Questions for Richard Thaler and Cass Sunstein
Amazon.com: What do you mean by "nudge" and why do people sometimes need to be nudged? Thaler and Sunstein: By a nudge
we mean anything that influences our choices. A school cafeteria might try to nudge kids toward good diets by putting
the healthiest foods at front. We think that it's time for institutions, including government, to become much more
user-friendly by enlisting the science of choice to make life easier for people and by gentling nudging them in
directions that will make their lives better.
Amazon.com: What are some of the situations where nudges can make a difference?
Thaler and Sunstein: Well, to name just a few: better investments for everyone, more savings for retirement, less
obesity, more charitable giving, a cleaner planet, and an improved educational system. We could easily make people both
wealthier and healthier by devising friendlier choice environments, or architectures.
Amazon.com: Can you describe a nudge that is now being used successfully?
Thaler and Sunstein: One example is the Save More Tomorrow program. Firms offer employees who are not saving very
much the option of joining a program in which their saving rates are automatically increased whenever the employee gets
a raise. This plan has more than tripled saving rates in some firms, and is now offered by thousands of employers.
Amazon.com: What is "choice architecture" and how does it affect the average person's daily life?
Thaler and Sunstein: Choice architecture is the context in which you make your choice. Suppose you go into a
cafeteria. What do you see first, the salad bar or the burger and fries stand? Where's the chocolate cake? Where's the
fruit? These features influence what you will choose to eat, so the person who decides how to display the food is the
choice architect of the cafeteria. All of our choices are similarly influenced by choice architects. The architecture
includes rules deciding what happens if you do nothing; what's said and what isn't said; what you see and what you
don't. Doctors, employers, credit card companies, banks, and even parents are choice architects.
We show that by carefully designing the choice architecture, we can make dramatic improvements in the decisions people
make, without forcing anyone to do anything. For example, we can help people save more and invest better in their
retirement plans, make better choices when picking a mortgage, save on their utility bills, and improve the environment
simultaneously. Good choice architecture can even improve the process of getting a divorce--or (a happier thought)
getting married in the first place!
Amazon.com: You are very adamant about allowing people to have choice, even though they may make bad ones. But if we
know what's best for people, why just nudge? Why not push and shove?
Thaler and Sunstein: Those who are in position to shape our decisions can overreach or make mistakes, and freedom of
choice is a safeguard to that. One of our goals in writing this book is to show that it is possible to help people make
better choices and retain or even expand freedom. If people have their own ideas about what to eat and drink, and how to
invest their money, they should be allowed to do so.
Amazon.com: You point out that most people spend more time picking out a new TV or audio device than they do choosing
their health plan or retirement investment strategy? Why do most people go into what you describe as "auto-pilot mode"
even when it comes to making important long-term decisions?
Thaler and Sunstein: There are three factors at work. First, people procrastinate, especially when a decision is hard.
And having too many choices can create an information overload. Research shows that in many situations people will just
delay making a choice altogether if they can (say by not joining their 401(k) plan), or will just take the easy way out
by selecting the default option, or the one that is being suggested by a pushy salesman.
Second, our world has gotten a lot more complicated. Thirty years ago most mortgages were of the 30-year fixed-rate
variety making them easy to compare. Now mortgages come in dozens of varieties, and even finance professors can have
trouble figuring out which one is best. Since the cost of figuring out which one is best is so hard, an unscrupulous
mortgage broker can easily push unsophisticated borrowers into taking a bad deal.
Third, although one might think that high stakes would make people pay more attention, instead it can just make people
tense. In such situations some people react by curling into a ball and thinking, well, err, I'll do something else
instead, like stare at the television or think about baseball. So, much of our lives is lived on auto-pilot, just
because weighing complicated decisions is not so easy, and sometimes not so fun. Nudges can help ensure that even when
we're on auto-pilot, or unwilling to make a hard choice, the deck is stacked in our favor.
Amazon.com: Are we humans just poorly adapted for making sound judgments in an increasingly fast-paced and complex
world? What can we do to position ourselves better?
Thaler and Sunstein: The human brain is amazing, but it evolved for specific purposes, such as avoiding predators
and finding food. Those purposes do not include choosing good credit card plans, reducing harmful pollution, avoiding
fatty foods, and planning for a decade or so from now. Fortunately, a few nudges can help a lot. A few small hints: Sign
up for automatic payment plans so you don’t pay late fees. Stop using your credit cards until you can pay them off on
time every month. Make sure you're enrolled in a 401(k) plan. A final hint: Read Nudge.
"How often do you read a book that is both important and amusing, both practical and deep? This gem of a book
presents the best idea that has come out of behavioral economics. It is a must-read for anyone who wants to see both our
minds and our society working better. It will improve your decisions and it will make the world a better place."-Daniel
Kahneman, Princeton University, Nobel Laureate in Economics (Daniel Kahneman )
"In this utterly brilliant book, Thaler and Sunstein teach us how to steer people toward better health, sounder
investments, and cleaner environments without depriving them of their inalienable right to make a mess of things if they
want to. The inventor of behavioral economics and one of the nation''s best legal minds have produced the manifesto for
a revolution in practice and policy. Nudge won''t nudge you-it will knock you off your feet."-Daniel Gilbert, professor
of psychology, Harvard University, Author of Stumbling on Happiness (Daniel Gilbert )
"This is an engaging, informative, and thoroughly delightful book. Thaler and Sunstein provide important lessons for
structuring social policies so that people still have complete choice over their own actions, but are gently nudged to
do what is in their own best interests. Well done."-Don Norman, Northwestern University, Author of The Design of
Everyday Things and The Design of Future Things (Don Norman )
"This book is terrific. It will change the way you think, not only about the world around you and some of its bigger
problems, but also about yourself."-Michael Lewis, author of The Blind Side: Evolution of a Game and Liar''s Poker
(Michael Lewis )
"Two University of Chicago professors sketch a new approach to public policy that takes into account the odd realities
of human behavior, like the deep and unthinking tendency to conform. Even in areas-like energy consumption-where
conformity is irrelevant. Thaler has documented the ways people act illogically."-Barbara Kiviat, Time (Barbara Kiviat
"Richard Thaler and Cass Sunstein''s Nudge is a wonderful book: more fun than any important book has a right to be-and
yet it is truly both."-Roger Lowenstein, author of When Genius Failed (Roger Lowenstein )
"A manifesto for using the recent behavioral research to help people, as well as government agencies, companies and
charities, make better decisions."-David Leonhardt, The New York Times Magazine (David Leonhardt The New York Times
"I love this book. It is one of the few books I''ve read recently that fundamentally changes the way I think about the
world. Just as surprising, it is fun to read, drawing on examples as far afield as urinals, 401(k) plans, organ
donations, and marriage. Academics aren''t supposed to be able to write this well."-Steven Levitt, Alvin Baum Professor
of Economics, University of Chicago Graduate School of Business and co-author of Freakonomics: A Rogue Economist
Explores the Hidden Side of Everything (Steven Levitt )