Improving Decisions About Health, Wealth, and Happiness

Richard H. Thaler, Cass R. Sunstein

Many psychologists and neuroscientists have been converging on a description of the brain’s functioning that helps us make sense of these seeming contradictions. The approach involves a distinction between two kinds of thinking, one that is intuitive and automatic, and another that is reflective and rational.1 We will call the first the Automatic System and the second the Reflective System. (In the psychology literature, these two systems are sometimes referred to as System 1 and System 2, respectively.)

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(Voters, by the way, seem to rely primarily on their Automatic System.3 A candidate who makes a bad first impression, or who tries to win votes by complex arguments and statistical demonstrations, may well run into trouble.)*

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Anchors can even influence how you think your life is going. In one experiment, college students were asked two questions: (a) How happy are you? (b) How often are you dating? When the two questions were asked in this order the correlation between the two questions was quite low (.11). But when the question order was reversed, so that the dating question was asked first, the correlation jumped to .62.

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anchors serve as nudges. We can influence the figure you will choose in a particular situation by ever-so-subtly suggesting a starting point for your thought process.

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Lawyers who sue cigarette companies often win astronomical amounts, in part because they have successfully induced juries to anchor on multimillion-dollar figures. Clever negotiators often get amazing deals for their clients by producing an opening offer that makes their adversary thrilled to pay half that very high amount.

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the availability heuristic. They assess the likelihood of risks by asking how readily examples come to mind. If people can easily think of relevant examples, they are far more likely to be frightened and concerned than if they cannot.

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The availability heuristic helps to explain much risk-related behavior, including both public and private decisions to take precautions. Whether people buy insurance for natural disasters is greatly affected by recent experiences.6 In the aftermath of an earthquake, purchases of new earthquake insurance policies rise sharply—but purchases decline steadily from that point, as vivid memories recede.

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Biased assessments of risk can perversely influence how we prepare for and respond to crises, business choices, and the political process. When Internet stocks have done very well, people might well buy Internet stocks, even if by that point they’ve become a bad investment. Or suppose that people falsely think that some risks (a nuclear power accident) are high, whereas others (a stroke) are relatively low. Such misperceptions can affect policy, because governments are likely to allocate their resources in a way that fits with people’s fears rather than in response to the most likely danger.

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A good way to increase people’s fear of a bad outcome is to remind them of a related incident in which things went wrong; a good way to increase people’s confidence is to remind them of a similar situation in which everything worked out for the best. The pervasive problems are that easily remembered events may inflate people’s probability judgments, and that if no such events come to mind, their judgments of likelihoods might be distorted downward.

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Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventive steps. If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.

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Loss aversion helps produce inertia, meaning a strong desire to stick with your current holdings. If you are reluctant to give up what you have because you do not want to incur losses, then you will turn down trades you might have otherwise made.

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Roughly speaking, losing something makes you twice as miserable as gaining the same thing makes you happy. In more technical language, people are “loss averse.”

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Once I have a mug, I don’t want to give it up. But if I don’t have one, I don’t feel an urgent need to buy one. What this means is that people do not assign specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing.

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The combination of loss aversion with mindless choosing implies that if an option is designated as the “default,” it will attract a large market share. Default options thus act as powerful nudges. In many contexts defaults have some extra nudging power because consumers may feel, rightly or wrongly, that default options come with an implicit endorsement from the default setter, be it the employer, government, or TV scheduler.

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It turns out that information campaign (b), framed in terms of losses, is far more effective than information campaign (a). If the government wants to encourage energy conservation, option (b) is a stronger nudge.

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Self-control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far-sighted “Planner” and a myopic “Doer.” You can think of the Planner as speaking for your Reflective System, or the Mr. Spock lurking within you, and the Doer as heavily influenced by the Automatic System, or everyone’s Homer Simpson. The Planner is trying to promote your long-term welfare but must cope with the feelings, mischief, and strong will of the Doer, who is exposed to the temptations that come with arousal.

