Nudge, Richard H. Thaler & Cass R. Sunstein - Book Summary

Nudge wants to give readers a way to make informed decisions with just one or two nudges. The book opens by explaining the reasons that lead to bad decisions in daily life.

This book is for:

  • Anyone who desires a healthy, disciplined life.
  • Anyone interested in the impact of the state and corporate firms on people's decisions.

Author :

Richard H. Thaler (b. 1945) is considered the father of behavioral economics, a science that includes psychology, consumer behavior and economics. He is a professor of Economics and Behavioral Science at the Booth School of Business at the University of Chicago (USA), director of the Center for Decision Research at the University of Chicago, and a research associate at the Department of Research and Development. US Economy.

Cass R. Sunstein (b. 1954) is a professor at Harvard Law School and an advisor to President Barack Obama.

What do you get when you choose the book?

Did you know that each person, even though they are just a small individual, holds a great power in their hands, affecting everything present in the surrounding life? Like The flap of a butterfly's wings can cause earthquakes thousands of miles away (Butterfly Effect) – you have unparalleled power, connection to the world and will succeed in everything. intended to overcome all challenges.

The book helps you identify the “Push” and make a big difference in your life. They will help you get rid of the habit of following others and eliminate the herd mentality towards the essence of survival – always creativity.

We rarely make the best long-term decisions.

Most people are well aware of what is good and bad for themselves. For example, eating scientifically, saving money for retirement or stopping smoking. But in reality, we often do the exact opposite: eating unhealthy, spending lavishly, smoking too much.

Such unwise actions greatly affect everyone's life from eating habits to daily activities. We choose a chocolate bar knowing that the apple is the smart choice, we often turn off the alarm and continue to sleep even though we know we will have to rush later.

Hasty, ill-considered decisions also have serious long-term effects. For example, according to one statistic, the majority of Americans save very little money even though they know they could get into trouble later on.

If unfortunately we have to pay a large amount of money for illness, unemployment or unexpected expenses such as car repair but do not have any money to pay, then we will regret about it. their unwise decisions. Even though we know these troubles can come at any time, we continue to make financial decisions with a short-term view instead of a long-term one.

We often make bad decisions based on too little or too complex information.

Why do we often make many decisions but not the best choice? In many cases, it's because we have too little or too much information and can't anticipate the consequences of our actions. Only when we know how to process the right amount of information at our disposal can we make sound decisions.

For example, in an ice cream shop, we often choose our ice cream flavors very quickly. After going through all the flavors, we know from experience that strawberry ice cream tastes better than mango ice cream, which shows that we have all the information we need and can process it quickly.

However, we will have different feelings in more complex situations like when deciding to take out a loan. There are many types of loans such as: consumer loans, consumer loans, securities, preliminary financing, interim financing and many more. Some of them have fixed interest rates, others have variable rates and all have different costs incurred. This information is not carefully presented in a regular text, they are often hidden in small print on prominent brochures.

On the other hand, even if we knew all the relevant information, it would still be quite difficult to align and match them with services objectively.

Humans act primarily on instinct.

When you see a child smile, you can't help but smile. That smile happens unconsciously, all of our reactions are completely spontaneous.

But when you want to find the answer to the calculation of 347 x 12, you have to deal with it consciously, because finding the answer requires effort and a good use of time.

The examples above demonstrate two different ways of thinking:

  1. In the case of the child, we are using intuitive thinking , an instinctive, subconscious method.
  1. In the case of math, we are using reason or reflexive thinking.

We don't have enough time and energy to think about every single action taken during the day, which is why our actions are often dominated by intuitive thinking.

Inner hunches and feelings can be very accurate, but sometimes they make us wrong.

In simple terms, intuitive thinking includes both spontaneous emotions and subjective experiences. For example, when estimating the likelihood of having a stroke, the first thing that comes to mind is the number of people with this symptom that we know.

If we have never known anyone who has had a stroke, we automatically assume that the risk will be less likely to happen to us. And so, even with the fact that we're at extremely high risk, we don't take any precautions. In other words, our instincts cause us to misjudge and make unwise decisions.

“Humans are evolved and intelligent but imperfect, full of prejudice and imperfect decision making.”

Giving in to temptation leads to thoughtless actions.

If you offer a smoker a cigarette while she's in the process of quitting, it can be hard for her to resist the temptation. Although she knew smoking was bad for her and wanted to give it up, she eventually followed the tempting offer.

The cause of these foolish reactions is a lack of will: despite having a clear goal, she can hardly resist the allure of temptation.

For example, experiments show that larger portions encourage us to eat more. If we have an extremely large portion of food in front of us, we will overeat, much more than we should, even if it doesn't taste good.

Another experiment was carried out by researchers in movie theaters. Before entering, each person will receive an old burn bag – half will be given a small size bag, the other half will be given a medium size burn bag.

Afterwards, although most of the participants complained that the old burns did not taste good, they ate and even those with large bags of burns ate more.

Some companies take advantage of the human tendency to make them make bad decisions.

If a company wants to be successful, it has to sell products and make a profit. In order to do that, they have to satisfy all the needs of their customers.

Positive or negative consumer feedback is not important to some companies, their main concern is whether customers are buying their products or not.

Sometimes companies do not just stop with meeting the needs of customers at the present time, but they also create many new needs to serve customers.

For example, many people are unable to face temptations on their own and never consider a second time the possible consequences before the moment of decision. Many companies take advantage of this to entice their customers to buy more than they originally intended. This is the company's primary approach to promoting XXL portion sizes in lieu of regular servings, and the easy availability of these oversized servings is one of the reasons why. People eat so much.

