Topic: Economics
Nudge: Improving Decisions About Health, Wealth, and Happiness Economist Richard Thaler and Legal Scholar Cass Sunstein's new book on helping people make the right choicesby Christopher Espinal
(Conservative)
Friday, May 2, 2008
Recently, noted Behavioral Economist Professor Richard Thaler and renowned legal scholar Cass Sunstein published the book Nudge: Improving Decisions About Health, Wealth, and Happiness.
I haven't read the book yet but will start today. For those interested in the field of economics: Nudge discusses the traditional idea of incentives but without the controversial neoclassical stuff. It uses other controversial models developed by an entirely different field of economics called Behavioral Economics.
This topic bridges studies in psychology and economic theory to develop what academics in this area believe to be more complete models of human choice and decisions. Big research names include Psychologist Amos Tversky and Nobel Laureate in Economics Daniel Kahneman.
As a primer for what these guys have to say about humans: we don't always make good choices, we overestimate small details, and we are way too confident in ourselves.
The question now is: given these basics of human irrationality how can we "nudge" people in a direction of choices that are good for them? In standard econ terms: how can we distort incentives in such a way that we help others make better choices for themselves?
Steven Levitt, author of Freakonomics, and Michael Lewis, author of Moneyball had very nice things to say about Nudge. Check out the website: http://www.nudges.org/.
Another reason you should read this book is because Richard Thaler is my boss at the University of Chicago. I'm his office assistant!
Enjoy!
Additional Details:
It turns out that after reading several pages in Nudge, a nudge is not the same thing as an incentive as I described above. Please allow me to read more and flesh out the meaning of this important term.
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2008 Christopher Espinal, all rights reserved.
Published: Friday, May 2, 2008
Last modified: Wednesday, May 7, 2008
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This book did interest me, but I feel that it might advocate government intervention in the economy (I might be completely wrong on this) in order to achieve its goals.
I think that a truely rational society that makes only good choices is an impossibility. I say this, because I believe in the right to be stupid. If one wants to harm themselves (and only themselves) via drugs, alcohol, or suicide, then I do not think that we should use any law or economic policy away from that.
Although I do oppose stupidity and irrationality, I do not think that we should attempt to shut it out via government, but let it show its ugly face to those who practice such idiocy. (Let the smokers die) This will only lead to the realization that such practices are bad. I want people to choose to be rational, not forced to be rational.
Please let me know if the book advocates government intervention via taxation, economic policy, or just a simple ad campaign.
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2008 Christopher Espinal, all rights reserved.