Critical Review of Nudge in The Sunday Times

Bryan Appleyard offers a polemical take on the Nudge idea in last weeks Sunday Times. His review raises some interesting issues but doesnt get at why people are so interested in the book - namely that the ideas behind it are lifting a big barrier in terms of collaboration between economics, psychology, policy and law and generating a lot of policy ideas.

"But there is one big issue. These choice architects are going to be extremely powerful people under the Obamist-Cameroon dispensation. It looks as though we are all going to be manipulated all the time."

"However, much the government nudges people to eat better, the advertisers will always be out there telling them to fatten themselves to death. I am writing this in America, and I can tell you it's working."

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/non-fiction/article4268165.ece

From the perspective of Irish policy, there are dozens of topics that reading the book will offer some insights on including: waiting lists for organs, retirement savings systems, education choice support systems, self-assessed taxation, sub-prime borrowing and lending, student finance, addiction, welfare spending etc., One of the main contributions of the book is that it finally kills any notion that the literatures in social psychology, cognitive psychology etc., are not relevant to these problems and helps to resolve a bizarre situation where people were designing tax, student finance and pension systems among others without thinking about the cognitive skills of normal human beings.

It is difficult to see how, after the debates around this book, it will be possible to frame an incentive system without considering ideas from psychologists, economists, lawyers etc., In that sense, the book and associated literature (e.g. the Thaler and Benartzi 2004 paper) are having an enormous and positive influence on public policy debates. As the columnist pessimistly predicts, its hard to imagine that somebody somewhere is not going to find a really stupid way of applying these ideas but we cant blame the authors for that!

One issue that is being raised is how Nudge and associated economics literature adds to literatures such as social marketing, consumer psychology, ergonomics, compliance and the general behavioural intervention literature in addiction. For example, the book references the psychology literature on the success of the reminders to people that the environment gets damaged from overuse of washing machines and detergents in reducing towel use in hotels. It also references behavioural intervention work across psychology.

All of this literature is based, more or less, on the assumption that individuals do not make fully rational decisions in many circumstances unless guided by another individual or helped by well-framed choices and i dont personally know anyone working in psychology who would have ever doubted that. Many of the people i know who are psychologists cant fully grasp why the ideas in Nudge are considered new (with perhaps the exception of the idea of Libertarian Paternalism as a political alternative). It would be very interesting to see someone from the literature in consumer psychology, compliance or behavioural interventions or ergonomics write a well reasoned account of how the new wave of behavioural economics fits in with these literatures and whether the insights from behavioural economics are a substantial advance. If Nudge was revised, Chapter 17 entitled "Objections" should address the main criticism that i have heard voiced which is that essentially Nudge is old wine in new bottles, a repackaging of well-established literatures rather than a fundamentally new way of thinking.