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Nudge: Improving Decisions about Health, Wealth, and Happiness (Review)

Tomorrow's Academy

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995

College campuses are full of intelligent people who sometimes struggle to understand behavior that is not rational. Nudge helps to explain the reasons why and how rational decision making can be supported by choice architecture.

 

Folks:

 

The posting below is a review by Scott Flanagan of the book: Nudge: Improving Decisions about Health, Wealth, and Happiness, by Richard H. Thaler and Cass R. Sunstein. Planning for Higher Education. 38(2): 57-59. The review originally appeared in Planning for Higher Education. January - March, 2010. Copyright © 1998-2010 by Society for College and University Planning (www.scup.org). Reprinted with permission. Planning for Higher Education book reviews appear at: (www.scup.org/phe).

 

Regards,

 

Rick Reis

reis@stanford.edu

UP NEXT: Global Learning through Short-Term Study Abroad

 

Tomorrow's Academia

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Nudge: Improving Decisions about Health, Wealth, and Happiness

Reviewed by Scott Flanagan

 

In higher education, the power to influence is often more potent than position authority (Bergquist 1992; Birnbaum 1988). Nudge explores the relationship between decision process design (choice architecture) and decision making and suggests that conscious choices about choice architecture can improve decision making. College campuses are full of intelligent people who sometimes struggle to understand behavior that is not rational. Nudge helps to explain the reasons why and how rational decision making can be supported by choice architecture.

 

The authors, Richard Thaler and Cass Sunstein, worked on this book during the course of their years together as faculty members at the University of Chicago. Since then, the authors have reportedly become part of a "behavioral dream team" (Grunwald 2009, p. 29) that influenced then-Senator Obama's campaign, and President Obama has appointed Sunstein to a leadership role in reviewing and crafting federal policies. While college and university planners are not its primary target audience, Nudge carries implications that planners can use to enhance the effectiveness of their work.

 

Thaler and Sunstein collaborated during weekly lunches at the same restaurant. At times the book has the comfortable, colloquial feel of a conversation among colleagues. The book is written in an accessible manner for a broad audience with examples liberally and skillfully used to illustrate key points. It is not the result of new research, but is rather the distillation of previous work in the field of behavioral sciences, presented in a manner easy to understand and apply. In this respect, it is similar to Freakonomics (Levitt and Dubner 2005), The Tipping Point (Gladwell 2000), Outliers (Gladwell 2008), The Black Swan (Taleb 2007), and other recent works that communicate complex ideas simply. The book contains sufficient scholarly background,   which gives its observations and recommendations more weight than other recent popular works that seem to be only a series of anecdotes loosely organized around a theme. Nudge is organized in five parts: an introductory exploration of the concept of libertarian paternalism, the impact of nudges upon financial, health, and lifestyle decisions (respectively), and a concluding section suggesting other specific applications of the concept.

 

The book is built on two key foundations. The first is that there is no such thing as neutral design. Whether intended or not, the choice architecture of every process influences the likelihood of particular outcomes. Exposing the myth of neutral design is one of the most powerful ideas in the book. Second, individuals do not tend to act rationally. Most of us have every good intention to pursue financial and physical health, yet we often buy more investments when the stock market is increasing in value, save less than we know we should, eat unhealthy food too frequently, exercise too infrequently, etc. Thaler and Sunstein describe this pheonmenon by contrasting the decisions of two groups of people: Econs (mythical individuals who make perfectly rational decisions) and Humans (who are subject to flaws in decision making). While the non-existent Econs have no trouble translating their rationality into action, Humans are easily confused and sometimes paralyzed by decisions with many options. Further, Humans have difficulty associating short-term decisions with the long-term impact of those decisions (hence the difficulties with the saving habits and waistlines of many Americans). Taken together, these two foundations lead to a conclusion that Thaler and Sunstein term "libertarian paternalism." The authors summarize the logic behind the idea of libertarian paternalism accordingly: "Choice architecture and its effects cannot be avoided, and so the short answer is an obvious oneŠ offer nudges that are most likely to help and least likely to inflict harm" (p. 74).

 

The authors address both the influence of default options and the relationship between the number of options and how people choose. First, most decision makers tend to passively select the default option, the option that is automatically selected if we do nothing. For example, most of us have not changed the power settings on our computers or the brightness settings on our televisions. We simply trust that those options are right for us. While these examples are relatively harmless, the principle holds when the stakes are much higher. For instance, many individuals leave potential retirement benefits unclaimed by taking the default step (doing nothing) rather than taking action. Not surprisingly, participation improves substantially when individuals are automatically enrolled unless they opt out. In other words, more individuals take steps that further their best interests when choice architecture makes that decision as simple as possible to pursue. Default options are even more important when a wide variety of choices is available. Common sense would suggest that more options lead to improved participation; after all, the more choices there are, the more likely that an individual will find something that suits. In fact, the contrary is true. As Thaler and Sunstein state, "With more options, the process becomes more confusing and difficult, and some people will refuse to choose at all" (p. 112).

 

Not everyone will agree with the use of libertarian paternalism as a tool to influence behavior. Objectors may suggest that the idea can be used to influence behavior in any way that policy makers believe desirable, whether it is to the benefit of individuals or not. Suggestions that seem to influence individuals to take actions from which they would derive benefit, such as increasing retirement contributions, are not troubling. It is more difficult to reconcile the use of choice architecture to influence individuals to take steps that also benefit others. For example, Thaler and Sunstein suggest a strategy to increase contributions to universities, leaving the reader to wonder whether such process design furthers the best interests of the individual, the institution, or both. It is safer ground to suggest that libertarian paternalism enables individuals to pursue actions that they are already inclined to take. The further liberal paternalism is applied with the goal of persuasion, the more difficult it becomes to overcome the objection that the approach is more paternalistic than libertarian.

 

The lessons included in this book can be useful to college and university planners. In fact, practitioners from a number of functional areas on college campuses could benefit from reading Nudge. Anyone involved in crafting policies will likely benefit from considering the impact of decision processes upon results. In addition, senior leaders engaged in change efforts will find suggestions about how to gather momentum for initiatives and how to influence movement   toward change through policy. More specifically, individuals with oversight of human resources (and, in particular, benefits) will be challenged to think about how changes in choice architecture can have a positive impact upon the decisions people make. Similarly, campus leaders involved in marketing-whether student development professionals trying to engage current students, admissions officers attempting to attract prospective students, or advancement officers pursuing gifts-will find plenty of food for thought. Nudge is an easy read with powerful messages that can assist campus decision makers.

 

References

 

Bergquist, W. H. 1992. The Four Cultures of the Academy: Insights and Strategies for Improving Leadership in Collegiate Organizations. San Francisco: Jossey-Bass.

 

Birnbaum, R. 1988. How Colleges Work: The Cybernetics of Academic Organization and Leadership. San Francisco: Jossey-Bass.

 

Gladwell, M. 2000. The Tipping Point: How Little Things Can Make a Big Difference. Boston: Little, Brown and Company.

 

---. 2008. Outliers: Why Some People Succeed and Some Don't. New York: Little, Brown and Company.

 

Grunwald, M. 2009. How Obama Is Using the Science of Change. Time, April 13, 28-32.

 

Levitt, S. D., and S. J. Dubner. 2005. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: William Morrow.

 

Taleb, N. N. 2007. The Black Swan: The Impact of the Highly Improbable. New York: Random House.