Nudge: Improving Decisions About Health, Wealth, and Happiness

The subtitle of the book ("Improving Decisions about Health, Wealth and Happiness") is what caught my eye at the bookstore, but dare I say, the authors fail to deliver. The introduction starts with a prolonged justification of what authors call "libertarian paternalism" or "choice architecture" - a process of carefully nudging people into making a specific decision - but the reader is left wondering why the authors are so compelled to defend their own ideas before even explaining them. They've made me a skeptic before they even began.

Studies from behavioral economics, psychology and sociology fields are introduced in the context of choice architecture, but once again, the authors often veer off into giving public policy prescriptions, or simply citing the study results. It is as if they got stuck in the middle: there are no new and interesting academic insights, nor are the public policy suggestions grounded in what the authors know best.

If you're interested in the subject, I would recommend "Predictably Irrational" by Dan Ariely instead.

Everyone seems to be talking about this book, and the Tories like it a lot (which may not necessarily be a good sign). The book shows how people often behave in irrational ways and offers some gentle 'nudging' techniques for making them behave more responsibly and sensibly. There are some very entertaining illustrations and 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 and stimulating - and optimistic - read. I recommend it along with Stop the Age Clock: Look 20 Years Younger, 20 Pounds Lighter and 200% Prettier in Only 20 Days

Introduction: In 2004, there were 1.4 billion credit cards. By 2007, the average American family had an average credit card debt of $12,000 and paid the typical 18 percent per year. Credit card payments are decreasing causes increased losses by banks.

Citigroup, in 2008, credit card losses eclipsed losses in the 1990s and is expected to rise in 2009. The weak economy has pushed more borrowers over the edge and affecting a wider range of borrower types.


1. Credit cards provide a convenience allowing to user to be cashless and still have buying power.

2. Businesses, such as, hotels and restaurants cater to credit card usage.

3. Credit cards provide a ready source of liquidity

4. Debit cards often offer a line of credit

5. Credit card usage is compulsive and addictive and has a huge nudge factor and tension. The constraints to usage don't exist and the temptative tension to use the credit card is compulsive and pressure oriented.

6. Excessive Credit cards usage and accumulative debt demonstrates lack of self-control

7. Credit cards provide instant gratification bypassing the discipline of saving for a duration, accumulating, and purchasing with cash.

8. People don't like to be told not to use their credit cards. They rebel at the censorship of their excessive usage and feel credit card usage is a right.

9. Credit card companies should be required to a electronic copy to the consumer showing all the precise usage and fee payments, so customers get a better sense of what they are paying for.

10. Credit card companies establish rules that help them raise fees. One way credit card companies capitalize on fee is by shortening the day you ahve between the time you get your bill and the day your payment is due. One day late means 30 days late, you pay the penalty and the interest; one day can result in a 100 dollar fee.

11. Credit card debt is unsecure debt. Default rates are expected to increase during receding economies.

12. Credit cards have hidden fees.

13. Interest paid on credit cards is not tax deductible.

14. Credit card companies require the consumer to pay the minimal payment and extend payment for decades without moral remorse.

15. People are more afraid to abandon their credit cards than to use cash.

16. Credit card companies should allow the automatic payment of the full bill.

Nudge provides a solid, easy-to-read background for the emerging space of behavioral economics. The upfront sections provide the context of fundamental human biases that provide power to those that help to form the decision choices each of us have. For me, the most critical insight of this book is the emphasis placed on how responsible any of us are for setting the default options in the choices we pose - whether to our children, our spouses, our colleagues, our team members or our organizations. Several examples provide further fodder, but if you just read the first few chapters, it can help significantly to remind you, that if you lead any people or help shape any decisions, how critical your role is in the impact on those people's lives.

EXCELLENT PRIMER FOR FIRST TIMERS ON BEHAVIORAL ECONOMICS. IT EXPLAINS IN PLAIN PROSE HOW WE CAN BE INFLUENCED BY OUR ENVIRONMENT TO DO THINGS WITHOUT THOUGHT.