Customer Reviews
Useful analysis of factors affecting decision making - By: Rolf Dobelli, 08 Aug 2008 
In this lovely, useful book, Richard Thaler & Cass Sunstein examine choices, biases & the limits of human reasoning from a variety of perspectives. They often amuse by disclosing how they have fallen victim to the limitations of thought that they are describing. The fact that these educated, articulate professionals can fool themselves so often demonstrates how tough it is to think clearly, a point the authors emphasize & even repeat. Humans fall prey to systematic errors of judgment, but you can harness this problematic tendency productively, including by helping others make better decisions. Some of the authors' suggestions may not be practical, but many are & all are interesting. getAbstract recommends this book to anyone who wants to know how to shape responsible decisions.
Applying behavioural economics - By: tomsk77, 31 Jul 2008 
Whilst I don't know if this book is quite as significant as is being made out, it's a nice & straightforward primer on behavioural economics & some of its applications.
The first section sets the scene for why nudges - policy interventions that encourage rather than mandate certain types of behaviour - may be necessary. So it builds up the argument for why we aren't the rational self-maximizers that economics has tended to assume we are. This section includes a useful run-through of some of the key heuristics & biases that have been identified & what kind of outcomes they result in. This does provide a pretty good overview of some of the major factors like anchoring, availability, representativeness, loss aversion & so on. It also stresses the importance of the design of choice, or choice architecture, & thatin many cases there is no option to be 'neutral' - some kind of structure of choices has to be offered.
The second section is about financial issues, so much of this is familiar ground if you know much about recent pension reform. Still the points are worth reiterating. If you auto-enrol people into a pension most tend not to opt-out. Whereas if you don't auto-enrol many don't join. This, combined with what non-savers say themselves, suggests that non-savers aren't making a rational choice not to save. People also adopt naive diversificaton strategies - the equity content of their asset allocation (if they have made an active choice) will be heavily influenced by the allocations of the funds on offer (and what stocks are popular at the time) & what's more people don't tend to shift their initial allocation. Also it seems pretty clear lessin morein fund choices - too many options puts us off choosing.
The section on health has a bit of a US focus, but there is interesting stuffin there. The example of the Part D prescription drugs system is useful if only to demonstrate why a random choice for non-choosers is a bad idea. Also the section on organ donations is worth a read - I think I still favour the assumed consent approach, but the idea of mandatory choice (ie having to state your position on your driving liscence) is at least worth thinking about. Alsoin this section are some fairly interesting suggestions for nudging people to reduce energy consumption. These are definitely worth a look since they involve, for example, being able to make peer group comparisons. I think this would work on two levels - firstly simple self-interest, wouldn't you be annoyed to know you are spending more on energy than comparable households? Secondly I think it would give people smug points for being more energy efficient.
The fourth section I probably found the least interesting, as it deals with ideas I'm not that impressed by, such as school vouchers. Having said that the idea of privatising marriage is intriguing, if unlikely to happen. Basically they argue that the state should restrict itself to civil partnerships & the legal rights that flow from them, but that 'marriages' could be arranged by other groups. That way churches could choose whether or not they want to carry out same-sex marriages. Equally other organisations could carry them out anyway. That way, the authors argue, no-one's values get compromised but neither are anyone's rights denied.
The final section sketches out some further ideas for nudges, as well as combatting some of the counter arguments that have been put forward. This latter chapter is well worth a read as the authors do a pretty good job at arguing back at some of the half-decent arguments there are out there that challenge them. Some good pro-nudge points here include the one I've already mentioned that often there isn't a neutral option - so the absence of a nudge is a kind of nudge itself. Also it is important that nudges are made explicit, so there is no sense that Government (or whoever else is doing the nudging) is being underhand.
Thaler & Sunstein argue that their approach offers a real 'third way' since it seeks an alternative to both state mandated paths on the one hand & complete laissez-faire on the other. This they call Libertarian Paternalism. That's obviously an Americanism, sincein the UK libertarianism of any stripe is not a strong themein our political culture. As such I don't expect the label to catch on here. However overall the book does provide quite a few ideas for how we could achieve some beneficial behavioural changes without being too heavy-handed. And if you want to get into behavioural economics this probably isn't a bad place to start.
engaging and thought-provoking - By: Janie, 28 Jul 2008 Everyone seems to be talking about this book, & the Tories like it a lot (which may not necessarily be a good sign). The book shows how people often behavein irrational ways & offers some gentle 'nudging' techniques for making them behave more responsibly & sensibly. There are some very entertaining illustrations & examples - I love the story about the urinals at the airport (but I won't go into any more detail here or else I'll spoil it for you.) Sometimes, however, the strategies seem to be a little less subtle than the authors suggest - for example, the idea that there should be a waiting period before people get married. Surely that's a little too much interference? Nevertheless, the book is an excellent & stimulating - & optimistic - read. I recommend it along with a very thought-provoking & entertaining book I've just read - Making Time, which is about understanding & controlling timein our livesMaking Time: Why Time Seems to Pass at Different Speeds & How to Control It.
