Human Agency and Behavioral Economics: Nudging Fast and Slow

122 Pages·2017·1.349 MB·English

by  Cass R. Sunstein (auth.)

PALGRAVE ADVANCES IN
BEHAVIORAL ECONOMICS
Series Editor: John Tomer
HUMAN AGENCY
AND BEHAVIORAL
ECONOMICS
Nudging Fast
and Slow
Cass R. Sunstein
Palgrave Advances in Behavioral Economics
Series editor
John Tomer
Co-editor, Journal of Socio-Economics
Manhattan College
Riverdale
USA
This groundbreaking series is designed to make available in book form
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Cass R. Sunstein
Human Agency
and Behavioral
Economics
Nudging Fast and Slow
Cass R. Sunstein
Harvard University
Cambridge, MA
USA
Palgrave Advances in Behavioral Economics
ISBN 978-3-319-55806-6 ISBN 978-3-319-55807-3 (eBook)
DOI 10.1007/978-3-319-55807-3
Library of Congress Control Number: 2017936329
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A
cknowledgments
This book has its origins in a lengthy co-authorship with the late Edna
Ullmann-Margalit; I am grateful to her for her terrific work on rational-
ity and for joint work, above all on what we called “second-order deci-
sions,” that provides the foundation for many of the organizing ideas
here. Richard Thaler, my co-conspirator on all things nudging, is a tre-
mendous friend as well as a colleague; it is obvious that without our
work together, this book could not possibly exist. Special thanks to Lucia
Reisch for many valuable discussions, for an ongoing collaboration on
behaviorally informed approaches, and for permission to draw heavily on
joint work in Chap. 2. Sendhil Mullainathan has done foundational work
on scarcity and bandwidth, and that work, along with many discussions
and valuable comments, has provided essential help here. Thanks too
to Tali Sharot for many valuable discussions and for joint work on the
intrinsic value of control, which plays a significant role in Chap. 4.
Important parts of this project were born in Berlin, above all in discus-
sions with Ralph Hertwig, a superb psychologist who has emphasized the
importance of what he calls “boosts.” I have learned a great deal from
Hertwig, though undoubtedly not enough. Christopher Young provided
extraordinary research assistance and helped shepherd the manuscript to
completion. Needless to say, none of these people is responsible for my
errors here.
For this book, I have occasionally drawn on, but also very sub-
stantially revised, several academic essays that were written roughly
contemporaneously. They are Do People Like Nudges?, 68 Administrative
v
vi ACkNOwLEDGMENTS
Law Review 177 (2016); Lucia A. Reisch & Cass R. Sunstein, Do Europeans
Like Nudges?, 11 Judgment & Decision Making 310 (2016); Choosing Not
to Choose, 64 Duke Law Journal 1 (2014); and People Prefer System 2 Nudges
(Kind Of), 66 Duke Law Journal 121 (2016).
c
ontents
1 Introduction: Agency and Control 1
2 People Like Nudges (Mostly) 17
3 People Prefer Educative Nudges (Kind Of ) 41
4 How to Choose 73
5 “What Route Would You Like Me To Take?”
Paternalists Who Force Choices 87
Index 115
vii
CHAPTER 1
Introduction: Agency and Control
Abstract For most people, control has some intrinsic value; people care
about maintaining it and will pay something to do so. whenever a pri-
vate or public institution blocks choices or interferes with agency, some
people will rebel, even if exercising control would not result in material
benefits or might produce material harms. On the other hand, people
sometimes want to relinquish control, because exercising agency is bur-
densome or costly.
Keywords Control . Agency . Default rules
This is a book about agency and control—about people’s power over the
course of their own lives, about how we should understand that power,
and about what might interfere with it.
Nudges are specifically designed to preserve both agency and control.
while nudges steer people in particular directions, they permit you to go
your own way.1 You can ignore them if you like.
A reminder is a nudge; so is a warning. A GPS device nudges; a
default rule nudges. Consider the automatic settings on your cell phone
or your computer, which you are free to change. Disclosure of relevant
information—for example, about the risks of smoking or the costs of
borrowing—counts as a nudge. A recommendation is a nudge. (“If
you want to lose weight, skip dessert!”) Save More Tomorrow plans,
which allow employees to sign up to give some portion of their future
© The Author(s) 2017 11
C.R. Sunstein, Human Agency and Behavioral Economics, Palgrave Advances
in Behavioral Economics, DOI 10.1007/978-3-319-55807-3_1
2 1 INTRODUCTION: AGENCY AND CONTROL
earnings to pension programs, are nudges.2 The same is true of Give
More Tomorrow plans, which allow employees, or charitable donors
of any kind, to decide to give some portion of their future earnings to
charity.3
In many domains of law and policy, nudges are easy to find, whether or
not they go by that name. They are as old as human history. In Genesis,
Satan nudged, and Eve did too; so, above all, did God. Especially in the
twenty-first century, public officials have been keenly drawn to the idea
of nudges, which have become understood as an important part of the
policy toolbox.4 Nudges are playing a large role in American initiatives
in multiple areas, including environmental protection, national security,
poverty, financial regulation, anti-obesity policies, and education. In the
first decades of the twenty-first century, and under both Republican and
Democratic presidents, many of the most important reforms in the USA
have enlisted nudges, coming not from any kind of “Nudge Unit,” but
from the white House and Cabinet departments. In 2012, the USA cre-
ated its own white House Social and Behavioral Sciences Team.
In 2009, the Uk created the first Behavioural Insights Team, focused
largely on uses of nudges and choice architecture to improve social out-
comes. Its results have been impressive, saving both money and lives. In
2015, Germany created its own such team as well, as did Australia. As
of this writing, dozens of nations have a Nudge Unit of one or another
kind. with an emphasis on poverty and development, the world Bank
devoted its entire 2015 report to behaviorally informed tools, with a
particular focus on nudging.5 In 2016, Qatar became the first nation in
the Middle East to create its own “nudge unit.” The worldwide Open
Government Partnership can be seen as an effort to use nudges to com-
bat corruption, inform citizens, and promote the goals of sustainable
development. In the future, we will inevitably see far more uses of behav-
ioral science at the highest levels of governments all over the world.
Indeed, the level of activity, on the part of political officials, is increasing
every month.
The reason for the mounting interest should not be obscure. If gov-
ernments can achieve policy goals with tools that do not impose high
costs and that preserve freedom of choice, they will take those tools
seriously. In domains that include savings policy, climate change,
corruption, and health care, among others, behaviorally informed
approaches have attracted considerable attention, and on countless
occasions, led to concrete reforms, with significant benefits for many
millions of people.