Nudge nudge

6th April, 2013

A behavioural economics guru gets the chance to put his ideas into practice

Simpler: The Future of Government, by Cass Sunstein, Simon & Schuster, RRP$26, 272 pages

There’s a point early on in this book where Cass Sunstein describes the distressing process of being confirmed as administrator at the Office of Information and Regulatory Affairs in Barack Obama’s White House. Everything Sunstein has said needs to be vetted and, “unfortunately for my vetters, I have written countless speeches, well over 400 articles, and a lot of books. The vetters had to sift through thousands of pages.”

We can consider ourselves fairly warned. Ideas pour out of Sunstein and on to the page – but this is not a man who has the time to step back and produce a little structure or storycraft. Simpler contains some important thoughts, written by an intelligent and experienced observer, apparently in haste. The reader is going to have to do a bit of work. This is ironic, because the book’s key message is about presenting information to ordinary people in the simplest and most useful way.

Sunstein was co-author, with Richard Thaler, of Nudge (2008), a book that aimed to show the relevance of behavioural economics to government policy. In particular, Nudge argued that the way forms are designed and default options selected, even the way cafeterias are laid out, will influence our behaviour, and that policy makers should exploit this fact to do good without spending money or infringing personal liberty. People could, by default, be enrolled in their company pension plan; efficiency labels on cars could list “gallons per 100 miles”, which by a mathematical quirk turns out to be far more informative than “miles per gallon”.

Nudge didn’t have the catchy anecdotes of Dan Ariely’s Predictably Irrational (2008), nor was it as comprehensive as Daniel Kahneman’s Thinking, Fast and Slow (2011), but because of its inventiveness and practical policy bent, it is perhaps the most influential of the recent crop of behavioural economics books.

What, then, of Simpler? If Nudge had never been written, this would be an important work, but instead Simpler feels like an echo of its predecessor. Sunstein spent time running OIRA and most of the book is Nudge shifted to the past tense: instead of writing “this would be a good idea”, Sunstein writes “we did this, and it was a good idea”.

Policies set out in Simpler include well-designed labels; treating people who take no action as though they had actively chosen some sensible default; using personal information to tailor these defaults to individual circumstances; cost-benefit analysis of new regulations; testing and piloting new policies and practices; continually re-evaluating regulations and forms; and making it easy for citizens to provide feedback on what works and what does not.

These are well worth a try. A particularly promising concept is “smart disclosure”, in which government departments and corporations allow us to download our own data in machine-readable format. I could send my mobile phone or electricity usage data to a third-party comparison website, which could tell me the perfect deal given my personal circumstances.

Yet since there is little here that was not already in Nudge, the added value of Simpler is unclear – although US political junkies may find Sunstein’s war stories engaging. What would be really useful now would be an independent analysis of how well all these “nudges” are working. Since Sunstein dreamt them up, he is not the man to tell us whether they are performing as hoped. Simplicity is a sound ambition but in a complex world we should also check for unintended consequences.

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