The Nudgening.
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Thanks to Mindseye for our theme song!
The Nudgening.
Support us on Patreon:
https://www.patreon.com/IfBooksPod
Where to find us:
Sources:
Thanks to Mindseye for our theme song!
Michael: What are we doing for zingers for Part 2s-
Peter: Yeah, I was thinking--
Michael: -Peter?
Peter: I don't know that we can. It doesn't make a ton of sense.
Michael: Peter, what do you know about the second half of the Nudge book? That looks like a joke.
[laughter]
Peter: Even less-- [laughs] I feel like we need something else, something that's not the usual format. Something about getting nudged into a Part 2.
Michael: Wait, do it, do it, do it. Do something.
Peter: Dance for me.
[laughter]
Michael: Okay, how about this? Okay. Peter?
Michael: Michael.
Michael: How do you feel about coming back for Part 2 of our Nudge episode?
Peter: Yeah, I actually didn't want to do it initially, but then you manipulated me using choice architecture, and here we are.
[If Books could Kill theme]
Michael: So, today, we are talking about the rest of Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein. Peter, do you want to give us a little previously on?
Peter: Yeah. So, in Part 1, we learned what a nudge is. They initially described it as something that impacts the choice architecture. Like, when you order things on a cafeteria menu a certain way, it impacts a person's choices. Then, they gave other examples which became steadily less and less like what they initially defined as a nudge to the point where I think we both lost track of what it actually means.
Michael: Yes.
Peter: I think we landed on the basic idea that what they're really trying to do is endorse a framework for policy analysis where nothing large ever happens.
Michael: Yes.
Peter: Instead, you are only ever doing tiny, little incremental nudges here and there rather than, for example, regulating coal emissions.
Michael: Yes, stuff. They don't want the government to do government stuff.
Peter: Right.
Michael: So, this is our first two-part episode. There are a couple reasons why I wanted to do a deeper and more detailed dive into this book than other ones we've covered that are maybe a little bit longer, maybe more bestselling or whatever. The first reason is, I'm doing this as a form of penance. Because when this book came out, I was super nudge pilled.
Peter: Oh, no.
Michael: To the point where I gave a presentation at work on the nudge concept and how good it was. I was 26 years old. I was just starting at my first job in human rights in international development. I had a lot of confidence and not very much knowledge. I really thought that this stuff, like a lot of people, was going to be very useful for international development and human rights, and advocacy campaigns, and how to solve poverty. I really thought this was going to be a very important tool. Then over the subsequent 10 years, especially as I spent more time in the developing world and realized what the actual problems and challenges were, I became really radicalized against this concept and this kind of like, "Oh, this technical tweak can solve this complicated social problem."
Peter: Yeah.
Michael: That's another reason why I wanted to do this as a two-part episode is, because I want to talk about what happened to this idea and the authors after the book came out. So, one of the aspects of Nudge that we didn't cover last episode is throughout the book, they not only describe nudges as good policy, they also describe them as good politics. Everyone is in their little ideological silos, and because nudges are technical and procedural, they offer a third way forward. The final chapter of the book is literally called The Real Third Way.
Peter: Right.
Michael: So, the best example of the kind of political analysis that they're doing in the second half of the book is the chapter I alluded to at the end of last episode. This is the chapter where they take on the tricky debate over same-sex marriage.
Peter: Goddamn it. [laughs] This is going to piss me off.
Michael: So, I am going to send you the first couple of paragraphs of this chapter.
Peter: "We now turn to the very old institution of marriage, and explore some of the questions that have recently been raised about marriage and same-sex relationships. We begin by offering a proposal that is highly libertarian that would protect freedom, including religious freedom, and that should, in principle, prove acceptable to all sides. We recognize that many people, including members of many religious groups, strongly object to same-sex marriage. Religious organizations insist on their right to decide for themselves which unions they are willing to recognize with attention to gender, religion, age, and other factors.
We also know that many members of same-sex couples want to make lasting commitments to one another. To respect the liberty of religious groups while protecting individual freedom in general, we propose that marriage as such should be completely privatized."
Michael: Privatize it.
Peter: "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."
Michael: Fixing marriage.
Peter: Okay, gay folks, I have a solution for you. What if we destroyed marriage altogether [Michael laughs] rather than allowing you into our club? What if we burned the club to the ground so that no one could be here? Would that make you feel accepted by society?
Michael: I fucking love this, because again, they're trying to do political analysis. "We're taking the temperature down. What are we going to do? We're going to destroy the institution of marriage." Something that, first of all, would piss off gay people, because you'd rather destroy this institution than let us into it. And also, it would piss off religious people-
Peter: Of course.
