Cass Sunstein and Richard Thaler introduced “libertarian paternalism” in a pair of academic articles in 2003. Five years later, they brought this seemingly oxymoronic concept to the general public in their famous book Nudge: Improving Decisions about Health, Wealth, and Happiness (New York: Penguin, 2008). In those days, “libertarian paternalism” and “nudge” were joined at the hip, treated practically as synonyms. But in the years since, the former term has stagnated while the latter has exploded, leading to a vast academic literature on nudging. Sunstein and coeditor Lucia A. Reisch have now assembled an illustrative collection of this work in the Research Handbook on Nudges and Society.
The book’s chapters come from authors in various disciplines, many doing fascinating and challenging work. But it is difficult to read the collection as a whole without seeing the ubiquitous fingerprints of Sunstein, who has relentlessly advocated for nudging ever since co-coining the term. He contributes four chapters here, two solo-authored and two with coauthors—and, of course, he helped determine which works to include. Taken together, they show how much the nudging concept has burgeoned—one might even say metastasized—over the years.
Nudging’s original association with libertarian paternalism created a couple of impressions that now appear misleading. First, the original focus on paternalism made it seem that nudging was exclusively focused on influencing choices for people’s own good, as distinct from the good of others: saving more for your own retirement, eating better for your own longevity, and so on. Second, the arguments in its support derived mainly from the field of behavioral economics—Thaler’s specialty—which ostensibly identifies a wide range of cognitive errors and biases in individual decision-making.
But even in 2008, Sunstein and Thaler’s definition foreshadowed much more. Nudging meant “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives” (2008, p. 6). The later chapters of Nudge included such applications as increasing organ donations and protecting the environment. You might wonder what either of these causes, agree with them or not, has to do with paternalism; they are manifestly social goals, aimed at the good of people other than the decision maker. Furthermore, Sunstein has increasingly deemphasized behavioral economics as the basis for nudges. For instance, he has often justified supposed nudges based on mere lack of information: his favorite example is the use of GPS navigation, whose usefulness requires no behavioral bias whatsoever.
The present volume represents the apotheosis of nudging’s capacious meaning. Sunstein and Reisch say that nudges include default rules, reminders, alarm clocks, automatic payments, simplifications, increases in ease or convenience, precommitment strategies, deployment of social norms, disclosures, warnings, information campaigns, and more. The following chapters then apply nudging to a stunning array of topics and goals: reducing “noise” rather than bias (Olivier Sibony); promoting healthy and sustainable lifestyles (John Thøgerson; notice how health and sustainability are linked); reducing polarization and the spread of misinformation (Steve Rathje and Sander van der Linden); promoting animal welfare (Richard Völker and Sven Grüner); reducing inequality (Kai Ruggeri and Valentina Cafarelli); and advancing “corporate sustainability,” which encompasses a range of environmental, social, and governance dimensions including diversity and inclusion (Leonie Decrinis and Reisch).
At this point, you might wonder if there is any policy that is not a nudge. The answer is “yes, but...” The editors make it clear that policies directly affecting monetary incentives are not considered nudges. Yet Mario Mazzocchi and Beatrice Biondi—in an insightful and eye-opening chapter—point out how policies such as sin taxes and subsidies have nudge-like aspects; for example, whether a sin tax is posted prominently or included in the base price can influence how much it affects consumption. Thus, nudges are involved even with non-nudge policies.
Even the nominal requirement of freedom of choice is less restrictive than it would seem. Policies that require employers and vendors to provide certain options to their employees and customers respect the freedom of choice of one side of the market while restricting that of the other. These, too, are classified as nudges. (As an aside, freedom of choice is not synonymous with liberty in the political sense, despite Sunstein and Thaler’s implication otherwise. If a vegetarian restaurant refuses to offer meat dishes, this restricts their customers’ freedom of choice—at least within the confines of the restaurant—but impinges on nobody’s liberty. This is one reason libertarian paternalism was always a poor moniker and deserves its current stagnation.)
Sunstein and his coauthors, as fellow users of the English language, are of course welcome to their own definitions. The definition of nudge they are using has one notable virtue, which is that it is consistent with the vernacular, where it has always been broad and vague. But in an academic and policy context, of what use is such a baggy and formless concept? As deployed, it elides all manner of important distinctions. Are nudges done by the self or others? Either! Are they private actions or government interventions? Both! Are they paternalistic or not? Are they invited or imposed? Are they provided in competitive or monopolistic environments? Are they informative or manipulative? All of the above!
Why should all these disparate things be packaged together? My suspicion is that, from Sunstein’s perspective, this is a feature and not a bug. He wants us to regard all the above distinctions as unimportant relative to the commonality of all nudges. It is a rhetorical strategy to ease our transition across those divides. When responding to objections, as in the final chapter of this volume, Sunstein unerringly retreats to the most innocuous, private, self-imposed cases. Again: alarm clocks and GPS! He leans on the idea that at least some nudging is unavoidable, meaning even you are in the nudge business. If you are already there, why not come a little further? The framing is designed to gain acquiescence to the whole amorphous blob as in-principle acceptable, thereby weakening resistance to any particular application.
