Please read the book. If you decide their ideas really are odious after doing it, fine, you can explain that, but complaining about a book without reading it is ... well, I'm just surprised.

Ummm, Sherman, I said I was wondering about the book, based on reviews I've read. Then I wonder out loud, and ask questions, having openly located that wondering in context. How is that "complaining" -- and how is it irresponsible? I'm asking readers who have read the book--or who are familiar with the economic ideas the authors develop--to comment and share their thoughts, and I'm expressing reservations about certain styles of thought and certain lines of thinking. I agree that one does not pass judgment on a book one has not read. But that is not what I was doing.

"ordinary folk should be "nudged" to decide more rationally"...the implied assumption being that the people doing the nudging can *themselves* decide more rationally and are not subject to the irrational factors tht "ordinary folk" are subject to. (Maybe the nudgers are "extraordinary folk?")

Consistent with his ideas on the benefits of limiting choice, Sunstein also seems to have some problems with our traditional concepts of free speech. Search "Sunstein" at my blog for more.

I'm not so happy with Sunstein's apparent views of free speech (see David Foster's comments, above), but the "nudging" bit doesn't really bother me. As Erin herself points, options are always already structured. People are constantly nudged in a myriad of ways (toward marriage and retirement savings, for example, through tax incentives). And choices are limited in the most fundamental areas (Democrat or Republican?). So what's wrong with admitting that this is what we do and having an honest debate on the best way of framing those choices? Isn't that vastly preferable to luring the electorate with false promises of unlimited "choice"?

I suppose that one response would be that government should play the least intrusive role possible in nudging and structuring choices, but this is not a position that either political party in the US has embraced.

Beyond governmental nudges, what Thaler and Sunstein are in favor of addressing the ways that corporations coral us into choices we're better off not making. Like you say, they're already doing it, and in their favor - why not fix it to help people out in some way. Is it so bad to make it as hard as possible for people to make bad decisions about their finances, health, and impact on the environment? These things, as we can now clearly see, eventually affect all of us, whether it's through economic collapse, widespread pollution, or insanely high health care premiums.

This would of course requirement stricter laws on behalf of congress, but in the end it's hardly Orwellian (a bit of stretch in any case here, really) and really does stand to improve everyone's well being. It's not hardly as "father knows best" as you think - their research does show that what they're suggesting works: people make bad decisions and can be nudged to make smarter ones, ones they admit they would like to make.

If there are two possible defaults, and they advocate choosing the one with the usually better outcomes, how is that paternalistic, Orwellian, or anything of the sort? It should be at maximum as paternalistic or Orwellian to choose the other possible default. The sort of thing they're proposing is completely obvious to (for example) user-interface designers; they've been aware of the importance of good defaults for years.

Erin,

If you hadn't written the following, I wouldn't have made the comment, but when you write, "I ... dislike intensely the book's working assumption that 'ordinary' people can't think for themselves, and must have their choices made for them by an elite group of managerial others," when you cannot say for certain what the book's working assumption is until you've read it.

FWIW, it's a quick read, and I don't think Sunstein and Thaler think that people can't think for themselves--rather, that there are very specific contextual circumstances that determine how people make choices. How EVERYONE makes choices, including themselves. There are specific examples (including about weight loss involving one of the authors) where it's clear they don't think of themselves as any more rational than other humans.

That doesn't mean I agree with them or other behavioral economists such as Dan Ariely on the practical consequences of their perspective. But it's an interesting way of looking at human behavior, sort of the way that game-theory and mechanism design is an interesting way to probe economic exchanges.

Nudging can lead to better outcomes, but when the nudger himself guesses wrong, it can lead to outcomes that are much worse or even catastrophic.

Here's a scenario from business..there are equivalent scenarios in government and other areas.

You're running a company or a business unit. Your sales force sells many different products, and in your opinion, they are not paying enough attention to the new Gerbilator Mark III, for which you have great hopes. You suspect this is because they don't want to take time to learn about the G.MkIII and develop the contacts necessary to sell it, since they have so many other products in their basket with which they are already familiar.

So you establish a special quota for G.MkIII sales--to keep his job, a rep needs not only to meet the overall quota, but also the specific quota. And you also set up a special incentive program--free trip to Tahiti for the best G.MkIII salespeople and their significant others.

Outcome #1: With these added incentives, the salespeople come to understand the true glory of the G.MkIII, and sell it successfully to the vast universe of customers who desperately needed it, even though they didn't yet know it. Revenue and net income are up 40% for the year. Your bonus is huge, and the Tahiti trip is great.

Outcome #2: Turns out you were wrong about the G.MkIII. The market need for this product was pretty much a fantasy, the production costs were too high, and, besides, the quality sucked. But the strong incentive program persuaded the reps to keep banging their heads against the wall, and paying far too little attention to the other products while they were trying to sell the dog you so strongly incentivized them to sell. Revenue is down 30% and net is down 50%. You lose your job, along with a large number of perfectly innocent sales reps and production workers.

In scenario #2, the nudge prevented the natural Darwinian behavior of the sales force--sell the products that are being successful--from working effectively, and turned a minor disaster into a major one.

David Foster,

That isn't really an example of a 'nudge' like those in the book. Nudges are changing the defaults for options, without changing one's ability to choose freely or the consequences. Your example is the worst sort of technocracy, which I think you knew when you wrote it.

Nudges are appropriate in cases where a) there has to be a default option anyway, and b) someone has already decided (implicitly or explicitly) what the default is, so the 'nudge' is no more manipulative than choosing to _not_ nudge.

David, "Nudging," as I understand it, is different from a quota system, in that it leaves choices free while rearranging the incentive system. This allows market forces to work, albeit to a lesser degree.

I find your example a little odd, in that I'm pretty sure that most companies do precisely what you describe—that is, provide varying degree of incentives to salespersons for different products and services. Why do they do this? Because unlike the sales force, they know that a start-up company across town is introducing the Hamstertron Mark I, and that the market is changing. The sales force, by contrast, is mostly concerned with their next paycheck. They have a great sense of what is going on "on the ground," but little vision regarding the future. They need to be "nudged."

An absolute quota is indeed more than a nudge...on the other hand, a variable incentive (you get x% commission on all other products and 3x% on the G.MkIII) would seem to qualify as a nudge by the definition being used here.

Peter, you're correct that many if not most companies do nudging in this sense, and I've done plenty of it myself. My point is that it must be done with great care. If the nudging is too extreme and the nudger turns out to be wrong in his assumptions, he can negate the normal self-correcting behavior of the sales force. Less use of feedback and more use of feedforward, as they say in the control systems world.

Also: the sales reps are indeed concerned with their next paychecks. But higher levels of management also have their own personal objectives, which may or may not be in sync with the long-term interests of the business.

For example, let's say we have a new CEO who is known to be a big fan of the Gerbilator Mark III. The VP of sales has had some problems lately, and feels his position is in some jeopardy. So, despit the fact that he has his own concerns about the commercial viability of the G.MkIII, he puts in place a very powerful nudge in favor of this product. That way, *he* will be less-likely (at least according to his possibly not-totally-rational thinking) to be blamed for the product's failure.

There's also an alternative way to handle this situation: if the G.MkIII is significantly different from the rest of the other products, set up a separate sales force to sell it, and let the people who really believe in this product come and join it, and the rest of the people doing what they've been doing all along. This can be very effective when done in the right circumstances.

IIRC, when GM launched the Saturn product line, it was done as a true business unit--separate engineering, separate dealers, separate factories. I think GM would have had a better chance of changing its corporate culture had it left Saturn separate, made it a success, and built on that success, rather than bringing it back into the blob.