The Nudger Laureate

Dr. Richard Thaler has been awarded the Nobel Prize in Economics (actually the Swedish National Bank's Nobel Memorial Prize in Economic Science since the prize was not included in Alfred Nobel's will) for his work in behavioral economics. He is best known to the general public for his book, Nudge, which he co-wrote with Cass Sunstein, a Harvard professor who worked in the Obama White House (and is married to Obama UN Ambassador, Samantha Power).

Sunstein said of Thaler, “I don’t think there’s an economist alive who’s had as large an impact on the economics profession and the world as Thaler. His influence on public policy and law is so great that people who have never heard the name Thaler and wouldn’t be able to say what behavioral economics is are marching to the beat of his drum.”

Here is what I said about Professors Thaler and Sunstein in my book, Principled Policy.

Many of the scientific advances discussed in this book about how we think and act both politically and economically are fairly recent. We have discovered that we don't always act rationally and that we can sometimes be easily manipulated. The work of Professor Kahneman and other economic behaviorists has given us greater insight into ourselves; however, more work needs to be done.

Politics and economics are closely linked. Philosophers of the 17th and 18th century such as Adam Smith studied the political economy. More modern economic theories have tried to separate politics and economics; however, recent studies have shown that they are inextricably linked.

The thought processes we use to make economic decisions are very similar to those we use for political decision-making. Greater understanding into the psychology of decision-making is essential to the process of improving the functioning of our democracy. Like all knowledge, this understanding can be used for good or evil. We know that advertisers use many tricks to get us to buy their products. We are aware of the concept but are often unaware when these tricks are being used to manipulate our decision-making. Everyone hates attack ads that proliferate at every election cycle, but they keep on coming. They keep on coming because they work.

The research on human behavior will continue. We just need to make sure that this information is public. We have a better chance to protect ourselves from misuse of this knowledge if it is widely known. The concept of democracy has come into question recently and democracy in many countries is threatened. Dictators like the Castro brothers or Kim Jung Un are relatively easy to identify and isolate. Manipulators of democracy like Putin, Chavez, Maduro and Correa use the forms of democracy to stay in power. They actually win elections by using the powers of the state to manipulate people to vote for them. They control the media. Independent voices are isolated and often imprisoned on phony charges. The Internet is censored.

While these international despots are relatively easy to spot we have manipulators in the United States as well (many of which are not so apparent to us). Richard Thaler and Cass Sunstein wrote a very scary book called Nudge. Nudge has a subtitle of "Improving Decisions about Health, Wealth, and Happiness". They think it is not only acceptable but also laudable to manipulate people into making better decisions. But who defines which decision is better? The manipulators, of course. Thaler and Sunstein think it is not just a good thing but a great thing that could be applied throughout our society.

The thought of a bunch of do-gooders working behind the scene to make me do the "right" things is a truly scary thought. We see these nudgers all around us. The abortion of a fetus is converted into a woman's right to choose to take away the sting of death. Homosexuals are converted into gays to make them appear friendly and approachable. Charity and the dole are converted into entitlements to ease the shame of having to take handouts. All these are done to make things more palatable. Entitlements have even gone through a second conversion. Regular government expenditures (mandated by the Constitution) are discretionary parts of the budget, while entitlements (transfers of wealth) are non-discretionary.

You can agree or disagree with particular policy decisions. But let's describe them accurately so that we can make a reasoned decision. We need to shine a bright light on manipulation wherever we find it. We also must structure our democracy in order to resist manipulation. Manipulation is tinkering with the level playing field and, as noted previously, the level playing field (the equality of opportunity) is essential to the democratic social contract that is the United States.

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Left/right it does not matter. Everyone is trying to manipulate you. President Trump's digital director, Brad Parscale, explained on 60 Minutes (Sunday October 8th) how he used social media to direct ads designed to appeal to specific groups of targeted voters (especially in swing states). So unless you want to be unknowingly marching to the beat of Professor Thaler's drum (or somebody else's drum) you need to become more aware of the manipulation that is going on around you.