Michael: -because they want to protect the institution of marriage. They like the fact that their religious thing gets state recognition.
Peter: [laughs] This is the worst proposal in terms of like, "Oh, I have a solution that everyone would love." No, this is actually the opposite of that. This is genuinely something that everyone would hate. Just because you have forced massive concessions from both sides, it does not mean that you have found a workable political solution.
Michael: [laughs] Exactly. This is the worst politics. So, their actual plan is they want to protect all of the estate rights, and inheritance, and all the legal stuff that comes along with marriage. But they're going to shunt that into a new institution called like civil unions or domestic partnerships or whatever. You remember a couple of states did this.
Peter: Yep.
Michael: They then bring in some liberal bona fides. So, they say, "Most people who enter into marriage contracts don't investigate the divorce laws of their state," because like, "I'm not going to get divorced."
Peter: Uh-huh.
Michael: It turns out that a lot of divorce laws in a lot of states are actually really exploitative, especially to women. So, a lot of women get fucked over in divorces. So, this institution that they are creating from scratch, the new marriage, is also essentially going to include a prenuptial agreement as part of the marriage contract.
Peter: They're like, "We're solving the gay marriage debate." Then, what they propose is just like five separate terrible policies.
Michael: It's also darkly funny to me, because it's like they're proposing this not as ideology, but as politics.
Peter: Right.
Michael: But it's like, "Okay, we're going to destroy the institution and we're also going to empower women [chuckles] and make it basically easier for women to get decent benefits in divorces. Is the religious right going to love this?" [laughs]
Peter: Right. That's what's so telling is like, if you just proposed the let's reform divorce laws, because they're unfavorable to women in isolation, that would get shot down by the right. That's like step three of this convoluted plan that they think is the apolitical [Michael laughs] solution to gay marriage.
Michael: Exactly. They're like, "Let's all sit around the table and be adults about this, guys."
Peter: It just goes to show how little they understand conservatism that they're like, "And let's throw in reforms that benefit women."
Michael: Right?
Peter: Why not?
Michael: This, to me, illustrates the limits of this entire behavioral economics approach, because they pepper this entire chapter with behavioral economics "insights." They're like, "People choose the default option." People have these biases, these ways that they're predictably irrational where no one thinks they're going to get divorced, so they don't look up the divorce laws. That's a problem for society, because all of a sudden, people are in these legal contracts that they haven't really investigated in advance. So. it seems academic and savvy.
Peter: Yeah.
Michael: But then, much more traditional aspects of human psychology, they're totally uninterested in such as bias. People are biased against gay people. They might say that they want to protect the institution of marriage, but they don't actually want that. They want gay people to continue to be excluded from establishment institutions of American life. As well as completely ignoring ordinary psychological principles, they also ignore history. Conservatives were against abolishing slavery. They were against giving women the vote. They were against women joining the workforce. They were against allowing interracial marriage. Conservatives object to social progress.
Peter: Also, that is like the definition of conservatism.
Michael: Right. They're very proud of this.
Peter: Right. This isn't some ancillary thing that you can work around. What sincere opponents of gay marriage actually wanted was the maintenance of a second-class status for gay people.
Michael: Yes.
Peter: You cannot wiggle your way out of that.
Michael: Also, what's so frustrating about this approach too is, as we talked about last episode, a lot of these little behavioral principles that they cast as gospel are actually quite conditional. They apply in some cases and not in others. That is quo bias, loss aversion, all these things. What this amounts to is boiling all of human psychology down to seven or eight psychological principles. They always refer to the same things. It's like a really shallow approach. It's a shallow approach that pretends to be empirical. So, speaking of which, the other argument that they make for why nudges are good politics is that they're non-ideological.
Peter: Sure.
Michael: Things like changing a form at the DMV or moving the desserts at the cafeteria, these don't have obvious left versus right valence. So, one of the things they say in the intro is they say, "Democrats want bigger government and Republicans want smaller government and we want better government. So, all we're trying to do is identify places in America where we can apply these technical fixes without getting bogged down into a big political fight. So, after we have solved same-sex marriage, we then turn to the US healthcare system."
Peter: [laughs]
Michael: Put yourself in a 2007, 2008 mind space, Peter.
Peter: Okay.
Michael: This is the US healthcare system, pre-Obamacare.
Peter: Sure.
Michael: Think of all of the problems with the US healthcare system, all of the challenges we face in trying to fix it.
Peter: Now entirely within the past.
Michael: Now that everything is perfect. This is the first couple of paragraphs where they lay out the problems with the healthcare system, and then they propose a counterintuitive solution to fix them.
