Saturday, September 25, 2010

A Few Nudges Might Help

I just finished reading: Nudge: Improving Decisions about Health, Wealth, and Happiness
It was named one of the best books of the year by the Economist. The basic premise is that classical economic thinking is misguided. In classic economic thinking we all make choices by weighing the benefits and risks of each decision. But most humans do not act like economists.

This book shows that in decisions about health, wealth, and other areas, the maxim of "Give as many choices as possible," does not work. Choices are determined by a lot of subconscious factors that we are unaware of. The liberalistic paternalism the authors speak of is a nonpartisan way of designing choice architecture.

I suggest you read it and think about where you could make simple nudges for you, your family, and your community. Every time you hear a policy maker talk about how great their plan is just because it gives citizens lots of choices (i.e. Medicare Drug Benefit, school choice, retirement savings), tell them to read this book.
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