Whether or not you love the idea of government trying to make you pick certain things, the idea of using a “nudge” to favor people making certain decisions over others has become popular in recent times. The idea was widely popularized by economist Richard Thaler and law professor (and Obama BFF) Cass Sunstein in their book Nudge: Improving Decisions about Health, Wealth, and Happiness.
New York Mayor Michael Bloomberg recently passed into law a controversial nudge that bans New York stadiums, restaurants, movie theaters, and food carts from selling sugared drinks larger than 16 ounces in an effort to reduce obesity there. The Economist–a big fan of Nudge the book–has a good recent article that summarizes why Bloomberg’s nudge is a poorly implemented one, in contrast to Michelle Obama’s nudge to encourage healthier eating.
Here are some lessons I’ve taken from the episode:
- Simple nudges work best for issues where the target cause is obvious
- Nudges need a certain amount of moral authority to be accepted
- Nudges must be committed to choice
- Positive nudges (i.e., carrots) are better than negative nudges (i.e., sticks) in many cases
Simple Nudges Are Best Where the Target Cause Is Obvious
In this context, I define a simple nudge as one that can be implemented directly through one or two measures. For example, Thaler and Sunstein use the case of increasing organ donations: people often don’t become organ donors because they don’t by default have to choose whether or not they want to be an organ donor when they renew their drivers license. The cause is inconvenience in terms of having to spend personal time seeking this option out.. Because people never have to make a yes or no choice, they often don’t.
Another good example is enrolling in company sponsored retirement plans. These plans (401k, Roth, etc) give employees free matching funds towards their retirement. But people often don’t sign up because the default is not to sign up. So the cause is again inconvenience–people are intimidated by the plans and don’t want to take time to look into them, even though for almost all cases choosing to enroll is better than not choosing to enroll.
Bloomberg’s nudge fails in this sense because in the case of obesity there are many substantial causes–exercise, diet, lifestyle choices. A simple ban on sugar drinks of a certain size alone is inadequate. Many people argue that this is a start, but what’s the end? Banning all foods that can be bad for you? As The Economist notes, almost all foods are fine in moderation. Someone who drinks a large coke once or twice a month but runs marathons is obviously much healthier than someone who never drinks coke but eats fried chicken 4 days a week.
Nudges Must Be Committed to Choice
A bedrock of the nudge concept is “libertarian paternalism.” Put simply, this means that the creator of the nudge must still value choice and ensure that alternatives aren’t blocked while at the same time encourage better choices.
Bloomberg’s nudge passes this test because there are still many alternatives–buy a 2 liter grape soda for 99 cents, buy a 24 ounce beer, or buy 5 eight once bottles of coke. The problem is that there are too many alternatives. The ban then becomes useless in nudging people towards good choices.
Nudges Need Strong Moral Authority
Which brings me to another point: the main problem with Bloomberg’s nudge isn’t that it unfairly limits choice, it’s that it doesn’t have strong moral authority. Nudges against smoking (making restaurants non-smoking in many cities, levying high sin taxes) and against drunk driving (high penalties for DUIs) are effective because people gave these causes moral authority. Almost everyone accepts that smoking causes lung cancer, and people who don’t smoke don’t like to smell like smoke. People can sympathize with mothers who have lost loved ones to drunk driving. These nudges protect people from themselves, but more importantly they protect people who are innocent bystanders being harmed by others’ behaviors.
Obesity does this less directly–by increasing health costs for everyone. But almost everyone can sympathize with wanting to drink a large bottle of coke, or at least wanting to choose whatever size of coke you want. Coke is not cocaine in terms of addictiveness. People respect their freedom to choose bad choices more than they respect the city’s power to enforce bans on sizes of drinks they can have. Bloomberg’s reputation as a passer of paternalistic rules also weakens the moral authority of the ban versus, say, the US surgeon general’s more unbiased reputation in the case of smoking. Worse still, an article in Atlantic Monthly by authors of the study which inspired Bloomberg’s ban on large sugary drinks say Bloomberg misread their work, and that the ensuing rebellion caused by Bloomberg’s staunch adherence to his ban might harm future efforts against obesity.
Prefer Positive Nudges Over Negative Nudges
Perhaps the best way to make a nudge successful is to make it positive rather than negative. People like positive messages. They inspire them. Negative messages often inspire rebellion. Just think of how you reacted as a teenager when your parents told you about all the great doors college education opens up versus when they banned you from going to a certain concert.
This is another big reason why The Economist thinks Michelle Obama’s campaign against obesity–which focuses on making more fresh food available to low income residents, growing gardens, encouraging family dinners, and initing exercise programs–is better than Bloomberg’s ban on bad stuff. I agree. Ultimately for nudges to work people have to want to go a certain direction, even if that want isn’t super strong. When you feel good about something you want to do it.
What do you think? Have I misread how the nudge concept applies to the Bloomberg ban?