Are you saving enough for retirement? Do you know how to your reduce your carbon footprint? Have you ever wondered how to stop men from urinating on the bathroom floor?
Behavioral economist Richard H. Thaler presents solutions to these problems in his new book Nudge: Improving Decisions About Health, Wealth and Happiness, a self-help guide to show people how to make more informed, and therefore better, financial and life decisions.
The 63-year-old Thaler, a professor at the University of Chicago, will give a free lecture about his book tomorrow at Taipei 101.
Thaler’s area of expertise merges psychology and economics, hence the term behavioral economics.
Co-written by Cass Sunstein, the current head of the Obama Administration’s Office of Information and Regulatory Affairs, Nudge uses examples drawn from popular culture — cartoon icon Homer Simpson and cult leader James Jones both make appearances — in a book that is largely free of the economic jargon that would put the average reader to sleep.
The book’s central premise is that through sensible “choice architecture” decision-makers can “nudge” people in the right direction without impinging on their freedom of choice. Thaler spoke about his book last week by e-mail.
Taipei Times: What is a nudge?
Richard Thaler: A nudge is any small feature of the environment that attracts our attention and alters our behavior.
A good example is default options. A default option is what happens if you do nothing. For example, when watching TV the default option is for the next show on the same channel to come on when one show ends. Since we don’t have to do anything to keep watching the same channel we often continue watching even if we don’t really like the next show.
TT: Did you invent “nudging?”
RT: We invented the “term” nudging but people have been nudging for thousands of years. Religions nudge as do people trying to sell us a product.
TT: What are choice architects and how do these people influence our lives or make our lives better/worse?
RT: A choice architect is anyone who has influence over the environment in which we make a choice. Consider a restaurant. The chef may decide what he will cook but someone is in charge of writing the choices on a menu. This person has decisions to make about how to group options (are soups in a special category?), how to describe the options, and in what order to arrange them. These small details can have powerful influences on what people decide to eat.
(Thaler’s most famous anecdote of choice architecture is the men’s bathrooms at Schiphol Airport in Amsterdam. Images of small black flies were etched into each urinal, a measure that, according to Aad Kieboom, an economist consulting on building expansion at the airport who came up with the idea, reduced spillage by 80 percent. “It improves the aim,” Kieboom was quoted as saying in the Wall Street Journal. “If a man sees a fly, he aims at it.”)
TT: Please explain the “yeah, whatever” heuristic and how it relates to default options.
RT: When in doubt, we often just take the easiest course of action. This is why default options are so important. They create a strong “status quo bias” meaning that whatever has been chosen in the past continues to be chosen even if a better option now exists. This can be a powerful impediment to progress.
RSS