Peter: Okay. "Every election cycle, presidential contenders unveil plans to make healthcare coverage available to the tens of millions of Americans who lack health insurance. The candidates decry our government's failure thus far to implement an effective plan. Whatever happens in the long run, such plans are hard to design for a simple reason, "Healthcare is really expensive." It is expensive in part, because Americans want access to all the best services, doctors, hospitals, prescription drugs, medical devices, and nursing homes, to name a few. Of course, we can try to keep healthcare affordable on our own by maintaining healthy lifestyles and by buying only the healthcare products and services that we need. We can save money by visiting the doctor no more often than necessary. If we purchase insurance, we can choose a plan that covers only catastrophic illnesses instead of coverage with low deductibles."
Michael: We have choices.
Peter: "But there is something that every healthcare customer in America is forced to buy whether she wants it or not, the right to sue the doctor for negligence." Goddamn it. Goddamn it.
Michael: [laughs]
Peter: Oh, my God, that caught me off guard.
[laughter]
Michael: I was going to skip this chapter, but then I was like, "Wait a minute, my cohost is a lawyer, and I want to make Peter melt down about their ideas for that." [laughs]
Peter: God. I forgot that 15, 20 years ago, one of the main right-wing talking points was that malpractice suits are driving the cost of healthcare.
Michael: This is this whole chapter is laying out the fact that we are forced to buy the right to sue our doctors. So, they say, "The principal claim here is that patients and doctors should be free to make their own agreements about the right to sue doctors. If patients want to waive the right to sue, they should be allowed to do exactly that. This increase in freedom is likely to help doctors and patients alike and to make a valuable, even if modest, contribution to the healthcare problem."
Peter: All right. There's so much packed into this that my brain just loses [Michael laughs] control. I wish that I could cleanly articulate the feelings that it makes me feel, but I get overwhelmed. It's so frustrating to hear people talk about liability from a cost perspective-
Michael: Oh, my God. I know.
Peter: -because, yes, it's an imperfect thing to be like, "Well, you can sue them if they hurt you." But the alternative is always like, "Well, you can't."
Michael: Right.
Peter: The idea that is just like, "Well, can't we all agree?"
Michael and Peter: No.
Peter: No. Fuck no.
Michael: They then compare this. They make analogy to haircuts. They say suppose, for example, that people had the right to sue their hairdressers, if a haircut went badly wrong and that the cost of this insurance raised the price of haircuts by $50, after someone who had received a particularly gruesome haircut won a $17 million judgment. Would you be interested in saving $50 per haircut to give up the right to sue if you got a bad one? Would you be angry if you were prevented from doing so?
Peter: Okay.
Michael: [laughs]
Peter: I think it's telling when you have to create analogy that A, is facially absurd. When your haircut is bad, it grows out. And then, you're talking about malpractice, where it's like walking is harder forever, because the doctor fucked up. It's an awful comparison. But even if you eliminated that critique, the analogy they use is a $50 increase in haircuts.
Michael: [laughs] So, basically, doubling or tripling the price of a haircut-- [crosstalk] .
Peter: This is funny, because for most women's haircuts, this is actually negligible. But for a men's haircut, you're tripling it.
Michael: There's a place downstairs that does it for $17. So, for me, I'm like, "This is like a 400% increase."
Peter: There's also a $20 haircut place in my building, and I've always just been like, "No, I don't know what goes on in there, but it can't be good. I'm going to go spend $40."
Michael: Oh, my haircuts are unbelievably bad, Peter.
Peter: [laughs]
Michael: My head looks tilted like a golden retriever at all times. It's not even--
Peter: [laughs]
Michael: So, to make this case, they have three arguments. The first argument is that all of the malpractice lawsuits in the United States healthcare system are spiking healthcare costs. So, they say, "These lawsuits cost a lot of money. Estimates range from $11 billion to $29 billion per year. Exposure to medical malpractice liability has been estimated to account for 5% to 9% of hospital expenditures. Of course, these particular figures are controversial and may be exaggerated. But no one doubts that many billions of dollars must be paid each year to buy insurance and to fend off liability." This is also this weird thing where they're like, "This is how big the problem is." It might not be that big.
Peter: [laughs]
Michael: But anyway-- [crosstalk]
Peter: Also, healthcare spending is [Michael laughs] in the trillions of dollars.
Michael: Yeah, it's $4 trillion a year.
Peter: Yeah, in like a vacuum $10 billion, $20 billion might seem like a chunky number, but no, it's not. I am, generally speaking, a defender of malpractice suits. But if they truly doubled the cost of health insurance, then I think we could have a conversation. Sure.
Michael: So, this leads to their second argument against medical malpractice liability. They say that, "The system is flooded with frivolous lawsuits."
