((:S))

I tend to read many books in parallel (not sure what to blame this one on, perhaps I’m just easily distracted…or amused) which is nice because it gives me plenty of ideas to discuss when I don’t really know what to write about.

One of the really fascinating books I’ve been reading is Richard Thaler and Cass Sunstein’s “Nudge” (blog here). The book is about behavioral science and how good “choice architecture” can encourage people towards making healthier decisions without restricting their freedom to choose. The first chapter has a section which describes the difference between humans and econs. Econs refer to the perfectly rational beings that traditional economics expects us to be. Econs always make the right choices based on having complete and perfect knowledge as well as the will power to follow through. Humans, on the other hand, are not like this at all.

A few interesting things about humans (also from the first chapter).

1. We are prone to having an unrealistic sense of optimism and overconfidence about our abilities to defy odds.
2. We hate to lose. If winning something feels good, then losing something feels twice as bad.
3. We are biased towards the status quo. Most people stick with the default option(s).
4. The framing of information can have a dramatic effect on our perception. The example the authors use is about an operation. You are told that there is an operation to fix your heart condition and that out of 100 people who receive the operation, 90 patients are alive after 5 years. When it is stated this way, it sounds like a lot of people are surviving the surgery. If they instead tell you the negative statement that 10 patients out of 100 who receive the surgery die, then it sounds like a lot of people are dying because of the surgery. Even though the information is the same, we perceive it differently and that can affect our choices.

I find it fascinating how easily we can (apparently) be influenced/manipulated. This creates an interesting dilemma. If we know that we can influence (most) people with choice architecture, how should we then influence people? Regardless of what is done, there is some sort of effect. Apparently Obama gets advice from the authors. That’s got to count for something.

I’m about halfway through the book now and I highly recommend taking a look if this sort of thing interests you. It also has a lot of interesting ideas regarding policy making and how to manage money. I was originally planning to save this book for the plane but it looks like I’ll be finished it before I leave. A similar book that’s next on my list is Freakonomics (blog here). I love this sort of stuff. Makes me feel smart.

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