Tuesday, May 13, 2008

Slate.com: How to opt out of our own stupid choices

from Slate.com:

The real trick to understanding how to approach Nudge: Improving Decisions About Health, Wealth, and Happiness, the new book by Cass R. Sunstein and Richard H. Thaler, lies in recognizing the limitations of your inner Homer Simpson. In the authors' view, your whole brain is a civil-war zone between your "automatic system" (the rapid, intuitive, reptilian part) and your "reflective system" (the slow, deliberate, self-conscious part). Behavioral economists take the position that snap judgments formed by your Homer Simpson brain are often quite terrible ones, which go on to have enormous consequences in your financial, physical, and emotional life. Like Homer, we use all sorts of mental "heuristics" or cognitive "rules of thumb" that are flawed, which is why we pay for magazine subscriptions for years after the three-month "free" trial ended ("status quo bias") and why we buy lottery tickets ("unrealistic optimism").

The premise of Nudge—the authors caution in their very first footnote that this is not to be read as noodge (noun: from the Yiddish, meaning, "You never call; you never write. ...")—is that in framing public policy, "choice architects" should gently guide us to make better choices, the sorts of choices Albert Einstein or Star Trek's Mr. Spock* might make or that we would make if we were to consult such men on our personal decisions about, say, giving up smoking. Laissez faire economics holds that faced with a broad menu of choices, most of us will choose wisely. Sunstein and Thaler fear that some of us might pull a Homer Simpson and try to eat the menu.

Now, nobody appreciates being compared to Homer Simpson, but isn't that really the whole point? Sunstein and Thaler are very persuasive in illustrating how often we channel him in our daily decision-making. In fact, your automatic system may reveal your own biases with respect to this book: While your Homer Simpson brain might leap to the conclusion that any book by a University of Chicago economist and a law professor—Sunstein is about to become a Harvard law professor—might be hopelessly dry, that could just be a mistake of the so-called "availability heuristic" (assessing the likelihood of an outcome based on the examples that come most readily to mind). But Nudge is actually great fun to read. And while your reptilian mind might balk at their language of "libertarian paternalism"—even the authors concede the words are "off-putting" if not "contradictory"—your reflective mind may have to concede that there's something to be said for gently guiding children to eat fruit in the cafeteria or inducing workers to sign up for their 401(k) plans, so long as nobody is being coerced and the Oreos are merely moved to a higher shelf, not banned. In some ways the whole project involves resetting the default buttons of your life to healthy and wealthy and wise. Of course someone else is doing the resetting, and that is where the problem lies.

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