Book Review - Nudge

Daniel Kahneman called Nudge the bible of behavioural economics. He wasn't far wrong. It is the defining literature on behavioural economics of our generation. And given that our generation is the pretty much the first generation to have used behavioural economics, that makes it the defining book on behavioural economics. And it isn't hard to understand why.

Let's start with the authors; Richard Thaler and Cass Sunstein. Thaler is one of the godfathers of behavioural economics and the book is brimming with his expertise, while Cass Sunstein, a political scientist, is now employed by Barack Obama to implement 'nudges'. They communicate clearly and with humour. Nudge is a book you will devour in days, and it may just change the way you approach life...

A key concept in Nudge is 'choice architecture'; the context in which a choice is presented, or framed (for more stuff on frames see You've Been Framed - American Idiot). They demonstrate that it isn't possible to present a choice in a way that has no influence over the decision. We are fickle creatures. Neutrality is just not attainable.

So what is a 'nudge'?

"A nudge, as we will use the term, is any aspect of choice architecture that alters people's behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not."

Sunstein

Some example nudges include encouraging healthier eating, increased  retirement saving, greener living and increased organ donations.

Thaler and Sunstein describe their approach as libertarian paternalism; using the oxymoron to communicate the fact that, while they believe people's decisions can be improved for their own welfare, they respect the freedom to choose. In short, they advocate the use of behavioural economics to improve people's lives, but in a libertarian way. Genius.

Unsurprisingly, since it was first published in 2008 Nudge has been incredibly influential; Downing Street even has a special 'nudge unit'.

The only poor chapter is the one on privatising marriage which, quite frankly, isn't worth the paper it's printed on. It feels like post-modern propaganda, shoehorned into the book for ideological reasons, which is a shame, because the rest of Nudge is so well thought out and scrupulously non-political. But one poorly researched chapter aside, Nudge really is a ground-breaking work.

Thaler

Nudge is so brimming with ideas that I'm struggling to keep this review short(!). Safe to say that it will inspire many a guruhogg blog post to come. I cannot recommend Nudge enough; such a good read. If you only read one book about economics in your lifetime (not a bad policy, per se), make it Nudge. It is Required Reading.

Genre: Behavioural Economics
Accessibility: 10/10
Accuracy: 8/10
Readability: 9/10
Usefulness: 10/10
Verdict: Required Reading

Cucumber Pimm's - Drink Up Me Hearties

Picture the scene... It's summer. It's dusk. I'm in the garden surrounded by friends sipping Pimm's at a rather splendid birthday party. A friend observed all the fruit in the Pimm's. Cue jokes about it being one of our five a day. It was then that we noticed the cucumber. Why was there cucumber? Was it part of a liberal conspiracy to make us more healthy? Was it just a mistake? Don't get me wrong; the Pimm's tasted great, but why cucumber?

In their highly influential book Nudge: Improving Decisions About Health, Wealth, and Happiness Richard Thaler and Cass Sunstein talk about the potential for using behavioural economics to 'manipulate' people into making objectively better decisions like, for example, eating more healthily. We know that in a canteen placing fruit at eye-level dramatically increases the demand for it.

But surely sneaking cucumber into my Pimm's is immoral?

I'm sure Thaler and Sunstein would immediately point out that they do not advocate tricking or forcing people into eating more healthily. Rather, they propose 'nudging' people to make 'better' decisions. They still want there to be a an open and free choice.

In fairness, the birthday party in question had many drinks on offer. I did not have to choose the fruity Pimm's. I could clearly see there was cucumber present. Perhaps I was just 'nudged' into being healthy...