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nudge April 22, 2008

Posted by KG in econ, interviews, neuroscience, politics, psychology, science.
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freakonomics q&a with richard thaler and cass sunstein about their new book:

Q: You talk about heuristics and decision-making biases which influence most people’s thinking. Which heuristic or bias has taken you for a ride? Are we as a society more or less vulnerable to heuristics than we were 20 years ago and why?

CASS: The one that has most gotten to me is the availability heuristic, which means that people assess probabilities by asking whether examples easily come to mind.

For about two years after 9/11, I was scared to fly, even though I knew, from my own work, that the risks were really low. And after a bad incident with Chinese food (I have a severe shrimp allergy, and the vegetarian dish contained shrimp), I have been ridiculously nervous about shrimp hiding somewhere in Chinese food.

Fortunately, I am also subject to optimistic bias — with respect to just about everything — and so I now fly contentedly and eat Chinese food happily if sometimes a bit warily.

I don’t know if our society is more vulnerable to bad heuristics and errors than it was 20 years ago. Certainly there’s a lot of vulnerability to those things, but the same as been true for a very long time.

Q: Is there a situation where it would be imperative to shove instead of nudge. How would you, as a libertarian paternalist, justify such a situation?

A: When children and third parties are at risk, mandates and shoves may be OK. We are not opposed to mandatory vaccination laws, in part because those who don’t get vaccinated endanger others.

Many antipollution laws are fine too. A full answer here would point to the costs of bargaining: when people can’t contract their way to a sensible outcome, because of collective action problems and a lack of information, the argument for a mandate gets stronger.

Shoves that aren’t that big an intrusion, such as mandatory seatbelt laws, are OK too, if they can be shown to save a lot of lives. But generally, we like freedom of choice.

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