"You see that?" Richard H. Thaler asks as we ride down picturesque Lake Shore Drive in Chicago. Thaler knows the route well. He travels it every day on his commute home from the University of Chicago Graduate School of Business, where he is a professor of behavioral science and economics. At the moment, he is excitedly jabbing his finger toward an approaching curve in the road, telling me that it is the scene of numerous accidents caused by drivers who fail to sufficiently reduce their speed. Then he directs my attention to a grid of lines that appear on the road ahead of us: Evenly spaced at first, as we near the apex of the curve, the lines begin to bunch closer together, which makes us feel like we are speeding up.related: Richard Thaler discusses the concept of libertarian paternalism with Russ Roberts in this podcast
As Thaler taps the brakes and gently steers into the bend, he explains how the tightly spaced lines trigger an instinct that causes drivers to slow down. With evident glee, he notes that Chicago is effectively exploiting — to society's benefit — one of the many ways in which human perception is flawed. Or, as Thaler puts it, drivers are being "nudged" toward safety.
What does a peculiar pattern on the road have to do with fixing the nation's health-care woes, protecting the environment, resolving the thorny issue of gay marriage, and increasing donations to charity? Everything, according to Thaler and Cass R. Sunstein, a professor of law and political science at the University of Chicago. They are authors of a new book, Nudge: Improving Decisions About Health, Wealth, and Happiness (Yale University Press), in which they articulate an approach to designing social and economic policies that incorporates an understanding of people's cognitive limitations.
They call this governing philosophy "libertarian paternalism." That is not an oxymoron, they insist in their book. Rather it is a corrective to the longstanding assumption of policy makers that the average person is capable of thinking like Albert Einstein, storing as much memory as IBM's Big Blue, and exercising the willpower of Mahatma Gandhi. That is simply not how people are, they say. In reality human beings are lazy, busy, impulsive, inert, and irrational creatures highly susceptible to predictable biases and errors. That's why they can be nudged in socially desirable directions...
Ed Glaeser makes the case against 'soft paternalism' in
this one
