Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself.
�
Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful “choice architecture” can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take—from neither the left nor the right—on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years.
�
(20080518)
Customer Reviews
engaging and thought-provoking:
Everyone seems to be talking about this book, and the Tories like it a lot (which may not necessarily be a good sign). The book shows how people often behave in irrational ways and offers some gentle ‘nudging’ techniques for making them behave more responsibly and sensibly. There are some very entertaining illustrations and examples - I love the story about the urinals at the airport (but I won’t go into any more detail here or else I’ll spoil it for you.) Sometimes, however, the strategies seem to be a little less subtle than the authors suggest - for example, the idea that there should be a waiting period before people get married. Surely that’s a little too much interference? Nevertheless, the book is an excellent and stimulating - and optimistic - read. I recommend it along with Stop the Age Clock: Look 20 Years Younger, 20 Pounds Lighter and 200% Prettier in Only 20 Days
What causes the perception that credit cards are necessary financial device:
Introduction: In 2004, there were 1.4 billion credit cards. By 2007, the average American family had an average credit card debt of $12,000 and paid the typical 18 percent per year. Credit card payments are decreasing causes increased losses by banks.
Citigroup, in 2008, credit card losses eclipsed losses in the 1990s and is expected to rise in 2009. The weak economy has pushed more borrowers over the edge and affecting a wider range of borrower types.
1. Credit cards provide a convenience allowing to user to be cashless and still have buying power.
2. Businesses, such as, hotels and restaurants cater to credit card usage.
3. Credit cards provide a ready source of liquidity
4. Debit cards often offer a line of credit
5. Credit card usage is compulsive and addictive and has a huge nudge factor and tension. The constraints to usage don’t exist and the temptative tension to use the credit card is compulsive and pressure oriented.
6. Excessive Credit cards usage and accumulative debt demonstrates lack of self-control
7. Credit cards provide instant gratification bypassing the discipline of saving for a duration, accumulating, and purchasing with cash.
8. People don’t like to be told not to use their credit cards. They rebel at the censorship of their excessive usage and feel credit card usage is a right.
9. Credit card companies should be required to a electronic copy to the consumer showing all the precise usage and fee payments, so customers get a better sense of what they are paying for.
10. Credit card companies establish rules that help them raise fees. One way credit card companies capitalize on fee is by shortening the day you ahve between the time you get your bill and the day your payment is due. One day late means 30 days late, you pay the penalty and the interest; one day can result in a 100 dollar fee.
11. Credit card debt is unsecure debt. Default rates are expected to increase during receding economies.
12. Credit cards have hidden fees.
13. Interest paid on credit cards is not tax deductible.
14. Credit card companies require the consumer to pay the minimal payment and extend payment for decades without moral remorse.
15. People are more afraid to abandon their credit cards than to use cash.
16. Credit card companies should allow the automatic payment of the full bill.
Emphasizing the importance of defaults and choices:
Nudge provides a solid, easy-to-read background for the emerging space of behavioral economics. The upfront sections provide the context of fundamental human biases that provide power to those that help to form the decision choices each of us have. For me, the most critical insight of this book is the emphasis placed on how responsible any of us are for setting the default options in the choices we pose - whether to our children, our spouses, our colleagues, our team members or our organizations. Several examples provide further fodder, but if you just read the first few chapters, it can help significantly to remind you, that if you lead any people or help shape any decisions, how critical your role is in the impact on those people’s lives.
NUDGE, IMPROVING DECISIONS OVER LIFE AND HEALTH:
EXCELLENT PRIMER FOR FIRST TIMERS ON BEHAVIORAL ECONOMICS. IT EXPLAINS IN PLAIN PROSE HOW WE CAN BE INFLUENCED BY OUR ENVIRONMENT TO DO THINGS WITHOUT THOUGHT.
A bit wordy, but that is its only fault:
As has been demonstrated numerous times, and reported in numerous books, humans are not rational decision makers. Therefore, why not take advantage of human tendencies to help people make better choices for themselves and for society? “Nudge” is a little wordy, but that is really its only fault. I certainly don’t mind being reminded of the various controlled experiments on decision making conducted by psychologists, the humor is good, and I enjoyed the authors’ personal experiences. Perhaps more important, the authors are careful in finding and assembling evidence for their recommendations.
Sometimes it is a matter of choosing the proper default to overcome inertia: so organ donation becomes the default rather than the opposite. If this bothers you, then there should be no default: to renew your license you would have to make a choice. Other times it is a matter of eliminating misconceptions: teens tend to overestimate the frequency of teen drinking and smoking, and conformity is a powerful influence. If you inform people about average energy use, and how they compare, they will tend to move toward the average, so the under users actually start using more; just using emoticons with the information (smiley face for the under users) eliminates the negative effects of providing the information and accentuates the positive. Routines are important reminders, so birth control pills for days 20-28 are placebos, but people remember they need to take a pill every day.
The government must take a better role in requiring useful information (such as nutrition labels); Thaler/Sunstein carry this idea farther in suggesting that more standardized/computer readable information be provided, for example on drug plans or mortgage terms: not because this will help the typical consumer directly, but because 3rd party providers could then develop software for the consumer.
Image