Peter: Mm-mm.
Michael: We all know, it's too easy to sue each other in America, because that lady sued McDonald's.
Peter: That's right.
Michael: We all know that there's no details that have emerged about that case since then to make it slightly more complicated. So, they're talking about how the argument for medical malpractice liability is that it deters doctors from making mistakes.
Peter: Yes.
Michael: They say, "The deterrence argument is undermined by the stunningly poor fit between malpractice claims and injuries caused by medical negligence. To put it bluntly, most patients don't sue, even if their doctor has been negligent. And many of those who do sue and end up with favorable settlements don't deserve the money."
Peter: What? What are they basing that on, don't deserve the money?
Michael: They're just speaking words into the world, just writing words on paper.
Peter: Okay. [laughs]
Michael: Then the third argument is basically what happens throughout the entire medical system when everybody's afraid of getting sued. They say, "Many doctors practice defensive medicine, ordering expensive but unnecessary treatments for patients or refusing to provide risky, but beneficial treatments simply in order to avoid liability."
Peter: So, first of all, maybe this is a little too in the weeds, but if you allow for waivers of liability, then every doctor would refuse to give care unless you signed a complete waiver of liability. This is literally just magical thinking, right?
Michael: Yeah.
Peter: There's absolutely nothing other than some loosely correlated numbers and concepts floating around in the void, and they're like, "Well, what if this worked really well?"
Michael: So, this chapter is so bad that there's an entire academic article responding to it.
Peter: That's what I'm talking about.
Michael: It's called Allowing Patients to Waive the Right to Sue for Medical Malpractice: A Response to Thaler and Sunstein. It's by Tom Baker and Timothy Lytton. This is a fascinating article. The reason I wanted to talk about this was not just to dunk on this terrible chapter of their book, but also like to talk about medical malpractice, and the fact that a lot of these myths are still around now.
So, the first thing the authors of this paper note is that, "Of course, there are costs to the medical malpractice system. There's also benefits. Hospitals dedicate significant resources to understanding why mistakes happen and trying to avoid them in the future. Medical journals have thousands of articles on how to improve surgical procedures. This is, like, a major activity of the medical system. Do we wish that was improving only for patient care and altruism and not to avoid lawsuits? Sure. But we also know that when people are punished for bad behavior, they will act to avoid the bad behavior. So, it's weird to just talk about this as, like, 'We should remove this form of accountability."'
Peter: Well, that's why they use that quick line about person getting a reward that they don't deserve. Because if you hand wave away the utility of this stuff, then you don't have to worry about the consequences of removing liability for doctors.
Michael: Well, another thing that really bugs me about the hair salon example is that it smooths over the fact that you're going to get a $17 million payout for a bad haircut. Juries and judges are looking at these cases, and you have to assume that thousands of people are looking at like, "Oh, I stubbed my toe at the doctor's office, and I get $10 million." This just isn't human behavior in any meaningful sense. What they point out in this article is that if you actually look at the specifics of medical malpractice lawsuits, the median payout is $150,000, which is not terribly much. Less than 4% of payouts are $1 million or greater. The vast, vast, vast majority of those large payouts are permanent grave damage. These are people who are paralyzed, these are people who cannot see, these are people who have the wrong limb amputated. These are grievous harms. And so, the idea of just like, "Oh, people don't deserve it," that's not based on anything.
Peter: Right. There's a reason that the tort reformers, including in the med mal context-
Michael: Ooh, med mal. Ooh, he is a lawyer.
Peter: [laughs] Focus on these outlier big payouts. Because you will just as often find people who win, but don't get any money or don't win due to some technicality or there was some doubt as to the doctor's negligence, etc., etc. People get screwed over all the time. It's just not a serious perspective. It's provably driven by industry interests in almost every case. The people who are aggressively pushing to limit med mal liability, guess what? It's not interested academics. It's industry players who would directly financially benefit.
Michael: There's also the broader systemic effect. This thing about defensive medicine and doctors ordering a bunch of scans because "I'm afraid of getting sued" is basically an urban legend. It's something that doctors will often say. They're like, "Oh, I have to order these scans, because I'm going to get sued otherwise." But the main reason that doctors order extra scans in the United States is because they get paid. We have a fee-for-service model.
Peter: That's the thing is, I've had a doctor that no matter what small problem you went in with, you would get a battery of tests. It's so obvious that's the primary driver of doctors like that assuming that there are some decent populations of doctors who are overemphasizing tests.
