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Nudge: Cass Sunstein on Improving Decisions About Health, Wealth and Happiness

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Cass Sunstein, an outgoing professor at the University of Chicago Law School and Department of Political Science, joins us to talk about his latest book, co-authored with Richard Thaler, Nudge: Improving Decisions About Health, Wealth, and Happiness. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.


Our guest is Professor Cass Sunstein. He has co-authored with Professor Richard Thaler Nudge: Improving Decisions About Health, Wealth, and Happiness. He is, well, formerly, or just leaving University of Chicago Law School and is moving on to Harvard University. And also, congratulations on your marriage last week to Samantha Power, a former adviser, at least official adviser, to Barack Obama, as well.


Thank you so much.


Nudge, lay out the theory.


OK. The basic idea is that the United States has been caught for many years between the people who say, “Markets, markets, markets, markets,” and then they add, “Markets, markets, markets,” and the people who say, “Mandates and bans. Whenever there is a problem, people are suffering, then we want the government to intervene and impose a requirement.” What we think is that often this is a false dichotomy, that the “markets, markets, markets” will lead to undue suffering and deprivation, that the “mandates and bans” often are too rigid, they have unintended bad consequences, they sometimes have some of the defects of socialist solutions to problems.

What we think, with the idea of Nudge, is that ordinary people, meaning all people, sometimes blunder; we sometimes have self-control problems; we sometimes don’t have adequate information; we sometimes are too optimistic about our future, both as individuals and as nations, facing, let’s say, hurricane or climate change or security threats; and that sometimes the best approach government can take is a nudge, which doesn’t require anyone to do anything but can set up a situation or a context in a way that leads people and governments to make better decisions.

An example of a little nudge is that Congress should enact very soon a greenhouse gas inventory, by which American citizens see who are the big contributors to the climate change problem. Amazingly, there isn’t a climate — a greenhouse gas inventory. That little nudge, there’s every reason to think, would achieve considerable good, because no company likes to see in the newspaper that it’s one of the worst contributors to the climate change problem. So information disclosure is a really simple, often costless and sometimes very effective nudge.


How do your views differ from those of another University of Chicago professor, Milton Friedman?


A lot. Someone whom I knew a bit and admired, Milton Friedman, was one of the “markets, markets, markets — pause — markets, markets, markets” guys. He was a defender of laissez-faire. And I think he’s quite right to think that markets are often an engine of economic growth and government interference with markets often makes things worse rather than better, but what he didn’t see is that sometimes there’s a way of approaching markets through, let’s say, a careful design, through an information disclosure strategy or through an educational campaign, so that people know something about the mortgages that they’re buying rather than being sweet-talked by someone who gives them just part of a picture. There’s a way for government to respect freedom of choice, not to ban, which Friedman hated, while also playing a constructive role in helping people who often find things confusing and complicated and, as a result, blunder.

Another way to put it is, Milton Friedman had a sense that everybody was a little like Mr. Spock of the old Star Trek show — that is, his sense, at least in his policy recommendations, attributed such knowledge and foresight to humanity that they looked like economic man. We think — that is, my co-author Thaler and I — that there’s a little Homer Simpson in all of us, that sometimes we have self-control problems, sometimes we’re impulsive, and that in these circumstances, both private and public institutions, without coercing, can make our lives a lot better.


Finally, you were colleagues with Barack Obama, is that right, at the University of Chicago Law School for more than a decade? What do you think is most important, in our last thirty seconds, for people to understand about him, the man you now advise?


That’s a great question. I’d say two things. First, he is a constitutional specialist, so we would have in the White House someone who knows the Constitution and the law, inside and out, in a way that we really haven’t, I don’t believe, since the founding period. That’s gotten much too little attention. The second thing I’d say about Senator Obama, the person I know, is he is a person of great calm — reminds me a little bit of Franklin Delano Roosevelt, actually.


We’re going to have to leave it there on that note. Professor Sunstein, thanks for joining us, co-author of Nudge and an adviser to Barack Obama.

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