Nudge: Improving Decisions - Book summary

Nudge was written by two American scholars at the University of Chicago: economist Richard Thaler and legal scholar Cass Sunstein.

The basic idea of this book runs very deep and influences many areas of our life. That's why I think it's an essential read (or at least look-through) for everyone! Beware, it gets kinda boring after 1/3, but I think it's worth it. Is there such a thing as free will? Doubt it. If you don't - read this book, otherwise, you might be the easiest to manipulate.

My grade of the book: A- (using the American grading system) - highly recommended!

Below is a collection of quotes from the book I wrote down for myself. Hopefully, they will inspire you to add it to your reading list!

Nudge

As we shall see, small and apparently insignificant details can have major impacts on people’s behavior. A good rule of thumb is to assume that “everything matters.”

A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.

There is no such thing as a “neutral” design.

The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else. We claim that this assumption is false—indeed, obviously false.

The picture that emerges is one of busy people trying to cope in a complex world in which they cannot afford to think deeply about every choice they have to make. People adopt sensible rules of thumb that sometimes lead them astray.

Anchor

Anchors can even influence how you think your life is going. In one experiment, college students were asked two questions: (a) How happy are you? (b) How often are you dating? When the two questions were asked in this order the correlation between the two questions was quite low (.11). But when the question order was reversed, so that the dating question was asked first, the correlation jumped to .62. Apparently, when prompted by the dating question, the students use what might be called the “dating heuristic” to answer the question about how happy they are.

In many domains, the evidence shows that, within reason, the more you ask for, the more you tend to get. Lawyers who sue cigarette companies often win astronomical amounts, in part because they have successfully induced juries to anchor on multimillion-dollar figures. Clever negotiators often get amazing deals for their clients by producing an opening offer that makes their adversary thrilled to pay half that very high amount.

Loss aversion

Loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when changes are very much in our interests.

In numerous experiments, people react very differently to the information that “ninety of one hundred are alive” than to the information that “ten of one hundred are dead”—even though the content of the two statements is exactly the same. Even experts are subject to framing effects. When doctors are told that “ninety of one hundred are alive,” they are more likely to recommend the operation than if told that “ten of one hundred are dead.”

Arousal

For most of us, however, self-control issues arise because we underestimate the effect of arousal. This is something the behavioral economist George Loewenstein (1996) calls the “hot-cold empathy gap.” When in a cold state, we do not appreciate how much our desires and our behavior will be altered when we are “under the influence” of arousal.

Self-control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far-sighted “Planner” and a myopic “Doer.” You can think of the Planner as speaking for your Reflective System, or the Mr. Spock lurking within you, and the Doer as heavily influenced by the Automatic System, or everyone’s Homer Simpson. The Planner is trying to promote your long-term welfare but must cope with the feelings, mischief, and strong will of the Doer, who is exposed to the temptations that come with arousal.

Social influence

Once a practice (like wearing ties) has become established, it is likely to be perpetuated, even if there is no particular basis for it. Sometimes a tradition can last for a long time, and receive support or at least acquiescence from large numbers of people, even though it was originally the product of a small nudge from a few people or perhaps even one. Of course, a group will shift if it can be shown that the practice is causing serious problems. But if there is uncertainty on that question, people might well continue doing what they have always done.

One reason why people expend so much effort conforming to social norms and fashions is that they think that others are closely paying attention to what they are doing.

Individuals were far more likely to download songs that had been previously downloaded in significant numbers, and far less likely to download songs that had not been as popular. Most strikingly, the success of songs was quite unpredictable, and the songs that did well or poorly in the control group, where people did not see other people’s judgments, could perform very differently in the “social influence worlds.” In those worlds, most songs could become popular or unpopular, with much depending on the choices of the first downloaders.

In many domains people are tempted to think, after the fact, that an outcome was entirely predictable, and that the success of a musician, an actor, an author, or a politician was inevitable in light of his of her skills and characteristics. Beware of that temptation. Small interventions and even coincidences, at a key stage, can produce large variations in the outcome. Today’s hot singer is probably indistinguishable from dozens and even hundreds of equally talented performers whose names you’ve never heard. We can go further. Most of today’s governors are hard to distinguish from dozens or even hundreds of politicians whose candidacies badly fizzled.

On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.

If consumers have a less than fully rational belief, firms often have more incentive to cater to that belief than to erradícate it. When many people were still afraid of flying, it was common to see airline flight insurance sold at airports at exorbitant prices. There were no booths in airports selling people advice not to buy such insurance.

Yeah, whatever

Inertia, status quo bias, and the “yeah, whatever” heuristic. All these forces imply that if, for a given choice, there is a default option—an option that will obtain if the chooser does nothing—then we can expect a large number of people to end up with that option, whether or not it is good for them. And as we have also stressed, these behavioral tendencies toward doing nothing will be reinforced if the default option comes with some implicit or explicit suggestion that it represents the normal or even the recommended course of action.

Make it salient

If we can find ways to make energy use visible, we’ll nudge people toward reducing their energy use without mandating any such reductions.

The second problem that contributes to excessive pollution is that people do not get feedback on the environmental consequences of their actions.

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