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people sat down to a large bowl of Campbell’s tomato soup and were told to eat as much as they wanted. Unbeknownst to them, the soup bowls were designed to refill themselves (with empty bottoms connected to machinery beneath the table). No matter how much soup subjects ate, the bowl never emptied. Many people just kept eating, not paying attention to the fact that they were really eating a great deal of soup, until the experiment was (mercifully) ended. Large plates and large packages mean more eating; they are a form of choice architecture, and they work as major nudges. (Hint: if you would like to lose weight, get smaller plates, buy little packages of what you like, and don’t keep tempting food in the refrigerator.)

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Markets provide strong incentives for firms to cater to the demands of consumers, and firms will compete to meet those demands, whether or not those demands represent the wisest choices. One firm might devise a clever self-control device such as a Christmas club, but that firm cannot prevent another firm from offering to lend people money in anticipation of the receipts of those funds. Credit cards and Christmas clubs compete, and indeed both are offered by the same institutions—banks. While competition does drive down prices, it does not always lead to an outcome that is best for consumers.

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When investments pay off, people are willing to take big chances with their “winnings.” For example, mental accounting contributed to the large increase in stock prices in the 1990s, as many people took on more and more risk with the justification that they were playing only with their gains from the past few years. Similarly, people are far more likely to splurge impulsively on a big luxury purchase when they receive an unexpected windfall than with savings that they have accumulated over time, even if those savings are fully available to be spent.

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ties were originally used as napkins; they actually had a function.)

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Federal judges on three-judge panels are affected by the votes of their colleagues. The typical Republican appointee shows pretty liberal voting patterns when sitting with two Democratic appointees, and the typical Democratic appointee shows pretty conservative voting patterns when sitting with two Republican appointees. Both sets of appointees show far more moderate voting patterns when they are sitting with at least one judge appointed by a president of the opposing political party.2

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is, ignorance, on the part of all or most, about what other people think. We may follow a practice or a tradition not because we like it, or even think it defensible, but merely because we think that most other people like it. Many social practices persist for this reason, and a small shock, or nudge, can dislodge them.6 A dramatic example is communism in the former Soviet bloc, which lasted in part because people were unaware how many people despised the regime. Dramatic but less world-historical changes, rejecting long-standing practices, can often be produced by a nudge that starts a kind of bandwagon effect.

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Candidates for public office, or political parties, do the same thing; they emphasize that “most people are turning to” their preferred candidates, hoping that the very statement can make itself true. Nothing is worse than a perception that voters are leaving a candidate in droves. Indeed, a perception of that kind helped to account for the Democratic nomination of John Kerry in 2004. When Democrats shifted from Howard Dean to John Kerry, it was not because each Democratic voter made an independent judgment on Kerry’s behalf. It was in large part because of a widespread perception that other people were flocking to Kerry.

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in the process of social contagion, public knowledge is subject to a kind of escalation or spiral, in which most people come to think that optimistic view is correct simply because everyone else seems to accept it. As the media endorses that view, people end up believing that we are in a “new era,” and feedback loops help to bring about ever-increasing prices. In his words, the “price-story-price loop repeats again and again during a speculative bubble.” Eventually the bubble is bound to pop, because it depends on social judgments that cannot be sustained over the long term.

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If choice architects want to shift behavior and to do so with a nudge, they might simply inform people about what other people are doing. Sometimes the practices of others are surprising, and hence people are much affected by learning what they are.

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Social nudges can also be used to decrease energy use. To see how, consider a study of the power of social norms, involving nearly three hundred households in San Marcos, California.20 All of the households were informed about how much energy they had used in previous weeks; they were also given (accurate) information about the average consumption of energy by households in their neighborhood. The effects on behavior were both clear and striking. In the following weeks, the above-average energy users significantly decreased their energy use; the below-average energy users significantly increased their energy use. The latter finding is called a boomerang effect, and it offers an important warning. If you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.

