What's New with Nudges

The bestselling book Nudge, first published in 2008, opened the field of behavioral economics to a general audience. Lead author Richard Thaler is an economist who went on to win the Nobel Prize in 2017; co-author Cass Sunstein is a lawyer who went on to head the Office of Information and Regulatory Affairs (OIRA) in the Obama White House. The authors define a "nudge" as "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" (p. 8). The concept of choice architecture itself was also popularized by this book, defined as design decisions in the way that information or choice options are presented to consumers, with the understanding that different presentation formats might subtly steer people in one direction or another. Some popular examples of nudges include many companies' policies of automatically enrolling employees in retirement programs with a default mix of investments, the cards in hotels that encourage guests to hang up their towels for re-use, the strategy of automatically rolling over the current year's health care coverage unless the insured person makes changes, the practice of publishing calorie counts or other nutrition information for food served in restaurants, or even the little illustrated fly in the men's urinal that indicates where to aim for minimum splash-back! In the 15 years since the book first appeared, the concept of nudging was taken up by governments worldwide in order to promote public welfare, including an official "nudge office" that was created in the British government in the late 2000s as well as efforts by the Obama administration.

I have highlighted nudge interventions as one potential approach for helping people to change their behavior under the umbrella of Two Minds Theory. I perhaps unfairly characterized these as ways to "trick" the Intuitive mind into doing what we want, as a contrast to the operant behaviorist tradition of "training" the Intuitive mind using rewards and punishments. Thaler and Sunstein clarify that nudges can be fully transparent (and perhaps should be): The "trick" here is by someone's own Narrative system, exerting control over their Intuitive system in order to keep it focused on long-term goals rather than short-term situational imperatives. The title of Thaler and Sunstein's new version of their book, Nudge: The Final Edition is a prime example of this. The authors realized that the book needed updating (it talked too much about plans for the upcoming Obama administration, and had dated references like "this new technology called the iPod"). Yet they didn't want to re-do the book again in 10 years. To keep themselves focused on examples that would hopefully endure for the ages, they wrote "the final edition" into their new title. Any subsequent revision would therefore come at a considerable social cost: The very first thing they would have to do would be to admit that their previous title was wrong! Economists call this type of thing a commitment device, a way of pre-emptively foreclosing one's own later options. (Marriage vows and other publicly-spoken oaths are other examples of commitment devices; they all count as nudges because it's possible to break them, just at a cost).

Like the edition updates in some of my other favorite books (e.g., Miller and Rollnick's Motivational Interviewing), the new edition of Nudge is almost a completely re-written book. I even love the elephants on the cover, with a new and even larger elephant pushing along the two from the previous edition of the book! For those who read the original, here are some of the things that are new:

