Human Agency and Behavioral Economics: Nudging Fast and Slow PDF
Preview Human Agency and Behavioral Economics: Nudging Fast and Slow
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 unique behavioral economic contributions. It provides a publishing opportunity for behavioral economist authors who have a novel per- spective and have developed a special ability to integrate econom- ics with other disciplines. It will allow these authors to fully develop their ideas. In general, it is not a place for narrow technical contribu- tions. Theoretical/conceptual, empirical, and policy contributions are all welcome. More information about this series at http://www.springer.com/series/14720 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 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Pattern adapted from an Indian cotton print produced in the 19th century Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland 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.
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