Nudge (Libertarian Paternalism)

Much Ado About Nudging

When we were trying to find a publisher for the first edition of this book, there were not a lot of takers. Most people did not expect a book about libertarian paternalism to find a readership beyond the authors’ immediate family members. Much to our surprise, and to that of our publishers, somehow the book did find an audience. The title Nudge certainly helped. (It was suggested by one of the publishers who politely turned us down.) Of course, with more readers come more skeptics. We have had our share of critics from many fields (including economics, psychology, philosophy, political science, and law). They span the political spectrum from right to left.

With respect to politics, it is tempting to conclude that angering both extremes means that we are doing something right, but that conclusion would reflect a self-serving bias. A more likely explanation for creating furor on both the right and the left is that our ideas are bad, evil, ill-advised, confused, or at least poorly written! We have tried to clear up some of the examples of imprecise writing in this version, but these clarifications will not answer the substantive objections that we explore in this chapter. We emphasize that we have learned a lot from our critics and that this book is better because of their questions and doubts.

A whole book could easily be written about conceptual, ethical, empirical, and other objections to nudging, but we will try to be brief.1 One way to achieve that is to avoid getting bogged down in semantic arguments—for example, about whether libertarian paternalism is either libertarian or paternalistic. As we have said, we use the word libertarian to mean “choice-preserving.” We have also said that, realistically, even opting out can be difficult, especially if there is some sludge involved, and that our ideal nudges impose as small a cost as possible on anyone who prefers to do something else. For a day or so back in 2007, we considered calling this book One-Click Paternalism, and while we rejected that terrible title, it will give you the idea of our goals. To us, the directions from a GPS device are perfect nudges. Even if the nice, polite voice suggests a right turn, the voice does not complain if we decide to continue going straight. Of course, not all nudges and nudge-inspired policies can meet that ideal, but if they don’t, we consider it a form of sludge, to be included in any cost-benefit analysis of the policy.

We have used the term paternalism to include efforts to protect people against their own errors by guiding them to the choices they would make if they were fully informed and free from behavioral biases. This is a paternalism of means, not of ends; nudges are generally designed to help people find the right means to their own ends. We certainly do not intend to nudge people toward the choices we prefer. How could we when we do not agree? As you know by now, Thaler loves wine, and Sunstein prefers Diet Coke. Thaler loves long dinner parties; Sunstein dreads them. Sunstein enjoys philosophical arguments. Thaler avoids them at all costs. You get the idea. Our preferences have nothing to do with what makes a good policy.

Finally, to get this out of the way quickly, no, we do not think that choice architects, from either the public or the private sector, are always smart and knowledgeable. We certainly do not think they are always well motivated, or that they necessarily have the best interests of those they influence at heart. We do not deny the power of well-organized interest groups. We agree that experts err. Please! We have been paying some attention to what has been going on in the world in recent decades. We have noticed that not every head of state is a stable genius. We have also noticed a worrying rise in authoritarian governments. And in the private sector, there is a lot of self-interested nudging (as we have pointed out many times in this book). We were also paying attention during the financial crisis, when it was hard to find a sector of the financial services industry that was devoid of bad actors. During the COVID-19 pandemic, a lot of people blundered, and a lot of them had their own interests at heart. So, yes, we want to go on the record as saying that not everyone has the well-being of others as a first priority. All choice architects are fallible, and some are even malicious.

But what lesson should we take from these obvious facts? Recall that choice architecture and nudging are inevitable; you cannot wish them away. We know we have said this earlier, but this point is so widely ignored that we feel the need to repeat it. You can object to graphic cancer warnings on cigarette packages, prefer active choosing to default rules, reject the whole idea of calorie labels, seek to abolish GPS devices, or reject social-distancing guidelines. But objecting to nudges per se makes as much sense as objecting to air and water. You can’t avoid them. And one reason for nudging, as opposed to prohibiting, is precisely the fallibility of choice architects of all kinds. So long as people can go their own way—and easily say no thanks!—the risks are greatly reduced. If you are worried about the mistakes and incentives of public officials, your first target should be coercion and mandates, not nudges.

Still, are we worried that bad people will read our book and go out and find new and more effective ways to nudge people? Absolutely! As we discussed in the chapter on sludge, we definitely worry about such things. But the existence of villains clearly predates the publication of our book, and while we acknowledge that a sophisticated understanding of behavioral biases can be put (and is being put) to self-interested use, we don’t think that the risk of our book falling into the hands of bullies and crooks should be at the top of anyone’s list of things to worry about. Maybe fret more about climate change?

With these preliminary issues out of the way, we turn to the most prominent critiques. Some of them come from critics on the right, mostly from those of the libertarian persuasion. They like freedom (as do we), and they think that nudging compromises it (as we don’t). Some of their concerns are important, but we sometimes think that critiques from libertarians arise in part because they don’t like the fact that we not only borrowed their word and used it without asking permission, but also paired it with another word that they hate. It would be a bit like a bunch of baseball-loving kids borrowing a cricket ball and using it to play baseball (or vice versa). Blasphemy. We admit that libertarian paternalism was a phrase that was intended to be jarring, but after all these years we would say to our libertarian friends: Maybe it is time to get over it?

A lot of people would say we must go further than nudging. They think that nudges are mere tweaks. They want large-scale change, and they don’t think that nudges will get us there. They think that nudges are a distraction. Many of them are concerned with economic inequality, with the rights of working people, with monopolies, with police violence, with discrimination on the basis of race and sex, with much more. So are we. And if you’ve read this far, you know that in some cases, well-designed choice architecture can achieve a lot; it is much more than a collection of tweaks. All over the world, public officials, including those who work in so-called Nudge Units, have accomplished a great deal. Still, it is right to emphasize that mandates, bans, and economic incentives can sometimes make a lot of sense, even for those who generally love freedom of choice.