Michael: The literature on this is actually really interesting, because it is clear that the US does way more scans, and way more screening, and way more stuff of this nature than other healthcare systems. But we also actually have better cancer survival rates than other countries and we're more likely to catch rare cancers. There's quite a bit of, I think, good faith debate about whether we do too much screening and treatment in the US versus other places maybe doing too little. That's fine. But it's not even clear at the most basic level that we do practice defensive medicine.
Peter: This is like a big outgrowth of econ 101 thought, which is, these guys will identify a theoretical problem that economics might predict and then just proceed as if it is a real material problem that they have actually identified in the real world.
Michael: There's also a legal standard thing here where all this stuff about defensive medicine is actually totally separate from the medical malpractice thing, because you can't sue a doctor for ordering an MRI when you didn't need one or doing a blood test that comes back negative.
Peter: Well, no, but they're saying the opposite. They're saying that the doctor is concerned about being called negligent, because they didn't order the MRI.
Michael: That's just nuts though. [chuckles] You can't say that doctors are ordering extra scans, because they're afraid of getting sued and also, they refuse to order scans. That doesn't make sense. The legal standard for negligence is somebody didn't do a test that was required by the main professional body in his field. So, if you come in and you say like, "Oh, I have a lump in my breast." And your doctor is like, "Oh, don't worry about it. Go home." That's just a straightforward case of medical negligence. That's why we have these laws.
Peter: Yeah, I didn't realize that was the heart of their argument, and that is very stupid.
Michael: It's very stupid. [laughs]
Peter: Yeah. [laughs]
Michael: Then, the other thing that they note is that there's no evidence that this would actually reduce healthcare costs, because we don't pay for fucking healthcare. It's not like you're looking at like, "Oh, my knee replacement could be at this hospital for $8,000 and this other hospital for $9,000. If I waive medical liability, they'll knock $1,000 off of it."
Peter: Right.
Michael: That's not how it works. You don't shop for healthcare. This is somewhere where the nudge framework just completely breaks down, because it's all about choice architecture. But our choices in terms of medical care are not remotely free, because no one has any fucking information on which to base their medical decisions. I once asked at the doctor's office, how much is this appointment going to cost me? They acted as if I spoke to them in Esperanto or something. They're like, "What do you mean?" I was like, "I'm about to receive a service. How much is this service going to cost?" They were like, "We couldn't possibly give you a ballpark." [laughs]
Peter: No. My favorite thing is when you're like, "Hey, do I have to pay?" And they're like, "No, absolutely not." And then you just get a bill later.
Michael: Yeah, like four months later.
Peter: They're mad at you in the letter about it.
Michael: [laughs]
Peter: I was in the office. I offered to pay.
Michael: Yeah. There's also a principled thing here where we wouldn't accept signing away your legal rights to get a discount in other areas. You get a $500 discount on a car, but you waive your right to join a class action in case it catches fire or you get a $50 discount on your rent if you waive the right to sue your landlord. This should not be how rights work. We know that at a systems wide level, if it is cheaper to not have legal rights, people, especially poor people, will sign away their legal rights.
Peter: The reason that those rights exist is because we had that system before.
Michael: Yes. [laughs]
Peter: It did not work. It was exploitative, etc.
Michael: It really takes a creative mind to make the US healthcare system worse.
Peter: [laughs]
Michael: So, at the end of this chapter, they basically say, "Look, we're not monsters. Of course, there's bad doctors out there, and of course, there's really significant harms." So, they say, "Patients will still be permitted to sue for intentional or reckless wrongdoing, just not for mere negligence." Negligence is normally defined as the failure to meet what is called the ordinary standard of care, a vague concept that tends to make lawyers fight and judges scratch their heads. Intentional or reckless wrongdoing is a harder standard for plaintiffs to meet.
Peter: I like how they're casting doubt on the concept of legal negligence, which by the way is the entire backbone of our tort system.
Michael: Yeah. [laughs]
Peter: Without it, there's a level of chaos that I don't think our society would tolerate. But it's right that it's a grayish concept, but the purpose of having a grayish standard there is to allow for juries to interpret dynamic situations and figure out what is reasonable and what is not.
Michael: It's like, "What are you proposing? We're just going to do this on a case-by-case basis?" It's like, "Well, kind of yeah. That's the legal system." Of course, these things are really nebulous and difficult to define, but the recklessness standard is also hard to define. It's just harder to meet. So, in the end, they haven't actually solved the problem that they started out with. Doctors are still going to have medical malpractice insurance. Patients are still going to sue their doctors. It's just going to be harder to win.
Peter: No question.
Michael: And again, this is claiming to be non-ideological. This is a huge part of the argument for nudges. They're technical, they're small, they're procedural. Who could disagree? We're bringing everybody to the table. Then you zoom out and you look at this idea as a whole, this is a deeply ideological policy change. What you're essentially doing is trading away rights to save money on healthcare. That is the definition of ideology.
