In this short book of 136 pages, titled On Freedom, Cass Sunstein makes the case that freedom is enhanced by the intentional restriction or gentle manipulation of free choice. Just as a GPS system guides you to the desired destination while preserving your freedom to take an alternate route, “nudges” can point you in the right behavioral direction while preserving your ability to choose otherwise.
A simple example is automatic enrollment in a 401K retirement savings program. This particular “nudge” is beneficial because it helps to overcome two common biases. The “present bias” makes it difficult for people to save for the future, and the “default option bias” makes it difficult for people to make changes to the status quo.
These two biases, acting together, prevent people from enrolling in retirement plans that are clearly beneficial, and so the “nudge” of automatic enrollment solves the problem. It enables people to make the right decision while still preserving their freedom to opt out. In this way, a nudge can be said to enhance freedom because, without a behavioral GPS system, people have difficulty navigating to their desired destinations in life.
All nudges work in this way, and in many cases the result is clearly beneficial. In the above example, if the person wants to save for the future, but has self-control problems in regard to spending, they will probably appreciate the automatic enrollment. In this case, the desired behavior is known by the chooser and the “choice architect” can easily identify the appropriate nudge.
But problems arise when the determination of the appropriate behavior is debatable. The ability of a “choice architect” to manipulate behavior to a desired end sounds a lot like coercion, and frankly, the idea of “choice architects” working for the government sounds like something out of a George Orwell novel.
However, as Sunstein explains, nudges are different from coercion because all nudges preserve freedom of choice. Any decision will already include a default option, whether it is consciously designed or not; in the example of 401K enrollment, non-automatic enrollment is nudging people to not save for the future. The nudge of automatic enrollment is simply presenting a more desirable default option from the perspective of informed choosers.
Informed choosers are choosers that are not influenced by nudges. They would enroll in 401K programs regardless of the default option, and so the appropriate nudge will align with these optimal choosers. And again, if you don’t like automatic enrollment in the 401K program, you can simply opt out.
On the other hand, the default option bias means that most people will not opt out, so in this way the choice architect does have quite a bit of influence depending on which behavior they’re trying to promote. This can get tricky depending on the situation.
If the chooser doesn’t have a clear preference, how does the choice architect decide which default option to present? For example, which is better, automatic enrollment in bronze medical plans, with low premiums and high deductibles, or gold medical plans, with high premiums and low deductibles?
How do you know which to choose? Do you go by the preferences of the chooser before or after the nudge, since some people have a different preference after being nudged? Or do you go by the option that promotes well-being in general?
One approach is to abide by the choices of informed choosers who are not affected by nudges either way, as described above. The default option is simply the option informed choosers would pick in any scenario. This approach seems reasonable, but only when the choices do not result in general harm. People, whether well-informed or not, sometimes exhibit behavioral biases that result in less than optimal behavior, and the point of nudges in the first place is to enhance outcomes.
For example, informed choosers might bypass healthy foods placed at the front location of a buffet for better tasting but unhealthy foods. In this case, it’s probably not a good idea to move the healthy foods to the back, especially if people will eat more healthy foods if they are placed up front. This is reinforced by the fact that many people will claim, after the meal, that they were glad they skipped the fried food and chose the salad instead. Their preferences before and after the meal changed, and it is their after-meal preferences that should be prioritized because this preference results in better health.
As you can see, nudges are not always straightforward, and careful consideration must be given when navigating the fine line between promoting beneficial behavior and coercion, and even when determining what the beneficial behavior is in the first place. Maybe eating better tasting foods is more important than marginal gains in health. Is it really moral for the choice architects to make this decision?
Despite the difficulties, in many cases it is clearly desirable to engineer choices in a way that nudges people towards better behavior, considering that you cannot avoid presenting a default option. Some real-life examples of beneficial nudges include the automatic enrollment in free lunch programs that provide millions of children with school lunch; automatic voter registration that could mean greater turn-out at the polls; graphic images of lung disease on cigarette containers to discourage smoking; and adding green arrows to the floor of a grocery store pointing to the produce section.
As for the book itself, it would have been nice to see more real-world examples rather than strictly hypotheticals, and the ideas could have probably been condensed into a long-form article rather than a book. But for a quick read it does a decent job of raising consciousness to the neglected problem of navigability in discussions of freedom. It raises the following difficult question: in what sense can someone claim to be free if they don’t know how to get to their desired destination, or if they cannot solve their problems of self-control?
Rather than allowing people to fend for themselves unguided, the use of nudges, employed carefully and thoughtfully, can go a long way in improving people’s lives while preserving freedom of choice.
Further Reading in Behavioral Economics
Thinking, Fast and Slow by Daniel Kahneman
Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein