Nudge: The Final Edition
Richard H. Thaler and Cass R. Sunstein
Penguin Books (August 2021)

“Letting the other chap have it your way.”

This is an updated and revised version of a book first published in 2008. The first four chapters are essentially the same. “They set out the basic framework of our approach, including the term libertarian paternalism, which only its authors love.”

How specifically, does this edition differ? “Two important topics are given new chapters early on. The first is what we call Smart Disclosure. The idea is that governments should consider the radical thought of moving at least into the twentieth century in the way they disclose important information….Widespread use of Smart DIsclosure would make it possible to to create online decision-making tools that we call choice engines, which can make many tasks as easy as it has become to find the route to get to a new restaurant.

“We have also added a new chapter on what we call [begin italics] sludge [end italics], which is nasty stuff that makes it more difficult to make wise choices…We introduce several choice architecture concepts, in addition to ‘sludge,’ that are new to this edition…These concepts play a large role in the chapters about financial decision making. We have increased the space we devote to climate change and the environment.” [Pages xiii-xiv]

According to Barry Schwartz, “What Kahneman and Tversky did for the basic psychology of decision making, Thaler and Sunstein did for policy. In domains as disparate as savings, health care, driving, energy conservation, eating, and even urinating (by men), Thaler and Sunstein provide evidence that left to their own devices, people often make mistakes, sometimes very consequential ones, and that these mistakes can be mitigated or even eliminated if institutions take an active role in doing so.

“The oxymoronic term ‘libertarian paternalism’ captures much of the thinking behind Nudge. Its recommendations are paternalistic in that they try to steer people in the right direction.  But it is libertarian in that people are free to resist nudges if they choose to do so. This libertarian paternalist approach has come to be called ‘soft paternalism,’ in that people are influenced, but not required, to move in certain directions.”

So, what’s a nudge? Sunstein has explained it this way: “A nudge is an intervention that maintains freedom of choice but steers people in a particular direction. A tax isn’t a nudge. A subsidy isn’t a nudge. A mandate isn’t a nudge. And a ban isn’t a nudge. A warning is a nudge: “If you swim at this beach, the current is high, and it might be dangerous.” You’re being nudged not to swim, but you can. When you’re given information about the number of fat calories in a cheeseburger, that is a nudge. If a utility company sends something two days before a bill is due, saying that “You should pay now, or you are going to incur a late fee,” that is a nudge. You can say no, but it’s probably not in your best interest to do so. Nudges help people deal with a fact about the human brain—which is that we have limited attention. The number of things that we can devote attention to in a day or an hour or a year is lower than the number of things we should devote attention to. A nudge can get us to pay attention.”

Thaler and Sunstein nudge their reader to consider being a “choice architect” who “has the responsibility for organizing the context in which people make decisions.” They offer dozens of examples from their own experience and remind me of several of mine. Here’s one. While attending a reception in Washington for a new UK ambassador to the United States, I became engaged in conversation with one of his aides.  When I asked him how he defined diplomacy, he replied, “Letting the other chap have it your way.”

That in essence is what nudging others is all about. Moreover, many of those who read this book may be encouraged to use some of the material to nudge themselves when making what may initially seem to be relatively minor decisions but could perhaps have important implications and even very serious consequences in months and even years to come. That is what one of the characters in Hemingway’s The Sun Also Rises indicates when explaining how his company became bankrupt: “Gradually and then suddenly.” The same is true of tooth decay and compound interest on credit card debt. Here’s a positive example: What if you set aside only one dollar a day, every day, since you first went to work full-time?

Those who share my high regard for this book are urged to check out Daniel Kahneman’s Thinking, Fast and Slow.