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Unsurprisingly, but significantly, the big energy users showed an even larger decrease when they received the unhappy emoticon. The more important finding was that when below-average energy users received the happy emoticon, the boomerang effect completely disappeared! When they were merely told that their energy use was below average, they felt that they had some “room” to increase consumption, but when the informational message was combined with an emotional nudge, they didn’t adjust their use upward. Many people, including Republicans and Democrats alike, are arguing for energy conservation on grounds of national security, economic growth, and environmental protection. To promote energy conservation, a great deal can be done with well-chosen social nudges.

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The “mere-measurement effect” refers to the finding that when people are asked what they intend to do, they become more likely to act in accordance with their answers.

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It turns out that if you ask people, the day before the election, whether they intend to vote, you can increase the probability of their voting by as much as 25 percent!22

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The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it. This insight falls into the category of what the great psychologist Kurt Lewin called “channel factors,” a term he used for small influences that could either facilitate or inhibit certain behaviors. Think about the “channel” as similar to the path a river takes after the spring snow melt. The path can be determined by seemingly tiny changes in the landscape. For people, Lewin argued that similarly tiny factors can create surprisingly strong inhibitors to behavior that people “want” to take. Often we can do more to facilitate good behavior by removing some small obstacle than by trying to shove people in a certain direction.

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offer nudges that are most likely to help and least likely to inflict harm.* A slightly longer answer is that people will need nudges for decisions that are difficult and rare, for which they do not get prompt feedback, and when they have trouble translating aspects of the situation into terms that they can easily understand.

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for all their virtues, markets often give companies a strong incentive to cater to (and profit from) human frailties, rather than to try to eradicate them or to minimize their effects.

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Generally, the higher the stakes, the less often we are able to practice. Most of us buy houses and cars not more than once or twice a decade, but we are really practiced at grocery shopping. Most families have mastered the art of milk inventory control, not by solving the relevant mathematical equation but through trial and error.*

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The same problem arises for the choice among health plans; we may have little understanding of the effects of our selection. If your daughter gets a rare disease, will she be able to see a good specialist? How long will she have to wait in line? When people have a hard time predicting how their choices will end up affecting their lives, they have less to gain by numerous options and perhaps even by choosing for themselves. A nudge might be welcomed.

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many insurance products have all of the fraught features that we have sketched. The benefits from holding the insurance are delayed, the probability of having a claim is hard to analyze, consumers do not get useful feedback on whether they are getting a good return on their insurance purchases, and the mapping from what they are buying to what they are getting can be ambiguous.

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If consumers have a less than fully rational belief, firms often have more incentive to cater to that belief than to eradicate it. When many people were still afraid of flying, it was common to see airline flight insurance sold at airports at exorbitant prices. There were no booths in airports selling people advice not to buy such insurance.

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required choosing is generally more appropriate for simple yes-or-no decisions than for more complex choices. At a restaurant, the default option is to take the dish as the chef usually prepares it, with the option to ask that certain ingredients be added or removed. In the extreme, required choosing would imply that the diner has to give the chef the recipe for every dish she orders! When choices are highly complex, required choosing may not be a good idea; it might not even be feasible.

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Leaving the gas cap behind is a special kind of predictable error psychologists call a “postcompletion” error.2 The idea is that when you have finished your main task, you tend to forget things relating to previous steps. Other examples include leaving your ATM card in the machine after getting your cash, or leaving the original in the copying machine after getting your copies. Most ATMs (but not all) no longer allow this error because you get your card back immediately. Another strategy, suggested by Norman, is to use what he calls a “forcing function,” meaning that in order to get what you want, you have to do something else first. So if in order to get your cash, you have to remove the card, you will not forget to do so.

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The nozzles that deliver diesel fuel are too large to fit into the opening on cars that use gasoline, so it is not possible to make the mistake of putting diesel fuel in your gasoline-powered car (though it is still possible to make the opposite mistake). The same principle has been used to reduce the number of errors involving anesthesia. One study found that human error (rather than equipment failure) caused 82 percent of the “critical incidents.” A common error was that the hose for one drug was hooked up to the wrong delivery port, so the patient received the wrong drug. This problem was solved by designing the equipment so that the gas nozzles and connectors were different for each drug. It became physically impossible to make this previously frequent mistake.3

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warning systems have to avoid the problem of offering so many warnings that they are ignored. If our computer constantly nags us about whether we are sure we want to open that attachment, we begin to click “yes” without thinking about it. These warnings are thus rendered useless.