None of which denigrates the specific contributions in this book, some of which are quite good. Reading chapter by chapter, a meta-theme emerges: the supreme importance of context and contingency in human decision-making. Applying social scientific research (including behavioral economics) to craft policy is difficult because it depends crucially on manifold details and unknown factors that influence real people’s behavior. Overall, the landscape is daunting, and some might even begin to doubt the feasibility of the enterprise. Nevertheless, another meta-theme also emerges: We can do this! Most contributors seem to believe that smart, well-intentioned, well-informed experts can use their findings to fine-tune and optimize society in countless ways. It is the dream of technocracy.
For instance, Dilip Soman and Yuna Choe’s chapter on financial wellbeing recognizes the difficulties posed by population heterogeneity—a point Mario Rizzo and I have often made in arguing against behavioral paternalism (Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy, New York: Cambridge University Press, 2020) —but they still seem confident that the challenge is surmountable: “Heterogeneity in response to the behavioural intervention is important to consider in successfully scaling behavioural interventions” (p. 134). How can we do this? Lots and lots of research: “However, pushing down the cost of experimentation and developing a culture in which constant experimentation allows an organisation to detect heterogeneity and to respond to it will ensure success” (p. 145, emphasis added). Mazzocchi and Biondi’s aforementioned chapter on nudge-like aspects of non-nudge policies offers “a rich list of behavioural dimensions to be considered when predicting consumer response to price changes, which is obviously key to the success of fiscal [i.e., non-nudge] policies” (p. 217). You see, while nudging definitionally excludes such hard measures as sin taxes, it certainly does not bar them; nudges merely add to the menu of policy options available to the aspiring technocrat.
Some contributors sound cautionary notes, but most still seem to believe in the dream. Oren Bar-Gill, after an excellent discussion of how “smart disclosures” are more troublesome than they might seem, nevertheless concludes “that smart disclosure is a powerful tool that needs to be harnessed” (p. 185). Samuli Reijula and Ralph Hertwig have a chapter on “self-nudging,” which makes the very important point—which Rizzo and I have also emphasized—that people often act to control their own biases. Normally this would weigh against the need for state involvement. Yet Reijula and Hertwig are at pains to emphasize that they are not among those “critics of nudging with politically conservative leanings [who] have argued in favor of non-interventionism and a laissez-faire approach—of letting things take their own course” (p. 271). Weirdly, they categorize self-nudging as a policy instrument. How could that be? They suggest that “public officials and policymakers” could “facilitat[e] the use of self-nudges” (p. 266). Self-nudging is thus transformed into another tool in the technocratic toolbox. Will this strategy displace more intrusive measures, or augment them? Unclear. Adam Oliver, in an admirably wise chapter on pandemic-related nudging, observes that public health officials may themselves be afflicted by availability and hindsight biases. A natural corollary is that public officials afflicted by biases will not necessarily design optimal policies to counteract biases. But due to the limited scope of Oliver’s chapter, the potential non-pandemic applications of his insights go mostly unstated.
Perhaps surprisingly, some of the strongest cautionary notes come from Sunstein himself, in a chapter titled “Welfare Now.” Here he recognizes the relevance of subjective emotional states to the cost-benefit analysis of any nudge policy; if a nudge makes people feel sad or anxious, for instance, those are genuine welfare costs that should be included. He further argues that distributional justice must be part of the welfare calculus, as some nudges will differentially benefit or burden the worst off. To account for this, “we might need to make significant adjustments in willingness-to-pay measure, because it will understate the utility benefits of certain gains to poor people (or the utility costs of certain losses), and overstate the utility benefits of certain gains to wealthy people (or the utility costs of certain losses)” (p. 79). Needless to say, both of these factors are difficult to measure at best. In the case of distributional justice, welfare analysis would require a social consensus on how to weigh the interests of the least well off versus everyone else. Sunstein admits this. Yet it is apparent that Sunstein believes a combination of intelligent minds and hard work and good intentions will meet the challenge. Part of the solution, he suggests, will involve “targeting and personalization” of interventions, designing micro-policies for the specific needs and biases of particular categories of people.
This is the technocratic dream in distilled form. It does not matter how detailed and fine-grained a policy must be to work; the technocrat is ready to dig in. It does not matter how little we know; the technocrat is ready to do the research. It does not matter how little consensus we have about our goals; the technocrat is confident we will find that elusive Social Welfare Function. Then we will throw everything we have learned into the giant policy blender, and it will deliver the perfect social welfare smoothie.
The Handbook on Nudges and Society includes many genuine insights and worthwhile factual findings, as well as some significant caveats and qualifications. Scholars working on these issues will find much of value. But at the end of the day, one can’t help thinking that the editors, and many of the contributors, have a remarkably sunny attitude about the ability of experts to design our world for us. It is ironic that the book refers to the danger of unrealistic optimism at least a dozen times, but not once in reference to policymakers and would-be social planners.
