I have never met Cass Sunstein, (economist, professor, former administrator of the Office of Information and Regulatory Affairs during Obama’s first term) or his research partner, Richard Thaler but I am eternally grateful to them for their theory of “the nudge.”
As a young employee at the University where I spent 27 years of my career, all employees, 35 and over, were required to have 4% of their annual salary deducted for a 403B-type retirement account. The University, in turn, would add a generous match. As a single parent back in the day I resented this forced deduction of my much needed earnings. But over time I came to understand what a gift this requirement was proving to be! Over the course of years I added to my deducted percentage and now have funds for a reasonably comfortable retirement. If left to me, I might not have done the fiscally responsible thing and participated in the retirement plan right away, if ever.
In his book Nudge: Improving Decisions about Health, Wealth and Happiness, Sunstein and Thaler write about how people tend to make faulty choices in the present and faulty predictions about the future and then cringe when they experience the results. Sunstein argues that steering people’s decisions in ways that will make their lives better, over the long haul, is a legitimate thing to do. Here are a few “nudges” that have proven helpful to some:
- Making fruit or salads the first choice for people (especially kids) on a cafeteria line, preceding French fries or other, less healthy choices. People tend to grab the first thing they see.
- Employers provide a default health plan for employees into which they are automatically enrolled. Employees can choose a different plan, but they must have at least one, ensuring minimal health insurance.
- When applying for or renewing a driver’s license, people must either “check” to be an organ donor or not. Whatever the choice, this question is put right up front and can’t be ignored. The rate of organ donors has gone up since this practice was instituted in some states.
- Though this particular “nudge” doesn’t exist in most states yet, I would like to see everyone given the opportunity to register to vote when they apply for or renew their driver’s license.
The criticism of Sunstein’s concept of “nudge” is that this approach is paternalistic. Do people really need to be “tricked” into doing the right thing? Based on the findings of behavioral economics……yes they do. And I, for one, am appreciative.