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we propose a very mild form of government regulation, a species of libertarian paternalism that we call RECAP: Record, Evaluate, and Compare Alternative Prices. Here is how RECAP would work in the cell phone market. The government would not regulate how much issuers could charge for services, but it would regulate their disclosure practices. The central goal would be to inform customers of every kind of fee that currently exists. This would not be done by printing a long unintelligible document in fine print. Instead, issuers would be required to make public their fee schedule in a spread-sheetlike format that would include all relevant formulas. Suppose you are in Toronto and your cell phone rings. How much is it going to cost you to answer it? What if you download some email? All these prices would be embedded in the formulas. This is the price disclosure part of the regulation. The usage disclosure requirement would be that once a year, issuers would have to send their customers a complete listing of all the ways they had used the phone and all the fees that had been incurred. This report would be sent two ways, by mail and, more important, electronically. The electronic version would also be stored and downloadable on a secure Web site. Producing the RECAP reports would cost cell phone carriers very little, but the reports would be extremely useful for customers who want to compare the pricing plans of cell phone providers, especially after they had received their first annual statement. Private Web sites similar to existing travel sites would emerge to allow an easy way to compare services. With just a few quick clicks, a shopper would easily be able to import her usage data from the past year and find out how much various carriers would have charged, given her usage patterns.* Consumers who are new to the product (getting a cell phone for the first time, for example) would have to guess usage information for various categories, but the following year they could take full advantage of the system’s capabilities. We will see that in many domains, from mortgages and credit cards to energy use to Medicare, a RECAP program could greatly improve people’s ability to make good choices.

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One strategy to use is what Amos Tversky (1972) called “elimination by aspects.” Someone using this strategy first decides what aspect is most important (say, commuting distance), establishes a cutoff level (say, no more than a thirty-minute commute), then eliminates all the alternatives that do not come up to this standard. The process is repeated, attribute by attribute (no more than $1,500 per month; at least two bedrooms; dogs permitted), until either a choice is made or the set is narrowed down enough to switch over to a compensatory evaluation of the “finalists.” When people are using a simplifying strategy of this kind, alternatives that do not meet the minimum cutoff scores may be eliminated even if they are fabulous on all other dimensions. So, for example, an apartment that is a thirty-five-minute commute will not be considered even if it has a dynamite view and costs two hundred dollars a month less than any of the alternatives. Social science research reveals that as the choices become more numerous and/or vary on more dimensions, people are more likely to adopt simplifying strategies.

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If we want to protect the environment and to increase energy independence, similar strategies could be used to make costs more salient. Suppose the thermostat in your home was programmed to tell you the cost per hour of lowering the temperature a few degrees during the heat wave. This would probably have more effect on your behavior than quietly raising the price of electricity, a change that will be experienced only at the end of the month when the bill comes.

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We interpret the statement “I should be saving (or dieting, or exercising) more” to imply that people would be open to strategies that would help them achieve these goals. In other words, they are open to a nudge. They might even be grateful for one.

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participation rates under the opt-in approach were barely 20 percent after three months of employment, gradually increasing to 65 percent after thirty-six months. But when automatic enrollment was adopted, enrollment of new employees jumped to 90 percent immediately and increased to more than 98 percent within thirty-six months. Automatic enrollment thus has two effects: participants join sooner, and more participants join eventually.

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With required choosing in place, employees have to state their preferences, and there is no default option. As compared with the usual opt-in approach (you are not enrolled unless you decide to fill out the forms), required choosing should increase participation rates. One company switched from an opt-in regime to active decisions and found that participation rates increased by about 25 percentage points.8

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While automatic enrollment or “quick” enrollment makes the process of joining a retirement plan less daunting, expanding the number of funds available to participants can have the opposite effect. One study finds that the more options in the plan, the lower the participation rates.10 This finding should not be surprising. With more options, the process becomes more confusing and difficult, and some people will refuse to choose at all.

