by Richard H. Thaler and Cass R. Sunstein. New Haven: Yale University Press, 2008. 304pages. Cloth. $26.00. ISBN: 9780300122237.
Reviewed by Benjamin Gregg, Department of Government, University of Texas at Austin. Email: bgregg [at] austin.utexas.edu.
Think of all the poor choices you could make in the course of a day, if not over an entire lifetime, and then think of all the better choices you might have made if only you had known better, had had better information, were paying attention, or had not been defeated by the sheer complexity of the issue. Richard Thaler and Cass Sunstein would help individuals and groups find their way to those better choices: to help not only you, gentle reader, but also your workplace, your retirement-account investments, not to mention the government, private business, even teenage girls vulnerable to getting pregnant. And that is just for starters. They offer a general theory of choice-management. With regard to Medicare, for example, they would “lead private sector firms to offer services allowing participants to input their data to help choose the best plan” (p.173). In public education, they would afford “greater choice” because “competition is likely to be good for kids” (p.197). As for medicine, they would “increase the freedom of patients and doctors . . . to contract with each other” (p.197). Same-sex marriage? They would “abolish ‘marriage’ . . . and rely on civil unions instead. If religious institutions want to restrict ‘marriage’ to heterosexual couples, they should certainly be permitted to do exactly that” while allowing same-sex civil unions in addition to a “wide range of experiments” (p.226), providing “freedom both for religious organizations and for people who love each other” (p.197). These are just random examples. Other possible areas for application include “Workplaces, corporate boards, universities, religious organizations, clubs, and even families” (p.252). The authors then invite their readers to develop their own applications and to submit them to a website. Can this POOR RICHARD’S ALMANACK for the 21st century (which shares both the sagacity and the witty and accessible style of its 18th century predecessor) redeem its aspirations?
The answer depends on how one evaluates (1) the authors’ underlying doctrine of libertarianism, (2) the psychological and sociological presuppositions the authors bring to it, and (3) their approach to applying that doctrine. I don’t suppose that all readers will share my particular evaluations.
(1) Thaler and Sunstein describe their approach as “libertarian paternalism.” It is one part paternalism, “self-consciously attempting to move people in directions that will make their lives better.” And as one part libertarianism, it would not forbid any options or significantly change addressees’ economic incentives. As a method, it would “be easy and cheap to avoid” (p.6) and would both preserve and honor [*453] “everyone’s freedom to choose” in ways “most likely to help and least likely to inflict harm” (p.72). Each of these two words, libertarianism and paternalism, is to modify the other. The method’s liberty-preserving efforts are to “influence choices in a way that will make choosers better off, as judged by themselves” (p.5). Such influence, as a coercion-free “nudge,” is something small in scale with potentially massive effects on group and individual behavior.
Thaler and Sunstein claim that policies flowing from their approach would satisfy an exceedingly diverse assortment of perspectives along the political spectrum. These policies would be “neither left nor right” (p.14). They could be “embraced by Republicans and Democrats alike” because they “cost little or nothing” and “impose no burden on taxpayers at all” (p.13). In other words: libertarianism not extreme. Perhaps extreme libertarianism is a straw man in the modern welfare state (for most people might agree that “we are not for bigger government, just for better governance” (p.14)). If so, then the authors provide not so much a “Third Way – one that can break through some of the least tractable debates in contemporary democracies” (p.252) – as temper libertarianism with non-libertarianism. Theirs is a gentle libertarianism, one (as we will see) that includes a moderate degree of governmental regulation.
