little about their child’s school…"

“In offering supposedly helpful nudges, choice architects may have their own agendas."

Table of Contents

• Introduction
• 01: Biases and Blunders
• 02: Resisting Temptation
• 03: Following the Herd
• 04: When Do We Need A Nudge?
• 05: Choice Architect
• 06: Save More Tomorrow
• 07: Naive Investing
• 08: Credit Markets
• 09: Privatizing Social Security
• 10: Prescription Drugs
• 11: How to Increase Organ Donations
• 12: Saving the Planet
• 13: Improving School Choices
• 14: Should Patients Be Forced to Buy Lottery Tickets?
• 15: Privatizing Marriage
• 16: A Dozen Nudges
• 17: Objections
• 18: The Read Third Way

· Introduction

page 3:

• A choice architect has the responsibility for organizing the context in which people make decisions.

page 5:

• Libertarian paternalists want to make it easy for people to go their own way; they do not want to burden those who want to exercise their freedom. The paternalistic aspect lies in the claim that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier, and better. In other words, we argue for self-conscious efforts, by institutions in the private sector and also by government, to steer people’s choices in directions that will improve their lives.

page 8:

• By properly deploying both incentives and nudges, we can improve our ability to improve people’s lives, and help solve many of society’s major problems.

page 9:

• The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else. We claim that this assumption is false—indeed, obviously false. In fact, we do not think that anyone believes it on reflection.

• Suppose that a chess novice were to play against an experienced player. Predictably, the novice would lose precisely because he made inferior choices—choices that could easily be improved by some helpful hints.

• Could people make “poor” decisions because they have lost the tools (education) to make decisions? This points back to the past; in the 1800s were people making bad decisions? Why are people making bad decisions today? The novice chess player needs to understand the game better. Instead of nudging people teach them the rules to the decision making game.

· 01: Biases and Blunders

page 19:

• The approach involves a distinction between two kinds of thinking, one that is intuitive and automatic, and another that is reflective and rational.1 We will call the first the Automatic System and the second the Reflective System. (In the psychology literature, these two systems are sometimes referred to as System 1 and System 2, respectively.)

• Ties back to evolutionary psychology.

• (Voters, by the way, seem to rely primarily on their Automatic System.3 A candidate who makes a bad first impression, or who tries to win votes by complex arguments and statistical demonstrations, may well run into trouble.)

page 23:

• Amos Tversky and Daniel Kahneman (1974),

• Thinking Fast and Thinking Slow

page 27:

• Stephen Jay Gould (1991)

• Now we are tying into Out of Control and evolutionary psychology again.

page 36:

• When credit cards started to become popular forms of payment in the 1970s, some retail merchants wanted to charge different prices to their cash and credit card customers. (Credit card companies typically charge retailers 1 percent of each sale.) To prevent this, credit card companies adopted rules that forbade their retailers from charging different prices to cash and credit customers. However, when a bill was introduced in Congress to outlaw such rules, the credit card lobby turned its attention to language. Its preference was that if a company charged different prices to cash and credit customers, the credit price should be considered the “normal” (default) price and the cash price a discount—rather than the alternative of making the cash price the usual price and charging a surcharge to credit card customers. The credit card companies had a good intuitive understanding of what psychologists would come to call “framing.”

page 37:

• Framing works because people tend to be somewhat mindless, passive decision makers. Their Reflective System does not do the work that would be required to check and see whether reframing the questions would produce a different answer. One reason they don’t do this is that they wouldn’t know what to make of the contradiction.

• Instead of trying to understand and exploit all of these psychological tricks, why not understand WHY people make mindless decisions and lack the ability/desire to check to make sure they are making the best choices? It is easier to trick people than convince them they have been tricked…

• This implies that frames are powerful nudges, and must be selected with caution.

· 02: Resisting Temptation

page 47:

• smokers might benefit from cigarette taxes, which discourage consumption without forbidding it.3

• Unless you WANT to smoke…

page 49:

• Even when we’re on our way to making good choices, competitive markets find ways to get us to overcome our last shred of resistance to bad ones.