Peter: How come 99% of the time someone is like, "We're going to do apolitical engineering to solve this political problem", they're just doing right-wing shit?
Michael: Oh, yeah.
Peter: You can't say that this is like post-politics or something.
Michael: Peter, I have led you to the river again.
Peter: [laughs]
Michael: This is where we were going with this chapter. So, reading the second half of this book, what I kept thinking of was a lot of the diet books that me and Aubrey read for Maintenance Phase, where in the intro, they're like, "You never have to be hungry again. It's easy to follow. It's a lifestyle for the rest of your life." Then, you keep reading, and once you get into the actual meat, the specifics of the diet, it's like, "So, you'll be meticulously weighing all of your meals. You can never eat out at a restaurant. If you go to any family gathering, you have to bring your own carrot sticks." The way that they describe the diet, in general, does not remotely match the specifics.
They're doing the same thing with nudges, where in the intro, they're like, "Oh, these are technocratic tweaks. They're non-ideological. They're going to bring all the parties to the table." But then, you get to the second half of the book. Not only are they not nudges, they're just libertarian policy ideas.
One of the examples that they want the US to implement is motorcycle helmets. This is like, if you read Reason magazine, there's 200 articles about this that they're against seatbelt and helmet laws and stuff. So, they want to have you basically get an extra license if you want to not wear a helmet on your motorcycle. So, there's an extra testing requirement, and you sign away some of your legal rights or whatever, and it's like, "Okay, now you don't have to wear a helmet on your motorcycle."
Peter: Right. To contextualize this, my understanding of this is that motorcycle helmets are important, because the fatality rate in motorcycle accidents without them skyrockets.
Michael: Yeah, it's worse than hang gliding. They also have this thing that apparently some states have already implemented, where if you have a gambling addiction, you can voluntarily put yourself on a do not allow list at casinos. So, if you're trying to quit, you can call the gaming commission and they're just like, "If they see your face, they won't let you in." Which seems honestly fine to me, but also, it's very clearly just an excuse not to regulate gambling.
Peter: Right. It's interesting, because the concept of nudging is all over casinos. They are constantly nudging you towards slot machines. That might be one of the most interesting places to study choice architecture.
Michael: They also have a bunch of weird libertarian programs to take people's money and give it back to them. So, this is an excerpt from the second to last chapter, which is like a lightning round of little nudges. They're like, "These are promising nudges."
Peter: It's the ideas section.
Michael: Yeah, exactly. Just bang them out, right?
Peter: CARES, Committed Action to Reduce and End Smoking is a savings program offered by the Green Bank of Caraga in the Philippines. A would-be nonsmoker opens an account with a minimum balance of $1. For six months, she deposits the amount of money she would otherwise spend on cigarettes into the account. After six months, she takes a urine test to confirm that she has not smoked recently. If she passes the test, she gets her money back. If she fails the test, the account is closed and the money is donated to a charity.
Michael: It's insane.
Peter: What?
Michael: It's insane.
Peter: What the fuck is this?
Michael: There's a World Bank report on this. This is like a World Bank funded project. They literally walk up to people with flyers in a poor country and they're like, "Okay, we are going to take your own money from you. And then in six months, we are going to piss test you. And then, if you pass the piss test, you get your own money back."
Peter: So, we're going to introduce a system where, if they fail, they lose money?
Michael: Poor people were taking poor people's money and giving it away.
Peter: With no benefit. Like, "And we'll give you 20%-"
Michael: Exactly.
Peter: "-more."
Michael: Nothing. So, there is a pilot where they tested this, where they handed out these flyers to 800 people. They got 83 people to sign up, which is incredible to me that anybody signed up for this. Around 10% of people quit smoking, which in the study they describe as like a triumph that in the control group, only 8% of people quit smoking.
Peter: Bang. 2% gains. All it took was robbing the other 90%-
Michael: Exactly.
Peter: -of their money.
Michael: Basically, in any given year, roughly 10% of smokers quit, because most smokers want to quit and are trying to quit. So, the fact that this program got 11% of 10% of people who got the flyer basically represents nothing. This is not scalable. If you gave this to 20,000 people, you'd get 2,000 people who sign up and then 200 people who actually quit smoking, most of whom end up starting again.
Peter: If I was in this program and lost my will a little bit and had a cigarette and then they stole my money, I would spite smoke for the rest of my life.
Michael: But this is like the whole weird libertarian thing, where they don't want to have any governmental anything. It's just like, "Oh, we should give people the frameworks to do what's best for them." But this sucks.
Peter: Is this even like choice architecture?
