Thaler and Sunstein's Nudge

Nudge-coverIn the process of listening to audio versions of some of the less arduous books on my reading list, I have just listened to Richard Thaler and Cass Sunstein’s Nudge.

The ideas in the book have been discussed in the public realm often enough that the book didn’t contain any surprises, although the emphasis in the book is a touch different from that in public debate. That difference in emphasis largely relates to the first word of Thaler and Sunstein’s philosophy, “libertarian paternalism”, and how nudges could be used to increase freedom.

Unlike public policy discussion of nudges which always seem to be on top of existing regulation, Sunstein and Thaler discuss how nudging could be used to wind back government involvement and increase freedom. They cover, among other things, school choice, getting the state out of marriage, allowing waiver of the ability to sue for medical negligence and allowing people to ride motorcycles without a helmet if they choose to opt out after suitable warnings.

Their discussion of how nudges could apply to marriage was the most interesting part of the book. They suggest that marriage should be the domain of private institutions, with the role of the state to set default rules that apply if there is no agreement to the contrary. If a couple splits, how much support should someone provide to their partner who has low career prospects due to the time they spent raising children? Appropriate default rules would give protection as they would likely stick (particularly as most people do not expect to divorce) and if they are amended, there will need to be transparent agreement between the parties. This nudge could provide protection to the vulnerable member of a couple and get the government out of marriage.

I’m not convinced by the “slippery slope” argument against nudges, as the slope toward regulation is already well oiled, and would like to see nudges used as a push toward sliding the other way. What about legalising a range of drugs with warnings? Or an ability to opt out of government provided services in exchange for tax breaks after you are nudged through, say, financial advice requirements (Bryan Caplan makes some of these arguments)? Libertarians should be more aggressive in seeing how nudges can wind back hard regulation.

And as an end note, this is another book that I’m glad I did via audiobook. If you’re familiar with much of the behavioural science literature, the book covers a lot of stuff you already know. And when you come to the chapters on money where Thaler and Sunstein tell “econs” to skip those sections, do it. You really won’t learn anything. That said, I am sure there are a lot of bureaucrats and politicians who, among others, should read the whole book.

3 comments

  1. Your last point is very fair.

    Do you actually need to make seatbelts compulsory? Or could you simply make it compulsory for cars to have a default setting whereby they beep for three minutes if you don’t fasten your seatbelt? At the time the legislation was enacted in most parts of the world, neither the technology nor the concept of nudging existed. Now both do. Should we replace compulsion with persuasion, and use LibPat to replace legislation rather than just overlaying it?

  2. The older I get, the more I appreciate government browbeating to change the culture. Consider seatbelts and smoking. The government has largely won on the former and is slowly winning on the latter. And that’s good.

    1. One thing I have been thinking about recently is whether some of those victories could be won through a temporary piece of hard paternalism. If seatbelt wearing was no longer compulsory, how much would the rate decline relative to before that before seatbelt laws? One example I tend to think about is laws concerning discrimination. At the time, they meant the end of segregation in some spheres. If they were repealed today, I suspect there would be very little shift back.

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