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Another common rule of thumb is to contribute to a retirement account the minimum amount necessary to get the full employer match. If the employer matches employees’ contributions up to 6 percent of pay, then many employees contribute 6 percent. If participants are behaving this way, then firms wanting to encourage employee savings might alter their matching formula to help workers. Changing the match formula from 50 percent on the first 6 percent of pay to 30 percent on the first 10 percent of pay would probably increase contribution rates. Those who use the match threshold as a rule of thumb would save more with a higher matching threshold.

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the diversification heuristic. “When in doubt, diversify.” Don’t put all your eggs in one basket. In general, diversification is a great idea, but there is a big difference between sensible diversification and the naïve kind. A special case of this rule of thumb is what might be called the “1/n” heuristic: “When faced with ‘n’ options, divide assets evenly across the options.”3 Put the same number of eggs in each basket.

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Often people do not diversify at all, and sometimes employees invest a lot of their money in their employer’s stock. Amazing but true: five million Americans have more than 60 percent of their retirement savings in company stock.8

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a dollar in company stock is worth less than half the value of a dollar in a mutual fund! In other words, when firms foist company stock onto their employees, it is like paying them fifty cents on the dollar.

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Online shopping is especially likely to help women and minority groups. A study of automobile shopping found that women and African-Americans pay about the same amount as white males when they buy a car online, but at the dealership they pay more, even after you account for other factors, such as income.4

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One helpful nudge would be to simplify the financial aid application. The complicated format of these forms can discourage students from applying for financial aid and cause them to seek pricey direct-to-consumer loans instead. Although the Department of Education has not released a specific formula for how it determines how much aid a family should receive, an application of RECAP to student loans would start with cutting down the number of questions on the FAFSA and making them uniform for all loans, federal and private.

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When the plan was launched in the spring of 2000, every participant who was then in the workforce was asked to choose a portfolio. In the years following the launch, new workers (mostly young people) have joined the plan, and they were also asked to choose a portfolio. But soon after the initial enrollment period, the government ended its advertising campaign encouraging participants to make an active choice. Moreover, private funds themselves greatly reduced their advertising aimed at attracting investments. Probably as a result of both these factors, the proportion of people choosing their own portfolios fell as well. For those workers joining the plan in April 2006 (the most recent enrollment period for which we have data), only 8 percent selected their own portfolios!* Because these new participants are primarily young workers, this percentage is most usefully compared with that of workers who were under age twenty-two when the plan was launched in 2000. That group chose their own portfolios 56.7 percent of the time in 2000, much more than now.

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The worst feature of the Swedish plan was the decision to encourage participants to choose their own portfolios. In complex situations, the government might actually be able to provide some useful hints. Recall a main lesson from Part 1: if the underlying decision is difficult and unfamiliar, and if people do not get prompt feedback when they err, then it’s legitimate, even good, to nudge a bit. In this context, it would have been better for the government to say something like this: “We have designed a program that has a comprehensive set of funds for you to choose from. If you do not feel comfortable making this decision on your own, you could consult with an expert, or you could choose the default fund that has been designed by experts for people like you.” The Swedish government seems to agree with us: it no longer actively encourages people to choose their own portfolios.

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If the United States ever adopts similar partial privatization of its own Social Security system, whether as an alternative to or substitute for the traditional system, many lessons can usefully be learned from the Swedish experience. Because the U.S. economy is more than thirty times as big as Sweden’s, a similar free-entry system would probably generate thousands of funds. This might make those who believe in the Just Maximize Choices mantra happy, but most Humans would find choosing from such a long list bewildering. A better plan would start by following Sweden’s lead of choosing a good default plan, containing mostly index funds with managers selected by competitive bidding. Participants would then be guided through a simplified choice process (preferably on the Web). The process would start with a yes-or-no question: “Do you want the default fund?” For those who said yes, their task would be done (though of course they could always change their minds at a later date). Those who rejected the default would be offered a small set of blended funds, perhaps based on the age of the participant (again privately managed with competitive fees). Only participants who rejected all of these funds would get to the comprehensive list. Evidence from the private sector suggests that few participants would make use of the big list, but their right to do so would be fully protected.