Michael: No.
Peter: You are just-- you're trapping someone's money.
Michael: They also have a chapter about school choice.
Peter: Goddamn it.
Michael: So, they say, "Caroline Hoxby, a leading economist who has analyzed both voucher and charter school programs finds that when facing competition, public schools produce higher student achievement per dollar spent. Test score improvements can range from 1% to 7% a year depending on the school and student. Improvement is usually greatest among younger students, low-income students, and minority group members. So, we solved it. School choice is good. When exposed to competition, public schools do better because they have to compete in the marketplace for the children."
Peter: Oh.
Michael: The study that they're referring to is from 2001. It's of a privatization project in Michigan in the 1990s. There are numerous other studies with this same data. And so, if you look at actual meta-analyses, what they find is that, in Michigan, what actually happened was, a bunch of charter schools opened, and the charter schools tended to take the lowest performing kids, kids that needed more attention. So, once you pull all of the troubled kids out of public schools-- Yeah, the test scores at the public schools go up.
But that's not because they were exposed to more competition. The composition of the classes has changed. There's more high achieving kids in the classes. So, yeah, they're going to have high achieving test scores. Then they very deliberately write around the effect of the charter schools on the kids who went to charter schools, which were almost universally negative.
Peter: [laughs]
Michael: So, the kids that went to charter schools were already low performers. After they went to charter schools, they were lower performers. I don't want to make this whole thing rest on what happened in Michigan in the 1990s, but this is a fucking field of academia. School choice. What is effective teaching, what is effective testing? People have been thinking and writing about this for decades, right? These guys who are presenting themselves as academics like, we're smart. We've looked at all the data. We're policy wonks. They stumble into this. They cite one fucking study, and then the whole rest of the chapter is about how to help parents choose the right school.
Peter: Yeah, this is a classic academic in over their head thing where they spent a lot of their life being smarter than the people around them. So, the idea that you are inadequately informed to tackle a subject does not compute.
Michael: Well, this is what's actually so chicken shit, I think, about this book is that in most of these chapters, they very openly propose these as solutions to problems, like, the organ donation thing, like, change the form. And then at the end of the chapter, they're like, "Well, we're not saying you should change the form. Obviously, changing the form isn't going to do anything." So, they're trying to have it both ways. They're trying to keep their academic credibility by not stating openly that they want these policies to pass like, "Obviously, it's complicated." But they're also not doing the work to actually understand these issues.
Policymakers on some level are relying on academics. They shouldn't be, but they are relying on books like this to determine what the right policy is, because they assume you have done your fucking homework. They assume, "If you're telling me to change the donation wording on a form, you have looked into this, you have consulted with actual experts in this field, and you are qualified to make that recommendation." But what these guys keep doing is they're obviously prioritizing things that are cute. Look at this project in the Philippines where they took people's money and gave it back.
But if they're not doing the basic work that you would expect from a fucking Harvard and University of Chicago academic behind the scenes to be like, "Hey, we've actually stress tested these ideas. We've thought about it. We've talked to people who are way more knowledgeable in the specifics of these issues than we are." They're not doing that.
Peter: At the end of the chapter, they're like, "Hey, don't make this the defining framework for your presidential administration's [Michael laughs] policy analysis."
Michael: Thank God this doesn't take over the entire liberal elite institutional apparatus for the next two decades.
Peter: God, this is truly the mindset that held our policy and politics on the left back for at least a decade, because coming out of the Bush era, there was this belief that we could move past that and recenter ourselves. I think the idea that you could create policy from a place of apolitical technocratic meddling rather than these great ideological projects took hold in places like the Obama administration in the major liberal think tanks. That's why they got fucking blindsided by Trump and the modern Republican party, because they did not understand the contours of the political debate that was happening. This book is right in that tradition that like embarrassing, totally missed the point tradition of liberal politics in the late 2000s.
Michael: I love it when you transition us, Peter. This is the perfect little ramp up to the next thing I want to talk about, which is, what happened to the authors after this book came out and what happened to this idea after the book came out?
Peter: Uh-huh.
Michael: So, as I mentioned last episode, Cass Sunstein, one of the coauthors of Nudge, a year after this book is published, is appointed by Obama as the Director of something called the Office of Information and Regulatory Affairs, OIRA.
Peter: Ugh. The Office of Information doesn't sound like a real office.
Michael: You can tell that this was created by Reagan as a fake thing to throttle government regulation by how it has the world's most boring name.
Peter: [laughs]
Michael: So, it was invented under the Office of Management and Budget with a mandate to apply a cost-benefit analysis to every single regulation that is passed by the US government. So, it's like, "We're going to create this little bottleneck of a bunch of people, none of whom are subject matter experts in the kinds of things that the EPA is doing or clean air particulates." These people don't have any expertise in that. They're all accountants and economists.
