Nudge Review

Nudge: an Idea Leading Smart Decisions

This book review evaluates the book Nudge. The authors of this book are Richard H. Thaler and Cass R. Sunstein. Thaler and Sunstein authored this book with their expertise in behavior finance and law. Thaler is an American economist, and the Ralph and Dorothy Keller Distinguished Service Professor of Behavior Science and Economics at the University of Chicago Booth School of Business (Thaler & Sunstein, 2008). His contributions include applying behavior finance to economics, but also planning 401(K) retirement pension plans, which cause a dramatic increase in the ratio of saving in the US (Thaler & Sunstein, 2008). He is also the author of The Winner's Curse (Thaler & Sunstein, 2008). Cass R. Sunstein is an American legal scholar, particularly having his specialty in the field of constitutional law, administrative law, and behavior economics (Thaler & Sunstein, 2008). He is currently the Administrator of the White House Office of Information and Regulatory Affairs in the Obama administration (Thaler & Sunstein, 2008). He authored Worst-Case Scenarios (Thaler & Sunstein, 2008).

Nudge defines the concept of “nudge” using a different perspective. According to the authors, nudge is a gentle intervention that causes people to change their behaviors in expectable directions without harming their economic incentives, and preventing their freedom of selection (Thaler & Sunstein, 2008, p. 19). The book also provides readers with many specific examples, and cases, related to the concept of nudge. In this review, I will mention the message of this book, and how this book supports its message. Finally, I will critique this book, and explain my evaluation.  

People have a high possibility of making incorrect decisions, because of internal and external influences, such as lack of information and the expectations of others, and once they select specific options, they rarely try to change their decisions (Thaler & Sunstein, 2008, p. 24). Thus, ‘choice architects,’ who plan the options that people can, and have to, choose, need to help people make correct decisions that are beneficial to their life and society (Thaler & Sunstein, 2008, p. 33). However, this help from the choice architects should follow liberalistic interventionism, without forcibleness (Thaler & Sunstein, 2008, p. 24).

The authors use the book to support the importance of nudge in various ways. First of all, they point out the many irrational behaviors in people’s everyday life, such as the belief in ‘the hot hand concept’ in basketball matches, and people’s tendencies to form different reactions depending on different framing of the same information (Thaler & Sunstein, 2008, p. 56). Subsequently, the authors state examples of how nudge can affect people’s behaviors in their life. For instance, a urinal with a picture of a fly can reduce splashing pea by on bathroom floors about 80%, and people who eat food with small plates can lose weight more easily (Thaler & Sunstein, 2008, p. 18). Thirdly, the authors apply the concept of nudge to many fields, such as a pension system, mortgage contracts, and organ donation policies. Lastly, the typical arguments against applying nudge to people’s life are covered, and the authors provide readers with their opinion about these arguments.

The book defines the term nudge using a new perspective, and this new definition of nudge is related to the general population’s behaviors. Thus, the subject of this book is treated in general terms. On the other hand, the book also delivers detailed examples and cases to support its ideas. For instance, the book mentions a business, named Stickk.com, and how the business use nudge to help people achieve their goals (Thaler & Sunstein, 2008, p. 336). The book also shows the different result of usage of nudge, regarding organ donation policies in different countries (Thaler & Sunstein, 2008, p. 276). As a result, the idea of nudge is delivered to readers in a logical and persuasive way.

I am convinced that the sources of this book are valid. The book cites information from more than 200 sources, including academic journals, research articles and federal laws. Sources from the 1960s to the 2000s are quoted in this book (this book was published in 2008). Therefore, these sources have credibility and reflect current information.

This book consists of four major chapters. The first chapter is about the general concept of nudge. In this chapter, how people make incorrect decisions, people’s decision making process about temptation and self-control, and other characteristics of people are covered. In the second chapter, nudge is applied to people’s financial decisions, regarding savings, mortgage contracts, and stock investments. The third chapter focuses on several areas, in which the use of nudge could generate helpful changes: governmental policies, the social security system, health insurance programs, organ donation, and the privatization of people’s marriages. In the last chapter, the typical objections to applying nudge to the public’s behavior are mentioned. From my perspective, placing the arguments about the concept of nudge at the end of the book is also an example of using nudge. If I read these arguments before I knew positive examples of nudge, I could not be open-minded to the concept of nudge.

According to the interview in the movie the Persuaders, consumers do not have ideas about their consuming behaviors. Thus, marketers should help people realize their ideas about purchasing (FRONTLINE, 2004). Similarly, the book claims that people are not econs who act rationally all the time, but human (Thaler & Sunstein, 2008, p. 22). In other words, people do not make rational decisions in some situations. This characteristic of human behavior differs from econ’s perspective, because econs are able to make reasonable decisions all the time. As an example of people’s unreasonable decisions, the book points out people’s irrational consuming decisions, like purchasing insurance for $20 for the future breakdown of an electric device, which has only a $2 value (Thaler & Sunstein, 2008, p. 61). Eventually, the book insists that people should be led by correct nudge to reduce errors in their decision making processes.

According to the reviews in Yes24.com, the biggest Korean online book store, many readers write that the idea of Nudge is interesting, but the book is boring, because only the first chapter is related to the main idea, and the other chapters are just examples (Yes24.com). I partly agree with these opinions. However, I believe that the organization of the book helps people read it efficiently. Many Koreans believe that they should thoroughly read a book from the beginning to the end. This method is useful for some books, but is not always correct. Nudge does not require readers to concentrate on all of the chapters. The readers can understand the concept of nudge in the first chapter, and then, they can find interesting examples within the following chapters. They do not have to read the entire book. They can focus on the specific examples that they are interested in. For example, I am interested in organ donation policies. Thus, how to make more people donate their organs is an amusing idea to me. On the other hand, I do not have any interest in 401(k) retirement pension plans, because South Korea does not have such plans. Therefore, I did not read the 410(k) part thoroughly. In short, the straightforward construction of this book helps people understand the idea of the book better, and read it efficiently.

My criticism of this book is that this book does not point out the possibility of misusages of nudge. The book claims that setting default options correctly helps people reduce errors when they make their decisions. I agree with this opinion. However, setting default options also can be used for bad purposes. For instance, a screen capturing software, An Camera, which is free and useful software in Korea, uses its default options for advertising. The users of this software should update its version regularly. However, if the users just click the next buttons for the update, they unintentionally agree to install other advertising programs. As a result, the users are exposed to advertisements that they do not want to watch. I believe that this is an example of the usage of nudge in a negative way. The book concentrates on many positive applications of nudge. However, the book does not seriously state the possibility of the misuse of nudge.

In conclusion, Nudge is a well written book with rich examples. The book also supports its ideas with a straightforward organization and many valid sources. As a reader, I can understand the new concept of nudge with the many examples that are related to everyday life situations. Additionally, the simple organization of the book provides me with an opportunity to experience efficient reading. I can also comprehend the arguments against the concept of nudge. On the other hand, biased examples of using nudge are a small flaw of the book. Explaining the risks of misusing nudge, with specific examples, would be helpful to give the book more balanced perspectives.

Work Cited

FRONTLINE. (Producer) (2004). The persuaders [Theater]. Available from http://www.pbs.org/wgbh/pages/frontline/shows/persuaders/etc/synopsis.html

Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decision about health, wealth and happiness. Yale University Press.

Yes24.com. (n.d.). Readers' review. Retrieved from http://www.yes24.com/24/goods/3361501?scode=029