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Before Part D, about half of all American seniors—approximately twenty-one million—had some form of prescription drug coverage through private plans or a government source such as the Department of Veterans Affairs.

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“If consumers are up to this task, then their choices will ensure that the plans, and insurers, that succeed in the market are ones that meet their needs,” writes the Nobel Prize winner Daniel McFadden, a Berkeley" title="Read about 'University of California' on Wikipedia">University of California–Berkeley economist who has studied Part D extensively. “However, if many are confused or confounded, the market will not get the signals it needs to work satisfactorily.”3 With so many complex plans to choose from, it should not be a huge surprise that seniors have had a difficult time sending the right signals.

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offering people forty-six choices and telling them to ask for help is likely to be about as good as no help at all. And in Medicare Part D’s case, many of the groups meant to assist seniors were confused themselves. The confusion spread to medical professionals, who agreed with their patients that the number of plans in the current program bewildered everyone. Others, such as AARP, decided to go into the business of offering insurance plans as well as giving advice about which plan to select, a pretty obvious conflict of interest.

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The poorest and sickest enrollees are those people eligible for both Medicare and Medicaid (and so are called the “dual eligibles”). These people are disproportionately African-American, Latino, and female. Dual eligibles are more likely to have diabetes and strokes than other Medicare beneficiaries, and they use, on average, ten or more prescription drugs.9 They include the most severely disabled Americans, physically and cognitively handicapped men and women of all ages, and elderly patients suffering from dementia and requiring full-time care. The government has not said exactly how many dual eligibles actively chose a plan, but the evidence we have suggests that very few did. Dual eligibles are able to switch plans at any time—but if few are actively choosing plans, we suspect that few are taking advantage of the flexible switching option.

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It seems somewhere between callous and irresponsible to assign plans without even looking at people’s specific needs. Random assignment is also inconsistent with the market-based philosophy of the plan. In markets, better products get a higher share, and most free-market economists consider this a good feature. We do not think that every automobile manufacturer should get the same market share any more than we think that families should pick their cars at random. Why should we want randomness for insurance plans?

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Katie allowed us to see how painful choosing a plan would be by kindly providing a list of the drugs her mother takes. Thaler logged onto the Medicare Part D Web site and tried his luck. What a nightmare! Just to give one example, the site does not have a spell checker. If you type “Zanax” instead of “Xanax,” you don’t get any help (unlike at Google, for example). This is a problem because drug names resemble strings of random letters, so typing errors are to be expected. Getting all the dosages right is also tricky. You need to know both the size of the pill (for example, 25 mg) and how frequently it is taken. The Web site assumes you take a generic drug, if it is available, and gives you the option of keeping the premium brand drug. Many people, however, take generics while calling them by their brand name, which requires paying close attention to every drug selection. Once a user manages to get all the data entered, the Web site offers three plan suggestions, with annual cost estimates. (Technophobic seniors can call 1-800-MEDICARE and have a customer service representative give them the three plan suggestions and prices, but no explanation is offered for how these plans have been chosen.)14

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We all got different estimates because prescription drug plans are constantly updating their drug prices. There is no guarantee that the cheapest plan for your mother today would be the cheapest plan for your mother tomorrow. In fact, Consumers Union has tracked price differences in five large states and found continuous monthly changes. Sometimes these fluctuations are only a few dollars; sometimes more. Nearly 40 percent of the 225 plans underwent changes of more than 5 percent, which can add up to several hundred dollars per year.15 Frequent price changes are one more hurdle for Humans to jump, and in light of our experience, they can be a rude awakening to those who don’t know about them.