(2) Someone who indirectly influences the choices of others is a “choice architect.” Good architecture requires a “good understanding of how humans behave” (p.83). Thaler and Sunstein locate that understanding in a number of presuppositions both psychological and sociological. They tell us that people think in two ways: alert (reflective and rational, deliberate and self-conscious) and not alert (intuitive and automatic, rapid and instinctive). The problem is very often the second way of thinking, individually – as inertia or knee-jerk preference for the unexamined default-position (p.8), and as unfounded and unrealistic optimism (p.33) – but even more so collectively, as bad influences (bad “nudges” that the authors would replace with good “nudges”): “Learning from others is how individuals and societies develop. But many of our biggest misconceptions also come from others. When social influences have caused people to have false or biased beliefs, then some nudging may help” (p.54). “It is almost as if people can be nudged into identifying a picture of a dog as a cat as long as other people before them have done so” (p.56). Better health, more wealth, and greater happiness depend on resisting the “blind internalization of the views of others (p.58); conformism (“social pressures nudge people to accept some pretty odd conclusions” (p.59); vulnerability to “spin” (“people tend to be somewhat mindless, passive decision makers” (p.37); and collective conservatism: the “tendency of groups to stick to established patterns even as new needs arise” (p.58)).
(3) One of the authors’ solutions, a touch unexpectedly for intellectuals, is not to encourage greater reflection and deliberation but rather to improve the quality of choosing by this second way of thinking (the non-alert kind) in ways that would allow people to “rely on their Automatic systems without getting into terrible trouble,” so that “their lives should be easier, better, and longer” (p.22) [*454] in a social and technological environment that perhaps increasingly relies on remote-control-thinking. But while it is more realistic not to expect people not to make an effort to be more thoughtful, encouraging a more efficient thoughtlessness would seem to render people more vulnerable, not less, to the types of manipulation to which the authors rightly object.
In fact, some of the authors’ reasons for why good “nudges” are needed suggest that they would often have their addressees rely on the first way of thinking (the alert kind which, as we will see shortly, actually often reinforces the second way). And, rather surprisingly for libertarians, they advocate this thoughtful alternative in the form of governmental regulation (a “mild” form, they assure us, a “species of libertarian paternalism that we call RECAP: Record, Evaluate, and Compare Alternative Prices” (p.93)). For governmental regulation is the best means to attack the greatest cause of poor-choice-making: the over-complexity of so much of everyday life: “For mortgages, school loans, and credit cards, life is far more complicated than it needs to be, and people can be exploited. Often it’s best to ask people to take care of themselves, but when people borrow, standard human frailties can lead to serious hardship and even disaster. Here as elsewhere, government should respect freedom of choice; but with a few improvements in choice architecture, people would be far less likely to choose badly” (p.144). Again: “if the underlying decision is difficult and unfamiliar, and if people do not get prompt feedback when they err, then it’s legitimate, even good, to nudge a bit” (p.155). And if the task just “has to be complicated to be functional, then it is best to offer plenty of signs to help people navigate” (p.174). This goal then leads back to the un-alert way of thinking, which is a good thing insofar as the authors want to “ensure that the Automatic System doesn’t get all confused” (p.83).
“Paternalistic libertarianism” turns out, then, sometimes to be more paternalistic, sometimes more libertarian. This combination is what makes the theory original. The problem it seeks to confront, un-alert ways of thinking, is an old one indeed. One prominent example from history is Émile Durkheim’s analysis of “ways of acting, thinking and feeling which possess the remarkable property of existing outside the consciousness of the individual,” ways “endowed with a compelling and coercive power by virtue of which, whether he wishes it or not, they impose themselves upon him.”
So NUDGE does not so much tell us things we do not know about our own frailties as to suggest clever ways in which we might better cope with them. To be sure, persons clueless about basic aspects of investing, college loans, mortgages, or retirement plans would surely benefit from reading this book. But what if such a book is more likely to be read by thoughtful, well-meaning, highly intelligent, college-educated persons who already know that they might benefit from subtle techniques either to make them more alert or to hone their skills at un-alert navigation in an overly complex daily life? Sunstein himself self-mockingly admits, repeatedly, to not following his own best advice. How can NUDGE nudge him or people like him – just the sort of person likely to read NUDGE and its evaluation [*455] in the LAW & POLITICS BOOK REVIEW?
Durkheim, Émile. 1982 . THE RULES OF SOCIOLOGICAL METHOD. Translated by W.D. Halls. New York: Free Press.
© Copyright 2008 by the author, Benjamin Gregg.