A Book Review - Nudge: Improving Decisions About Health, Wealth and Happiness Book by Cass Sunstein and Richard Thaler

Publisher: Yale University Press 8 April 2008 Buy at AMAZON Human behavior One of the main justifications for Thaler's and Sunstein's endorsement of libertarian paternalism in Nudge draws on facts of human nature and psychology. The book is critical of the homo economicus view of human beings "that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists. They cite many examples of research which raise "serious questions about the rationality of many judgments and decisions that people make". They state that, unlike members of homo economicus, members of the species homo sapiens make predictable mistakes because of their use of heuristics, fallacies, and because of the way they are influenced by their social interactions. Two systems of thinking The book describes two systems that characterize human thinking, which Sunstein and Thaler refer to as the "Reflective System" and the "Automatic System". These two systems are more thoroughly defined in Daniel Kahneman's book Thinking, Fast and Slow. The Automatic System is "rapid and is or feels instinctive, and it does not involve what we usually associate with the word thinking". Instances of the Automatic System at work include smiling upon seeing a puppy, getting nervous while experiencing air turbulence, and ducking when a ball is thrown at you. The Reflective System is deliberate and self-conscious. It is the one at work when people decide which college to attend, where to go on trips, and (under most circumstances) whether or not to get married.