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Random default plan assignment is a terrible idea. If a poor person is assigned to a bad plan and does not switch, her drug bills may rise, or she may decide to stop taking an expensive drug, as some already have. This may save the government money in the short run, but it will be costly in the long run, especially for diseases such as diabetes, for which a failure to keep on the drug regime can lead to numerous complications. The government also pays more if it assigns someone to one plan if a different plan covers all that person’s drugs and costs 15 percent less.

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Maine is the only state that uses an intelligent assignment system for placing its dual eligibles in a prescription drug plan.18 Random assignment “resulted in a poor fit for many dual eligible beneficiaries in Maine,” according to a Government Accountability Office report.

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Software and building engineers live by a time-honored slogan: keep it simple. And if a building has to be complicated to be functional, then it is best to offer plenty of signs to help people navigate.

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As of January 2006 more than 90,000 Americans were on waiting lists for organs, mostly for kidneys. Many (possibly as many as 60 percent) will die while on the list, and the waiting list is growing at a rate of 12 percent per year.*

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The primary sources of organs are patients who have been declared “brain dead,” meaning that they have suffered an irreversible loss of all brain function but are being maintained temporarily on ventilators. In the United States, roughly twelve thousand to fifteen thousand potential donors are in this category each year, but fewer than half become donors. Because each donor can be used for as many as three organs, getting another thousand donors could save as many as three thousand lives. The major obstacle to increasing donations is the need to get the consent of surviving family members. It turns out that good default rules can increase available organs and thus save lives.

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we know something about how much the choice of the default matters in this domain. Using an online survey, the researchers asked people, in different ways, whether they would be willing to be donors. In the explicit consent condition, participants were told that they had just moved to a new state where the default was not to be an organ donor, and they were given the option of confirming or changing that status. In the presumed consent version, the wording was identical but the default was to be a donor. In the third, neutral, condition, there was no mention of a default—they just had to choose. Under all three conditions, the response was entered literally with one click. As you will now expect, the default mattered—a lot. When participants had to opt in to being an organ donor, only 42 percent did so. But when they had to opt out, 82 percent agreed to be donors. Surprisingly, almost as many people (79 percent) agreed to be donors in the neutral condition.

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“The next of kin can be approached quite differently when the decedent’s silence is presumed to indicate a decision to donate rather than when it is presumed to indicate a decision not to donate. A system of presumed consent allows organ procurement organizations and hospital staff to approach the family as the family of a ‘donor’ rather than as the family of a ‘nondonor.’ This shift may make it easier for the family to accept organ donation.”5

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The government should create a Greenhouse Gas Inventory (GGI), requiring disclosure by the most significant emitters. The GGI would permit people to see the various sources of greenhouse gases in the United States and to track changes over time. Seeing that list, states and localities could respond by considering legislative measures. In all likelihood, interested groups, including members of the media, would draw attention to the largest emitters. Because the climate change problem is salient, a Greenhouse Gas Inventory might well be expected to have the same beneficial effect as the Toxic Release Inventory. To be sure, an inventory of this kind might not produce massive changes on its own. But such a nudge would not be costly, and it would almost certainly help.

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The most straightforward point is that if we can find ways to make energy use visible, we’ll nudge people toward reducing their energy use without mandating any such reductions.

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To respect the liberty of religious groups while protecting individual freedom in general, we propose that marriage, as such, should be completely privatized. Under our proposal, the word marriage would no longer appear in any laws, and marriage licenses would no longer be offered or recognized by any level of government. The state would do its business, while religious organizations would do theirs. We would eliminate the ambiguity created by the fact that the word marriage now refers both to an official (legal) status and to a religious one.

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The tax system offers big rewards to many couples as a result of marriage—at least if one spouse earns a great deal more than the other. (There can be a big marriage penalty if both spouses earn substantial incomes.)

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Our basic claim here is that state-run marriage makes it impossible to protect the freedom of religious organizations to proceed as they see fit while also safeguarding the freedom of couples to make the commitments they seek without being treated as second-class citizens by the state. But we also believe that the official licensing system no longer fits modern reality. For one thing, the institution of state-run marriage has a highly discriminatory past, enmeshed as it has been in both sexual and racial inequality.