• Besides removing outdated pop-culture references (the iPod) and issues that are now long-settled (gay marriage had its own chapter in the prior edition), the authors added a decade of new experiences using nudges, and successful outcomes from across the globe. Two theoretical chapters about investing and social security have been replaced with new material that emphasizes hard data from actual experiences with choice architecture.
• The authors provide 2 new tools for the choice architect, in a chapter that's winningly titled "but wait--there's more!" In fact, the title is an example of one of the new tools, "make it fun." The insight here is that people are more willing to change their behavior when the change seems fun. (The authors also say that "if you don' know what fun is, you're not having enough of it"). The other new strategy is curation -- selecting, annotating, or presenting content in a particular way so that others can better make sense of it. The recently televised January 6 committee hearings provide an excellent example of this influencing strategy.
• In one chapter on retirement accounts in Sweden, which was an early success story for the authors' "save more later" strategy of automatic retirement-program enrollment, they now look at the potential long-term consequences of initially bad choice architecture. In another example, the authors found that the median automatic deduction for businesses that implemented the "save-more-later" strategy was 3%, a number that the authors had picked out of thin air for the first edition: "for instance, an employer might automatically enroll employees at a 3% contribution level, and then later increase to 4% or 5%." They say this is very bad choice architecture because in many plans, the company will match up to 5% of contributions, so employees who enroll at a 3% level are leaving money on the table, and for completely arbitrary reasons.
• A new chapter on mortgages and credit cards titled "borrow more today" complements the "save more tomorrow" strategy and looks at how to avoid being fooled by malicious choice architects (hint: never take the extended warranty!). A new chapter on insurance rounds out the money section of the book, which is Thaler's major area of expertise.
• The "social issues" section has been slimmed down (former chapters on school choice and marriage equality have disappeared), but it still contains a chapter on environmental conservation. That was another early area of success for nudge interventions -- e.g., getting people to recycle or to re-use their towels. The new edition has lots of new policy ideas for saving the planet, based on more experience and new urgency as global warming accelerates.
• The "health" section has been combined into social issues, and now focuses exclusively on organ donation (a prior chapter on how to fix Medicare Part D was rendered obsolete by the passage of Obamacare while Sunstein worked in the White House). The organ donation section has been completely re-written, and is now framed as an argument against people who mis-characterized the authors' position after the first edition. They want to emphasize that they support a policy of "prompted choice" rather than "presumed consent" for organ donation, because in practice assuming that a person has consented to organ donation ignores the wishes of the family. Prompting the person to make a deliberate choice, while they are still healthy, is more likely to ensure that their wishes are actually honored while also increasing the pool of organ donors.
• The "dozen nudges" chapter is gone, which felt like a loss. It contained a wide variety of policy proposals, some half-baked but collectively demonstrating the range of possible applications for nudge interventions. Some of those have been incorporated elsewhere in the book, or else rendered irrelevant by later social and technological changes.
• The "objections" chapter, now amusingly titled "much ado about nudging," has been sharpened and expanded after a dozen more years in the fray of ideas. Besides the traditional "slippery slope" argument (if we nudge you to pick fruits over candy today, what's to stop us from switching you to soylent green tomorrow?), there's an expanded section on freedom and choice. This includes consideration of the idea that people have a "right to be wrong," which the authors pretty thoroughly debunk. For one thing, a true nudge leaves people with all of the original choice options -- a mandate is not a nudge. The authors have been clear about that from the start, as well as providing clarity about how their approach contrasts with the "just maximize choices" libertarian strategy. In fact, they are in support of both maximizing choices and also at the same time structuring them to prompt the choice that the person, if they were thinking clearly with their Narrative mind, would most likely want for themself. They also point out the important ways in which people are already being nudged all the time by private industry and advertising, in ways that are presumably not designed to maximize the public good; the idea that the government might use some of the same tools is really nothing new. The possibility of mandates and bans is considered in the ramped-up context of the COVID-19 pandemic (although those are clearly separate from nudges), and a new section addresses the objection that "nudging is sneaky," an emotional reaction that seems to underlie many of the other concerns. Finally, the authors consider an alternate proposal of "boosting" to increase people's decision-making capacity as an alternative to sneaky nudges, and conclude again that there's no reason not to do both.

If you're interested in the ethics of nudging, I also particularly recommend this philosophical essay on the topic. It directly takes on varying definitions of "autonomy" that might come up in people's reactions against nudge interventions -- e.g., freedom from manipulation versus rational agency versus the freedom to do do whatever the heck you feel like in the moment. Only some of these are typically viewed as truly "autonomous" behavior in the long tradition of Western philosophy. Many of the common objections can be overcome if we stick to Thaler and Sunstein's original concept of a nudge as a piece of decision architecture that encourages a particular response without removing any of the original choice options and while imposing the lowest feasible cost for making a different decision. The ethics also become clearer the more transparent the nudges are to the person being nudged.

Besides the new edition of Nudge, which is a treasure trove on its own, Sunstein went ahead and wrote two more books in the last 2 years (in addition to his collaboration on the book about randomness with Daniel Kahneman! The man is prolific). One of Sunstein's new books, Sludge: What Stops Us From Getting Things Done and What to Do About It, looks at the dark side of nudging. Sludge includes any aspect of choice architecture that creates "frictions that prevent you from doing what you want to do" (p. 1). Sludge can be a type of nudge intervention -- for example, think of lengthy Federal forms that are required to claim certain types of benefits, or mandatory meetings with a job counselor in order to receive unemployment payments. Sometimes the steps required to obtain a benefit are onerous enough that people will decide to forego the benefit. (The same logic underlies manufacturer rebate coupons, which feel like a discount to buyers but are rarely paid out by the manufacturers, because the purchaser doesn't follow through on the deliberately-annoying steps to claim the rebate). Or think about trying to reach a customer service representative for one of your utility providers: You probably have to go through a website first, use a self-help tool, maybe chat with someone online, and only then (maybe) get to speak on the phone to an actual human being. Again, this is by design -- making you go through all of the sludge is a way of dissuading you from using the more expensive call-center service. 