· 03: Following the Herd

page 58:

• consistent and unwavering people, in the private or public sector, can move groups and practices in their preferred direction.

page 62:

• An experiment watching which songs (for download) were popular showed that the first few downloaded songs would garner more subsequent downloads when the number of downloads was visible.

page 63:

• Small interventions and even coincidences, at a key stage, can produce large variations in the outcome.

• The effects of social influences may or may not be deliberately planned by particular people.

· 04: When Do We Need A Nudge?

· 05: Choice Architect

page 100:

• //mnemonic for choice architects:

iNcentives
 Understand mappings
 Defaults
 Give feedback
 Expect error
 Structure complex choices

• Voilà: NUDGES

· 06: Save More Tomorrow

page 104:

• For most of their time on earth, Humans did not have to worry much about saving for retirement, because most people did not live long enough to have much of a retirement period. In most societies, those who did make it to old age were cared for by their children. In the twentieth century, the combination of rising life expectancies and geographical dispersion of families made it necessary for people to think about providing for their own retirement income rather than depending on their children…

page 105:

• employees who change jobs frequently can end up with virtually no retirement benefits, because there is often a minimum employment period (such as five years) before any benefits are vested (that is, owned by the employee).

• Some older American workers are also turning down “free money.” To have this free money option, a worker must meet three qualifications: he needs to be more than 591 / 2 years old, so that he faces no tax penalty when he withdraws funds from his retirement account; his firm has to offer a matching contribution (meaning that the firm contributes something if the employee does); and his employer has to allow employees to withdraw funds from their retirement accounts while still working. For such employees, joining the plan is a sure profit opportunity because they can join, then immediately withdraw their contributions without any penalty, yet keep the employer match. Nonetheless, a study finds that up to 40 percent of eligible workers either do not join the plan at all or do not save enough to get the full match.5

· 07: Naive Investing

page 121:

• (There is no twenty-year period in history in which stocks have declined in real value, or have been outperformed by bonds.)

• Ignore that 20+ trillion debt, the magic money stock market works!

• This book cites a Jew every few pages, surely the stock market merchant is my friend, right?!

· 08: Credit Markets

page 136:

• The Truth in Lending Act was originally intended to summarize the terms of the loan in clear terms. But it is hard to see “truth” when it is buried in a mountain of fine print.

• Another act that has 100% opposite effects. How dumb are those lawmakers… or how dumb are we for falling for their never ending scams.

• In 2007 there was an eruption of subprime foreclosures, which caused ripples throughout financial markets, prompting many government bodies to think harder about how to help. Of course markets, left alone, will solve some of the problem, because investors who had been buying up subprime loans learned the hard way that the loans were riskier than they seemed.

• Never mind that 800 billion dollar bailout and the subsequent quantitative easing. Cheat, get caught, get a bailout! No moral hazard here.

page 141:

• learning to use a student loan recap spreadsheet might be an excel- lent assignment in a high school math class for seniors.

• Credit cards are blessedly convenient. Paying with a credit card is often faster than paying with cash, and lets you avoid struggling with change; digging into your pocket to find the correct change and managing the large jar of pennies at home are vexations from which you are liberated. Not to mention the frequent flyer miles!

• If change and penny jars are “vexations”, you are already screwed.

· 09: Privatizing Social Security

page 156:

• The more choices you give people, the more help you need to provide.

· 10: Prescription Drugs

· 11: How to Increase Organ Donations

page 175:

• *Of course, economists have a simple solution to this problem, which is to permit a market in organs. Although the idea has obvious merit, it is also spectacularly unpopular for reasons that are not well understood. We will not address the issue here. For a good summary of the argument in favor of introducing markets see Becker and Elias (2007). Although explicit markets appear to be politically infeasible now, a type of barter exchange does seem to be acceptable. Suppose that each of us needs a kidney, and each has a sibling who is willing to donate but does not have the same blood type (which is essential). If Sunstein’s sister was a match for Thaler and Thaler’s brother was a match for Sunstein, then a trade could be set up. Much work is now being done in an effort to orchestrate such matches, using techniques similar to those we discuss below involving school choice. A question to ponder: Why is it socially acceptable for Sunstein and Thaler to arrange this trade but unacceptable for Sunstein to offer to buy Thaler’s brother a new car in exchange for his kidney?

