Nudge

My review of Nudge appeared in the Christchurch Press this morning. Enjoy!

Cass Sunstein, the phenomenally productive legal scholar and now head of the Office of Information and Regulatory Affairs in the United States, wants to give you a nudge. And I do too. You might not like my nudge, but I can’t see a convincing argument against my nudge that doesn’t also cut against Sunstein’s.

Sunstein and coauthor Richard Thaler argue that foibles in human rationality mean that we are prone to making bad decisions: especially on decisions we make infrequently, where short term gains are outweighed by longer term costs, where we don’t get good feedback from the consequences of our decisions, where the choice is difficult and where we may not even ourselves have a good sense of our own preferences. Moreover, for lots of these kinds of choices, the choice architect – the person who arranges the order of the menu items or who picks the default Kiwisaver investment fund for your firm – can’t avoid influencing your choice; Sunstein provides a good deal of evidence that choice context matters. In these kinds of cases, he argues for what he calls a “libertarian paternalism”: set the choice architecture so as to maximize the chances of folks making the right decision, but let them make the wrong decision if they really want to. So the chef at the workplace cafeteria should make sure that the healthiest options are given the most prominent position, the HR director should make sure that the default Kiwisaver plan is the one that makes the most sense for the most workers, and the government should make it harder for us to make choices that redound to our own detriment unless we’ve given evidence of having put some thought into it.

While Sunstein worries about our decisions over investment plans or our weakness of will at the buffet table, I worry about our decisions at the voting booth. We vote infrequently, there’s no feedback from our personal voting decision to any policy outcome (unless you happen to hit Lotto by breaking a tie), the voting decision is complex and we may have little grasp of the issues at stake let alone our own positions on those issues. In my own research, I’ve found that only about half of voters in 2005 could place National, United Future, and Labour correctly on a left-right spectrum, for example, and that individuals’ political knowledge independently affects their policy and party preferences even after controlling for income, education, race, employment, gender, and other demographic characteristics. And so I think we (by which I mean you) need a nudge. Under my libertarian paternalistic voting system, your electoral enrolment would be linked to your census details. You’d then answer a brief questionnaire when entering a computerized voting booth, and I’d tell you, through the computer’s algorithms, for whom you should vote. Trust me: I’d be choosing the option that really would be best for you, if you only understood all of the policies supported by each of the parties and had a PhD economist’s understanding of the likely effects of these policies. You’d still be free to pick some other candidate or party, but you’d have to first reject the default choice I’d pick for you. The remaining options would then be presented in an order designed to maximize the chances of your choosing the next best option.

I trust that you find this kind of scheme repugnant. I’d find it great, so long as I got to be the choice architect. But opinions surely would vary, and I’d surely oppose the scheme if anyone other than me got to be the architect. The problem is that most of the arguments against my scheme cut similarly against Sunstein’s. More worrying, Sunstein seems pretty happy to blur the line between nudges and shoves: increasing cigarette taxes to discourage smoking is surely paternalistic, but is a bit stronger than a nudge. And, honestly, even the choice preserving nudges, like cars that nag you about the petrol you could save by easing up on the pedal, sound thoroughly unpleasant: I’d be nudged into learning enough automotive electronics to cut the right wires.

There are a few cases where Sunstein recommends nudges instead of regulation as a way of rolling back current nanny state protections. In particular, his recommendations to get the state out of the marriage business and instead provide default “civil union” contracts, with the option for couples to select into alternative arrangements, is rather nice and not that far from practice in New Zealand. And, allowing problem gamblers to sign onto a state-provided list banning their entry into gambling facilities is surely a less intrusive solution than blanket regulations catching all punters. For the most part, though, nudges are recommended in addition to existing regulations, not as a way of expanding the range of choice. But couldn’t we imagine creative nudge-based alternatives to current regulatory regimes in areas like drugs or health and safety regulations?

Nudge provides a provocative read. Just be sure to think about the kinds of folks who’d be likely to be giving the nudges, and how hard they’d be pushing.