The influential new book “Nudge” (Thaler and Sunstein 2008) comes from the emerging field of behavioral economics, which investigates the non-rational ways in which people make decisions.

Its policy implications are radical – it advocates what the authors call “libertarian paternalism”. This paradoxical prescription is based on the idea of ‘choice architecture’ – the notion that the way we are presented with choices deeply influences the decisions we make. So if we shape ‘choice architectures’ that guide us to make beneficial choices, by and large we will.

For example, the way food is ordered on a school self-service lunch counter affects what pupils choose to eat, and hence their future health. This can shape our choices to make us healthier, or unhealthier – so there is no escaping the ‘choice architecture’, whether we like it or not.

Politicians of both Left and Right seem to be signing on to this approach in the hopes of cheap solutions to difficult policy areas (such as poor diet) whilst maintaining people’s ‘choice’.

The ideas certainly have strong support in research evidence – although the degree to which they work in practice is more questionable.

Probably the strongest policy idea to emerge from this strand of thinking is the positive “default” idea. For example, instead of being given the choice to opt in to a pension scheme you are automatically included unless you exercise your choice to opt out. Or, more controversially, you are assumed to consent to organ donation in the event of your death unless you specifically take action to opt out.

This certainly has potentially radical implications for law and policy-makers, who are more used to proscribing acts than framing policies and laws that are meant to ‘nudge’ people in the ‘right’ direction. It remains to be seen how effective, or how widely applicable, this approach might be.

Thaler, R. H. and C. R. Sunstein (2008). Nudge – Improving Decisions About Health, Wealth, and Happiness. New Haven and London, Yale University Press

And thanks to Andrew W for pointing out the Nudge blog.