Back in 2008, pre-financial crash, when economists were still a trusted animal, two economists, Thaler and Sunstein, collaborated to put forward their vision of how things could work that little bit better in Nudge – Improving decisions about health, wealth and happiness.

The book was a runaway bestseller, the book to read for policy wonks and chattering classes. The two economists were wined and dined by the political elite, governments rushed to implement recommendations, and there was a flurry of interest in behavioural sciences in business schools. Sunstein was appointed to be administrator of the US Office of Information and Regulatory Affairs, in 2010 the British government created a Behavioural Insights Team or “nudge unit” and corporate governance got in on the action too.  We now live in a world where we are “nudged” to better decisions; you have this book to thank for Graze bars at supermarket checkouts, and for your automatic enrolment into your workplace pension scheme.

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What was it all about?

Nudge theory is based on the premise from behavioural psychology, that people are not always good decision makers, even when “good” is measured by themselves. We have two different systems of thinking and decision-making - one is considered and rational (our reflective system), and the other is instinctive and frequently irrational (our automatic system) – and it’s our “automatic” system that’s to blame for us making decisions we regret. It’s this that makes us eat doughnuts and skip the gym, binge on Love Island instead of doing our life admin, never get round to saving for retirement, stay subscribed to magazines we never read, or turn “just one drink” into several.

Nudge theory recognises that there is a systemic biases behind which decisions we are bad at making, and suggests ways in which governments and businesses can manipulate the way choices are presented to consumers (or “choice architecture”) to “nudge” them towards better decision-making.  This can be done by things like selecting good default options (e.g. automatic enrolment in pension schemes), or arranging choices so that preferred options are more salient (e.g. veg before chips in a cafeteria).

The book’s success is in large part due to the practicality of its recommendations. The theory is applied to genuine problems in modern society that governments are desperate to solve such as obesity rates, environmental protection, teenage pregnancy, or pension schemes, and provides clear applications that are both within most governments’ remit to carry out and not too intrusive to consumers. 

Along the way, it’s also accessible and entertaining. The book keeps you engaged with frequent anecdotes and vivid imagery to help you understand the concepts described. To illustrate automatic and reflective systems, the reader is asked to imagine an inner Homer Simpson and an inner Spock fighting to control their decision-making. And there are interactive puzzles throughout the book that help get you involved and try some psychological experiments on yourself.

For example try this Roger Shepard table illusion that the book opens with. Decide which table you think is longer and thinner. Then get a ruler out and measure the surfaces.

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 This theory is important for anyone who is interested in how consumers make decisions. Whether you know it or not, you are probably a choice architect. 

It’s worth thinking carefully about how you, governments, and businesses could or should use “nudging” because nudging is a tool that can be used for any outcome the choice architect wants. Thaler signs copies of the book with the plea to the reader to “nudge for good”.