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Posted by on Jul 22, 2008 in Politics | 2 comments

Sunstein’s influence on Obama: the right kind of Nudge

The Philadelphia Inquirer’s Chris Satullo had a column Sunday looking at Richard Thaler and Cass Sunstein’s Nudge:

Been nudged lately?

You have, whether you know it or not.

If you’ve ever obeyed your computer’s invitation to install some software in the “standard (recommended)” mode, you’ve been nudged, in a helpful way. If you’re still paying for that magazine subscription you got in a “free trial” three years ago, you got nudged less benignly.

Unless you’re a creature of rare self-discipline, you get nudged all the time.

If Barack Obama becomes president, you will likely be nudged more often by the federal government, as his policy advisers seek ways to reach goals without new mandates or hard-and-fast bans.

Nudge now peppers wonkish conversation the way tipping point did a few years ago after Malcolm Gladwell published his famous book. At a recent Urban Institute panel on the future of retirement, every panelist mentioned something about “finding the right nudge” or “seeing a nudge opportunity.”

As with tipping point, this instant cliche comes from a book. Written by two witty guys from Chicago, economist Richard H. Thaler and legal scholar Cass R. Sunstein, it’s called Nudge: Improving Decisions About Health, Wealth and Happiness.

Sunstein is a good friend of Obama’s; both authors serve as informal policy advisers.

Not everyone is happy about that. Last week Big Tent Democrat pointed to Glenn Greenwald quoting Ari Melber that Sunstein wasn’t interested in pursuing criminal conduct in the current Administration arguing we risk a retributive cycle of criminalizing public service. [LATER: Sunstein debates Greenwald on Democracy Now.]

As it happens, on that point, I may agree with Sunstein. But BTD goes on to explain that Sunstein has “[defended] the Bush Administration’s illegal actions and… preposterous claims for many years.” And, indeed, I agree with BTD’s criticism of Sunstein on Chief Justice John Roberts.

But in the end those positions do not rule him out in my book. He is a law professor! He talks and thinks and argues and acts like the legal minds I have known. I trust Obama to be the political animal we need to translate Sunstein’s insights — and hopefully filter out his clunkers — into positive social change.

So back to the insights:

Psychologists have shown that we humans harbor many quirks that don’t resemble the hyperrational Economic Man of free-market theory.

We’re experts at inertia (those lingering magazine subscriptions). We’re overconfident, sure that we invest our money better than the average bear, that our marriages (unlike half of everyone else’s) won’t end in divorce. We’re impulsive, suggestible, and slaves to peer pressure.

So, the authors argue, “choice architecture” – the way choices are presented and explained – inevitably sways the decisions we make.

Given that, they say, shouldn’t government and institutions set up choices to nudge people toward the most beneficial decision?

In the school cafeteria, whatever’s put at eye level gets eaten most. So why not carrot sticks instead of Doritos?

Given their libertarian streak, Thaler and Sunstein still want Doritos to be available; they hate to bar choices. As important, “nudge paternalism” aims only to help individuals achieve goals that they themselves say they want.

Take this popular example of a national policy nudge: People say they want to save for retirement, but half the workers eligible for tax-protected 401(k) accounts don’t sign up for them. Crazy. When employers have made those accounts opt-out (that is, you’re enrolled automatically, with the option to pull out), nearly everyone keeps a 401(k). Obama wants to make that nudge the federal norm.

Similarly, opt-out registration for organ donation sharply increases donor rates.

An example:

RecyleBank, a four-year-old Philadelphia recycling company. In the 40-odd towns where it operates, including Cherry Hill and Philadelphia, RecycleBank has never failed to double the recycling rate.

RecycleBank nudges people in ways that Thaler and Sunstein would applaud. The amount you recycle is weighed and turned into points that you can track on a Web site and redeem for coupons to local stores. (Simple incentive to get your inner Homer off his duff? Check!)

The Web site tells you how many trees and barrels of oil you’ve conserved through this single-stream recycling. (Personally meaningful feedback? Check!) Even the size (huge) and color (green) of the company’s wheeled bins serve as a nudge. Unlike those little blue bins so prone to spillage, these 64-gallon monsters signal to you that most of the waste you produce should be recycled. They dare you to fill them up.

In my household, we do. Every week. We’ve been nudged. And it feels so good.

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