What's ironic about Sludge (the content of which is also summarized in a chapter of the new Nudge edition) is that Sunstein, as head of OIRA, was for several years responsible for all the sludge in Federal forms. The Office of Management and Budget currently estimates the total burden of all Federal paperwork at 11.4 billion hours per year, a significant drain on the U.S. economy. Sunstein gives numerous examples in which this paperwork burden is actually harmful to people, including the difficulty level of applications for food stamps/SNAP, welfare/TANF, Social Security, the Earned Income Credit on taxes, and health insurance enrollment under the Affordable Care Act. In other examples, things like student visas, voting registration, and access to abortion have all been made intentionally sludgy processes by lawmakers who want to restrict people's access to these things (or to restrict only certain people's access -- it's also true that if you are wealthy enough, you can pay someone else to wade through the sludge on your behalf).

Thaler argues that the primary distinction between sludge and nudge is that nudges are "low friction." But Sunstein writing on his own suggests that some types of sludge are also nudge interventions, if the goal is actually to increase friction in order to give people a chance to reflect on their choices (i.e., to move the decision-making process out of the Intuitive mind and into the Narrative mind). Sunstein proposes the following list of situations in which creating sludge might actually be a valid approach:

• To counteract self-control problems, as in the classic example of imposing a waiting period for gun sales as a "cooling off" period before actually giving the buyer their gun. In the immortal words of Homer Simpson: "I have to wait 5 days? But I'm angry now!" That's exactly the point.
• To ensure eligibility for program services and maintain program integrity -- i.e., preventing "waste, fraud, and abuse." Sunstein acknowledges that the risk of actually offering services to someone who might not quite qualify is probably a lot less than the harm that might come from denying services to an eligible person who needs them. But he counterbalances that with a political consideration, in which the public might not continue to support offering a benefit at all if too many non-eligible people are taking advantage of it.
• To protect privacy. This is an interesting one. Sunstein points out that in today's information-rich society, the government probably doesn't need you to fill in a form to find out anything that it wants to know about you. But if we are uncomfortable with the government surveilling our online activities, movements, etc. even though the technology to do so exists, then we might be more comfortable with a bit of sludge. The existence of a form makes it more likely that the government will look to that form in seeking information about me, rather than trying to obtain it through other, more surreptitious means.
• To protect security. For example, Sunstein points out that 2-factor authentication on mobile devices and online accounts is a form of sludge. Yet we are all learning to live with it, because it protects us from identity theft and other online hazards.
• As a way of screening people to ensure that scarce resources are allocated to those who are willing to endure the most sludge to access them. This is a "willingness to pay" measure, although it involves expending time rather than money. That partially removes concerns about equity, although it isn't a perfect fix. As described above, wealthy people could still pay someone else to spend the time -- e.g., as in paying an expert to prepare your taxes.
• Finally, Sunstein the government functionary would be remiss if he didn't tell you that one good reason for requiring forms is "collecting important information." :) 

Of course, the fact that you expect Sunstein to say some of this doesn't make it less true. There are numerous uses for things like U.S. census data, to support important goals in policy, equity, and public health. The database created by the government is a searchable resource that can be used for many purposes, including some not originally envisioned by the creators of forms. Still, I'm not necessarily sure that Thaler, who has more libertarian tendencies, would agree with it.

A third recent book on the nudging theme is Sunstein's 2020 Too Much Information: Understanding What You Don't Want to Know. Where Sludge is mainly about collecting information, Too Much Information is about the government's role in distributing information to people. One of Sunstein's early policy achievements was the requirement for restaurants to post calorie information on all foods, which included places like fast-food joints and movie theatres. A friend summarized his achievement like this: "Cass ruined popcorn." Much of the early segment of this book is therefore about the ethics of providing information, and what to do in situations where we know something is true but people would genuinely prefer not to hear it. Mostly Sunstein comes down on the side of disclosure, but it's an interesting topic to consider. What if the knowledge increases your future welfare -- e.g., by prompting healthier dietary decisions -- but does so at the cost of your present happiness? This kind of "for your own good" situation is common in nudge interventions, and is part of why some people don't like them. Sunstein presents some interesting survey results about what types of things a person might prefer not to know (the future date of their spouse's death, what your colleagues really think of you, whether heaven and hell exist -- intriguingly, people are more reluctant to know about hell than about heaven!).

