The problem with nudging

Jeremy Waldron in the New York Times Review of Books has one of the best critiques of the "Nudge" approach advocated by Sunstein and other behavioral economists (HT: Tyler Cowen).

After discussing the problem with the elitism inherent in "we" (i.e., the experts) making decisions "them" (i.e., the laypeople), he gets to the issue of dignity:

Consider the earlier point about heuristics—the rules for behavior that we habitually follow. Nudging doesn’t teach me not to use inappropriate heuristics or to abandon irrational intuitions or outdated rules of thumb. It does not try to educate my choosing, for maybe I am unteachable. Instead it builds on my foibles. It manipulates my sense of the situation so that some heuristic—for example, a lazy feeling that I don’t need to think about saving for retirement—which is in principle inappropriate for the choice that I face, will still, thanks to a nudge, yield the answer that rational reflection would yield. Instead of teaching me to think actively about retirement, it takes advantage of my inertia. Instead of teaching me not to automatically choose the first item on the menu, it moves the objectively desirable items up to first place.

I still use the same defective strategies but now things have been arranged to make that work out better. Nudging takes advantage of my deficiencies in the way one indulges a child. The people doing this (up in Government House) are not exactly using me as a mere means in violation of some Kantian imperative. They are supposed to be doing it for my own good. Still, my choosing is being made a mere means to my ends by somebody else—and I think this is what the concern about dignity is all about


Choice architects nudge almost everything I choose and do, and this is complemented by the independent activity of marketers and salesmen, who nudge away furiously for their own benefit. I’m not sure I want to live in nudge-world, though—as a notoriously poor chooser—I appreciate the good-hearted and intelligent efforts of choice architects such as Sunstein to make my autonomous life a little bit better. I wish, though, that I could be made a better chooser rather than having someone on high take advantage (even for my own benefit) of my current thoughtlessness and my shabby intuitions.

Sounds somewhat similar to how I ended my chapter on behavioral economics in the Food Police

The economist Robert Sugden says the paternalists are wrong: “There is a viable alternative to paternalism. It is what it always has been – the market.” I don’t know about you, but when I walk into a cafeteria, I want the managers to tempt me – to offer me what looks good at a price I’m willing to pay. Yes, this kind of world might require more will-power and self control, but the alternative world of the paternalistic food police would deprive us of the noble act of making a wise choice when we had the freedom to do otherwise.

One thing nudging defenders often say is something like: "but companies nudge us all the time . . ."  That is true, but one must recognize that we can opt-out of a company nudge.  Companies are in competition with each other, and if we don't like the results of the company-nudge, another entrepreneur will come along.  Not only that, if the company nudges aren't really in our best interest, why doesn't another company come along, tell us that and sway us to buy their product?  In short, the difference between a company nudge and a government nudge is the the abundance of competition and op-out ability for the one and the lack of competition and monopoly in the other.  

My most recent piece on the topic came out recently in the European Review of Agricultural Economics.