Signing up for a cyclical service trial is another case where companies take advantage of a human weakness. You can subscribe and use it for free for a certain period of time, but if you don't cancel your subscription within the due time, it will automatically renew, you keep getting a new cycle and pay money for it.

Nudges are subtle transformations that help us avoid making bad decisions.

How should we not make the wrong decision? With just a push , a little push will get us on the right track.

The nudge is not a “taboo” or a clever promotional message. Rather, they are subtle actions that are easy for us to perform, without any command to any specific action. In short, nudge gives us complete freedom, easy to choose the right thing.

Displaying fruit in an attractive, visible location and placing fast food in less prominent places in cafeterias is a hit: we have the choice between buying an apple and a bar. candy, but this arrangement of products will suggest we should choose apples to be healthy.

Of course, nudges can also be used for less legitimate purposes, such as a company looking to increase the certainty of a customer's purchase decision. They have applied the push at supermarkets for a long time, eye-level shelves often contain expensive goods.

However, the fruit example most prominently displayed in the cafeteria shows that nudging can also help people choose healthier and better alternatives.

"A nudge is any factor that changes people's behavior in a meaningful way."

Defaults are a powerful push to help people take the initiative to do what's best for them.

So that we don't have to think twice before making a decision, decision making cases should be designed so that they have a positive outcome.

The e-mail service “Gmail” has adopted with its attached reminders. If words like “Please see attachments” are written in the e-mail text but no files are attached, the e-mail system automatically recognizes and asks the user “Do you want to send Attachments?" This little push can save everyone time and get rid of any problems quickly.

Companies can choose a similar system to help their employees make wise decisions, such as enrolling in a company's planned retirement plan.

Since most people tend to be lazy and don't want to change their status quo, enrolling in a company's retirement plan shouldn't be voluntary. It would be better if a program could be set up so that all employees are automatically registered if they want to participate and declined when they don't.

Companies should choose defaults to make sure every employee does everything right even when they 're doing nothing .

The nudge is extremely useful when we have so many options and the future is at stake.

The best times to use nudges are when we are in a very difficult situation where it is not easy to make the right decision. A wrong decision is made when we easily accept and don't realize the negative consequences until the next day.

We eat that second piece of cake and have a cocktail after work, because it makes us happy at that moment, and we only notice its negative effects most clearly during the end of the month or morning. Woke up the next day with a headache.

Not having enough knowledge and experience to refer to is a cause of bad decisions.

At one point or another, we have to decide which insurance company we want to use. We only make this decision once or twice in our lives, so it's impossible to rely on prior experience to judge which insurance company is the best. For example, if an insurance company offers a variety of terms, but some customers just want general information when they have trouble choosing which policy will be good for them, the company may offer suggests a “default policy” one of which covers more than 80% of a person's total medical expenses. This helps customers who are less knowledgeable about insurance to choose for themselves a policy suitable for many types of treatment for common diseases.

Many people use the push as a springboard to reach their goals.

At the end of the year, many of us look back and realize we didn't follow through on the decisions we made at the beginning of the year: the weight was still on and the ashtray was still full.

However, some are successful. How did they do that? Often, people can follow through with decisions by using nudges to avoid making the wrong decisions: betting with friends, promoting weight loss or using the right Internet programs to follow. Keep track of all your progress and goals.

On the website, more than 100,000 people have signed up for the support system to make a commitment to themselves, required to achieve the set goals. Once logged in, set your goals and then define a specific deadline and carefully consider investing in that plan. If you hit the goal, you will get a refund. If all else fails, your money will be owned by whatever charity you chose in the first place.

This site is a prime example of how nudging can help you adjust your behavior and realize your ambitions.

“The planner is the voice of reflective thinking and the executor is the part that is deeply influenced by intuitive thinking.”

States and agencies should use nudges to encourage informed decision-making.

Nudge encourages individuals to make good decisions, and this often benefits the team as a whole. When the majority of members make wise decisions, the whole society benefits. The fewer people who smoke or are obese, the lower the cost of health care will be – we all hit the mark.

Although push-ups can cost a bit at first, their long-term benefits cannot be overlooked.

In the field of environmental protection, placing a common obligation to report on carbon emissions can change human behavior. This obligation does not prohibit companies from having concentrations and volumes of polluting emissions exceeding the permissible limits. Instead, it promotes voluntary cuts in emissions from factories. This obligation has created a competition – reasonable cuts without any legal coercion.

In the one-dollar-a-day program, the push can also reduce the rate of unwanted teen pregnancies among members. Many young mothers, pregnant in their teens, are quite likely to have consecutive pregnancies. To solve this problem, some American cities pay them a dollar a day to prevent pregnancy. This program actually leaves taxpayers less vulnerable to the costs of child support.

The company also uses nudge to keep customers from making their mistakes. If we forget to fasten our seat belt in the car, the car will make a “beep beep” sound, until we fasten the seat belt it will stop. If the fuel tank is running low, the indicator light will flash to remind us to stop and refill. We're not obligated to fasten our seat belts or fill our gas tank: they do, however, signal when we've accidentally forgotten.


The main message of the book:

People often make unwise decisions, but with just a little change – the push can help us make better decisions. That is why the state and every organization should use nudge.

The book answers these questions:

How and why do we make bad decisions?

We rarely make the best long-term decisions.
We often make bad decisions based on too little or too complex information.

Humans mainly act on instinct.

Giving in to temptation leads to thoughtless actions.
Some companies take advantage of the human tendency to make them make bad decisions.

How will the nudge solve this problem?

The push is the subtle change that helps us avoid making bad decisions.

Default is a very powerful nudge that helps people proactively do what's best for themselves.

The nudge is useful when we have too many options or when the future is at stake.

How can we all use nudge?

Many people use nudges to achieve their goals.

States and agencies should use nudges to encourage informed decision-making.