One important section of this book considers the well-documented difference between willingness to pay and willingness to accept. For example, if you sue me for ten thousand dollars because I put a toxic waste dump next to your house, then it stands to reason that you would be willing to pay up to ten thousand dollars to prevent the situation. But that's not how it works most of the time: People often demand much higher rates in damages for a negative outcome (willingness to accept) than they are willing to pay to prevent it from happening. Often they are willing to pay only a nominal amount for prevention, yet say that they would be unwilling to accept the negative consequence at any price. A sense of moral outrage is probably involved in these discrepancies: e.g., in the question of how much cost we should impose on fisheries to make them tell consumers whether their products are dolphin-safe, most consumers won't care but a few consumers will care a great deal indeed; should the outrage of the few outweigh the indifference of the many? In a more positive example, Sunstein found that people would charge a high premium (in the range of $75-$100 per month) if someone offered to pay them to stop using Facebook, yet they were unwilling to pay almost anything -- at most a few dollars per month -- to maintain their access. And that was even though about half of people said that spending more time on Facebook made them less happy! It's an interesting example of people's ambivalence toward information, one that I hadn't seen before.

Finally, Sunstein spends a lot of pages in this book on how policymakers can design effective information disclosures:

• Disclosures are more effective when they are simple, visual, vivid, and include some social component (a feature that increases their relevance to the Intuitive mind). They also work best when they come with a specific call to action. 
• People tend not to notice what isn't there, so selective disclosure is both an effective technique and also a potential source of deception to be on guard against.
• People's judgments of probability follow motivated reasoning patterns. Said another way, we aren't good at understanding statistics, so we tend to process them emotionally: "that's a lot!" versus "oh, that's hardly anything." Information designers should anticipate these reactions.
• The phenomenon of moral licensing is a way in which disclosure can have unintended negative effects. For example, when physicians know that their conflicts of interest have been disclosed to a patient, they may be less religious in looking out for the patient's best interests -- after all, the person has been warned. And on the consumer's side, there is often an assumption that when a conflict has been disclosed that also means the consumer will be protected from harm. In fact, it probably means just the opposite -- "after all, we warned you."
• People who know that an expert will benefit if they accept a particular recommendation might feel a pressure to "help" the expert (called the panhandler effect), or may be concerned about retribution from the expert if they refuse (called the insinuation anxiety effect).
• On the other hand, the spotlight or telltale heart effect suggests that when experts know they will be forced to disclose conflicts of interest, they may make special efforts to avoid having them -- probably one of the better outcomes of disclosure requirements.
• In Nudge, Thaler and Sunstein also argue for what they describe as "smart disclosure" -- essentially a database of relevant information that can be mined with a range of tools that utilize different decision rules. Thaler (the inveterate capitalist) hopes that private businesses will step in to develop these tools, and will compete to deliver the most value to consumers.

In both Sludge and Too Much Information, Sunstein argues that we should look at the costs versus benefits of information collection or information disclosure. Advocates will focus on the benefits, while industry or people who don't want to comply with disclosure requirements will tend to focus on the costs. Too Much Information spends a good bit of space considering how to make those cost-benefit determinations. Sunstein also introduces an important equity concern, about whether the costs fall disproportionately on people who are older, poorer, or otherwise disadvantaged. These same methods could be used to evaluate any type of nudge intervention, not just disclosures.

Overall, there is a wealth of new material on nudging, which reflects the evolving expertise of this sub-field within behavioral economics. Taken together, these books provide an expanded toolbox and an improved rationale for nudge interventions, especially in the public sector. These tools will continue to be relevant in confronting the newest variants of COVID-19, substance use and mental health problems that emerged during the pandemic, self-care behaviors to address long COVID, and other urgent public health concerns.