Nudge: Improving Decisions About Health, Wealth and Happiness
by Richard H. Thaler, Cass R. Sunstein
Rating: 4.0 / 5 · Read · Finished 2026-07-04
Defaults, mental accounting, habits, etc. Little tricks that use the flaws of human psychology for good. It’s a sign of the success of the book that I consider it all common sense now, 18 years after its publication.
Raw notes:
- Everything matters. Little details of design have an effect on human behavior.
- Libertarian paternalism - nudge people toward what’s good for them, but leave them the freedom to do as they please
- “In many areas, ordinary consumers are novices interacting in a world inhabited by experienced professionals trying to sell them things”. Choice architecture is needed in choosing healthcare plans, not ice cream flavors.
- Rules of thumb (anchoring, availability, representativeness) can all be used as nudges.
- Gives lots of cognitive biases. Optimism. Loss aversion. Status quo. Framing.
- Endless scroll and autoplay are defaults for bad. 401k enrollment and organ donation are defaults for good.
- When book was talking about strategies for increasing enrollment in 401ks, all I could think is that growth teams at tech startups would wipe the floor with these amateurs.
- Sometimes suboptimal choices are good if they counter your own flawed psychology. Mental accounting - rainy day funds and fun money.
- We mimic those around us. Obesity and pregnancy are contagious. Your kids’ friends are super important.
- It’s easier to take a pill daily than every other day. Routines are powerful.
- Save more tomorrow plan (automatic increases in 401k savings) is perfect example of nudges. A default which defers the right choice to future, and times it with a pay raise so your mental accounting doesn’t notice. Medicare part D as canonically example of complexity and choice overload leading to worse outcomes. In anecdote, economist and 3 colleagues all tried using Medicare tool to get cost estimates for parents. All got conflicting estimates.
- Interesting framing: part of the cost of healthcare is you paying for the right to sue your doctor. It’s like there’s no option to buy high deductible liability insurance, or waive insurance. In general, authors advise buying highest deductible you can on all insurance.
- Medical malpractice suits. Most people harmed by negligence don’t sue or win. Many people who win don’t deserve it. Doctors don’t pay higher premiums for repeat suits, so no incentive to avoid them. And then lawyers take 40%. And then defensive medicine causes the ordering unnecessary tests and avoidance of risky procedures.