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Nudge

I have recently read Thaler and Sunstein's Nudge.  Thaler is a founding father of behavioural economics and Sunstein is a Harvard law professor, who currently works for the Obama administration.

Nudge is a manifesto for what its authors call Libertarian Paternalism, the idea that governments should design choice architecture to nudge people in the direction that the State (or its expert advisers) thinks is best for individuals and society.  In this world, people are 'free to choose' (to quote the title of the Friedmans' famous book), but government determines the choices people face and may even nudge them in the direction of one particular choice.

The problem with this, of course, is that governments and their advisers as well as their lobbyists have incentives to nudge us in directions which are not optimal for us or society, but which benefit the government and its supporters or financial backers.  See here for more on this critique.

The behavioural economics in Nudge is fascinating, but the authors spend far too much time on how this translates into public policy.  I would have loved them to have spent more time on the theory and more time on how managers and businesses can use behavioural economics to build better companies and organizations.  Anyhow, if you are interested in human behaviour, this book should be on your reading list!  Was that a nudge or a shove?

Nudge: Improving Decisions About Health, Wealth, and Happiness

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