Link · 3598

Insofar as it operated through government, the marital institution was originally a means of government licensing of both sexual activities and child rearing. If you wanted to have sex or to have children, you were in a much better position if you had a license from the state. In fact you might well have needed that license, no less than you now need a license to drive. A state license was a way of ensuring that sexual activity would not be a crime; and it was difficult to adopt children outside of the marital relationship. But official marriage no longer has this role. Indeed, people now have a constitutional right to have sexual relationships even if they are not married—and people become parents, including adoptive parents, without the benefit of marriage. Now that marriage is not a legal precondition for having either sex or children, the state’s licensing role seems less important.

Link · 3603

Essentially, the self-serving bias means that in difficult or important negotiations, we tend to think that both the objectively “fair” outcome and the most likely outcome is the one that is skewed in our own favor.

Link · 3714

Goolsbee estimates that this proposal would save taxpayers up to 225 million hours of tax preparation time and more than $2 billion a year in tax preparation fees. True, many people don’t trust the IRS, so here’s one way to assure them that our tax collectors are honest: if there’s an error, you get the money back, plus a bonus (say, $100). Automatic tax returns are already being used in other countries around the world. Denmark pioneered the pre-filled tax return idea the early 1980s, and the other Nordic countries soon followed. Finland Prime Minister Matti Vanhanen awarded his Tax Administration an award in 2006 for its automatic tax return program, with the prize jury praising it for having “significantly reduced the time taxpayers need to complete and file their returns … (and) substantially reduced the Tax Administration’s internal costs from processing return forms.”1 Today, pre-filled systems of varying levels have been adopted in Australia, Norway, Sweden, Belgium, Chile, Portugal, Spain, and France, with the Netherlands planning to implement one in 2009.2 In Norway, taxpayers who want to alter their tax information can even request a change form through a text message.3

Link · 3773

Teenage pregnancy is a serious problem for many girls, and those who have one child, at (say) eighteen, often become pregnant again within a year or two. Several cities, including Greensboro, North Carolina, have experimented with a “dollar a day” program, by which teenage girls with a baby receive a dollar for each day in which they are not pregnant.6 Thus far the results have been extremely promising. A dollar a day is a trivial cost to the city, even for a year or two, so the plan’s total cost is extremely low, but the small recurring payment is salient enough to encourage teenage mothers to take steps to avoid getting pregnant again. And because taxpayers end up paying a significant amount for many children born to teenagers, the costs appear to be far less than the benefits. Many people are touting “dollar a day” as a model program for helping reduce teenage pregnancies.

Link · 3833

We propose a Civility Check that can accurately tell whether the email you’re about to send is angry and caution you, “WARNING: THIS APPEARS TO BE AN UNCIVIL EMAIL. DO YOU REALLY AND TRULY WANT TO SEND IT?”

Link · 3857

If you want people to lose weight, one effective strategy is to put mirrors in the cafeteria.

Link · 4010

we endorse what the philosopher John Rawls (1971) called the publicity principle. In its simplest form, the publicity principle bans government from selecting a policy that it would not be able or willing to defend publicly to its own citizens. We like this principle on two grounds. The first is practical. If a government adopts a policy that it could not defend publicly, it stands to face considerable embarrassment, and perhaps much worse, if the policy and its grounds are disclosed. (Those who participated in, or sanctioned, the cruel and degrading actions in the Abu Ghraib prison might have benefited from using this principle.) The second and more important ground involves the idea of respect. The government should respect the people whom it governs, and if it adopts policies that it could not defend in public, it fails to manifest that respect. Instead, it treats its citizens as tools for its own manipulation.

Link · 4014

If you want to increase the level of recycling, make it clear that other people are, in fact, recycling.

Link · 4374

As Yale economist Robert Shiller has shown, the best explanation of the real estate bubble greatly overlaps with the best explanation of the stock market bubble of the late 1990s: In both cases, people were influenced by a process of social contagion. This belief produced wildly unrealistic projections, with palpable consequences for home purchases and mortgage choices.

Link · 4416