• The whole premiss of the book is to nudge people into making “good” decisions. How is selling your body, literally, a good decision? Like eating junk food will lead to health problems in the future, don’t you think living on 1 kidney will cause health problems in the future?

page 176:

• The primary sources of organs are patients who have been declared “brain dead,” meaning that they have suffered an irreversible loss of all brain function but are being maintained temporarily on ventilators. In the United States, roughly twelve thousand to fifteen thousand potential donors are in this category each year, but fewer than half become donors. … The major obstacle to increasing donations is the need to get the consent of surviving family members. It turns out that good default rules can increase available organs and thus save lives.

· 12: Saving the Planet

page 192:

• One reason that the Toyota Prius has been so successful compared with other hybrid cars is that the Prius is sold only as a hybrid (unlike, say, a Camry, which is sold in both conventional and hybrid versions). People who want to signal their green credentials are much happier in a Prius than a hybrid Camry because no one will know that the Camry is a hybrid unless she carefully examines some labeling on the car.

• This is virtue signalling.

· 13: Improving School Choices

page 199:

• Most Americans seem to believe that children do have a right to a good education…

• Even I agree with that, but “right to education” does not mean someone to administer said education. With the internet and a library everyone has access to the materials required to educate one’s self. What most Americans seem to believe is more along the lines of: everyone has the right to sit in class for 16+ years and receive a piece of paper that admits them into the workforce.

page 201:

• As with a 401(k) plan, the average parents know little about their child’s school…

· 14: Should Patients Be Forced to Buy Lottery Tickets?

· 15: Privatizing Marriage

page 217:

• A couple that is married within a religious or other private tradition, but not with the authority of the state, lacks an important kind of validation, regardless of the strength of that couple’s private commitment or the importance to them of the religious element of their marriage.

• It isn’t real unless the state validates it!

page 218:

• In sum: when people marry, they receive not only material benefits but also a kind of official legitimacy, a stamp of approval, from the state.

page 220:

• Some states have in fact experimented with an institution called covenant marriage, which makes exit extremely difficult.

• And it turns out that covenant marriage has made almost no difference to the institution of marriage. Only about 1–3 percent of couples choose covenant marriage when it is available, and not surprisingly, couples who choose that option tend to be religious and to have a traditional view of marriage, child rearing, and divorce.5

• This chapter constantly harps the “fact” that women are worse off after divorce and men are better off, that women need protection after divorce, and that women are generally vulnerable and more likely abused in marriage. Even if this is the case, and I don’t think it is, how does this fit with the narrative of equality? How many dads are paying child support? How many moms? Who usually gets the children? Who gets the lion’s share of assets?

• On the whole, I do agree that state should have nothing to do with marriage and the benefits (tax, etc) of being married are ridiculous. “Baby what we have together is so good… let’s get the government involved.” -Bill Hicks

· 16: A Dozen Nudges

· 17: Objections

page 239:

• In offering supposedly helpful nudges, choice architects may have their own agendas.

page 240:

• We would love to see similar principles used to monitor governments. Require government officials to put all their votes, earmarks, and contributions from lobbyists on their Web sites.

• Contributions sure, maybe earmarks, but votes should be anonymous. If you can see how officials voted, it makes bribery possible. With anonymous votes, like it used to be, you can’t check to see if the person you bribed voted your way.

page 241:

• Some of our most extreme critics offer an objection that will strike many readers as just odd. These critics object to any forced exchanges. They don’t like to take anything from Peter to give to Paul, even if Peter is very rich and Paul is very poor. They obviously oppose progressive taxes. (Well, most taxes, actually.)

• He is literally arguing for coercion, “forced exchanges”, and calling opposition odd.

· 18: The Read Third Way