Invisible shove: how choice is becoming the favored social engineering tool of the twenty-first century

Nudge: Improving Decisions About Health, Wealth, and Happiness

by Richard H. Thaler and Cass R. Sunstein

Yale University Press, 304 pp.

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A Russian man defects from the Soviet Union in the years before perestroika, arrives on our shores, and walks into an American supermarket. He discovers, for the first time, abundance: brilliantly lit aisles of long shelves stacked to a high ceiling and loaded with dozens of varieties of every imaginable good, each more or less affordable even to minimum-wage American workers. He finds the choice--and the market plenitude that demands it--overwhelming, and he faints.

This fable--which draws on the experience of Boris Yeltsin, who described a visit to a Houston supermarket as "shattering," and of Soviet exchange students in the 1950s and '60s, who were sure that American stores were Potemkin emporiums, erected for their benefit--was staged in the movie Moscow on the Hudson, and persists years after the collapse of the U.S.S.R. It is not, of course, a tale about Russian deprivation or the sclerotic central planning of the Soviet state. It's about our own spectacular case of material abundance. Choice is what makes us flee, the fable goes, and the market forces freed up by choice are what make Americans wealthy.

But choice is also what makes us fat and unhappy. Put two plates in front of the average American and he'll eat both. He'll eat whatever is put in front of him, basically, and stop only when the food runs out. (There have been some playfully sadistic experiments showing this by means of bottomless soup bowls, and in one study, moviegoers chowed through large buckets of popcorn that they later described "as like eating Styrofoam packing peanuts.") This is a public health issue, but there is also a public happiness problem: as sociologists from Daniel Bell to Barry Schwartz have shown, living in a land of plenty is not necessarily paradisiacal. In many cases--particularly high-stakes cases such as choosing colleges, careers, or mates--the opportunity can be psychologically crippling. We might not faint before a buffet of options like the proverbial Russian emigre, but we block out the experience of confronting choices in other ways, overlooking available information, neglecting due diligence, and arriving at decisions often contrary to our own interests by economic autopilot.

And, as behavioral economist Richard Thaler and legal theorist Cass Sunstein show in Nudge: Improving Decisions About Health, Wealth, and Happiness, a wonky little book on public policy, even when we are able to make decisions, we invariably make bad ones. We sign up for free trial subscriptions, and fail to cancel them once the bills start coming. (Economists call this "status quo bias," and marketers exploit it mercilessly.) We plan for our rosiest futures, not our likeliest ones, and nobody saves as much money as they'd like, deferring contributions to savings accounts or 401(k)s for even the most trivial expenditures. We are extremely uncomfortable with risk, even when large profits are likelier than small losses. Thaler has spent the better part of his career studying these shortcomings and mapping the ways in which ordinary people fail the standard of rational choice set for them by orthodox economics.

Our powers of estimation and forecasting are just as weak. Students handed a mug and asked to sell it to others in the class value the good at roughly twice the price others are willing to pay. (This is known as the "endowment effect," and it complicates even the simplest transactions.) We are overconfident: 90 percent of drivers believe they're better than average on the road, and nearly everyone thinks they have a superior sense of humor. Since homicides are more visible than suicides, most people wrongly believe they are also more common, and telemarketers who ask for larger amounts of money receive larger contributions. (This is called "availability bias.") Teenage girls who see other teenagers getting pregnant are more likely to become pregnant themselves; and the average Republican judge shows liberal voting patterns when sitting with Democratic appointees, and vice versa. (This is plain-old suggestibility.)

Thaler and Sunstein are cheerleaders, though, not dour dons. They offer this dim portrait of human reason not to depress us, but to inspire us. In particular, they would like us to rethink the way in which public policy shapes private choice, given how suggestible most Americans are--how likely their preferences are to be determined by a meteorology of indifference, bias, and laziness.

When seniors sat down with their Medicare Part D paperwork in 2006, most didn't feel they were making affirmative choices about managing their own health and lifestyle, but that they were flying blind through yet another maze of government bureaucracy. As a result, they became increasingly resentful at the complexity and opacity of the program. This kind of failure isn't inevitable, but avoidable through better planning. People will make smarter decisions, Thaler and Sunstein insist, when they're given smarter choices.