Peter: [laughs]
Michael: What we want them to do is apply a cost-benefit analysis to every single thing to make sure that they're not wasteful government regulation, right?
Peter: Of course.
Michael: Of course, rather than seeing right through this thing and just fucking destroying it when they come into office, democrats basically reify this. So, Clinton didn't really do anything with it. He just staffed it with his own people. It then gets more power and becomes even more of a central, just like "let's kill everything" graveyard under George W. Bush. And then, when Obama comes in, he appoints Cass Sunstein to run this weird little bottleneck department of the government.
Peter: It's just like mission statement, destroy the country.
Michael: If you think about the actual concept of the book, and what we talked about last episode as the core insight of the book. That our decisions are profoundly affected by choice architecture, by the options that are presented to us, the way that they're described, the thing that is easy versus the thing that is hard. If you think about government regulations, this is where a lot of that choice architecting happens. This is where you can actually have a huge impact on the world, if you believe the core concept of your book.
Peter: [laughs]
Michael: You mentioned last episode that you were vaguely aware of Cass Sunstein.
Peter: Yeah.
Michael: I always thought he was kind of a standard issue center left guy like, "Okay, some good, some bad, whatever." But after spending the last week reading up on his record and his work, I am truly convinced that he is the Antichrist.
Peter: [laughs]
Michael: No one who looks into this man comes away with anything, but utter unmitigated contempt.
Peter: I'm sorry, but you have to be cool and charismatic to be the Antichrist.
Peter: [laughs]
Peter: I feel like you're giving him a lot of credit.
Michael: So, the primary thing that he did with all of this huge power was just delay and water down necessary regulations.
Peter: Hmm, shocking.
Michael: The best example of this is silica dust, which is basically these tiny little particulates that come off when you're cutting concrete.
Peter: Yeah.
Michael: You breathe it, and it causes silicosis and lung cancer. It's really nasty stuff.
Peter: Okay.
Michael: In 2011, the EPA proposed a rule to make companies provide protective equipment, to give free medical checkups to their employees, to ban certain kinds of activities that kick up a lot of silica dust. They send it to Cass Sunstein's department in 2011. His agency is legally required to make determinations on laws after 90 days. He then sits on it for two years-
Peter: Jesus.
Michael: -with no explanation.
Peter: Uh-huh.
Michael: There's then a whole kind of lobbying effort that has to take place. There's actual sitting senators put out all these open letters of being like, "Cass, we need you to move on this." Finally, he returns with his answer and he basically says, "Oh, we don't disagree, but we'd like the agency to do one more round of public consultation on this."
Peter: Oh, my God.
Michael: So, it was like, "Okay."
Peter: Just red tape bull--
Michael: Ugh.
Peter: So, Reagan creates this little agency to-- I imagine he conceptualize it as eliminating the dead weight loss of bureaucracy or whatever.
Michael: Job killing regulations.
Peter: Then you have the actual output of it, which is the creation of red tape on behalf of industry.
Michael: Exactly.
Peter: Oh, God.
Michael: Then this fucking law doesn't even end up coming into place until 2016 under Trump's EPA, which then, of course, waters it down even more.
Peter: Of course.
Michael: There's numerous think tank reports published about all of the regulations that Cass Sunstein's little nudge unit delayed and watered down for no reason. So, there's at least 38 rules that were delayed by more than a year.
Peter: Oh, my God.
Michael: Of the regulations that were actually passed during the Obama administration, three quarters of them were changed by Cass Sunstein's nudge unit, and almost all of them were watered down and made less stringent.
Peter: Yeah. I do think it's the senate's fault for just sending them letters when they could have started a PR campaign like, "Don't mess with our regs."
Michael: [laughs] "Don't lay that trash on OIRA."
Peter: [laughs]
Michael: Although, it's better than the Oklahoma one.
Peter: Yeah, that's not bad.
Michael: The worst example of this during Cass Sunstein's time in the White House is there's a process where the EPA is trying to regulate ozone smog.
Peter: Sure.
Michael: The Bush administration in 2008 said that, "The limit should be 75 parts per billion," even though the EPA wanted it to be 65 parts per billion.
Peter: Okay.
Michael: Finally, Obama gets in. The EPA, looks at it again and is like, "Okay, let's reduce this to 65 ozone smog. It's just straightforwardly bad." They say that this change would save 7,200 lives and 38,000 cases of asthma every year.
Peter: Ooh, that doesn't really sound like a nudge. That's more like a push.
Michael: Yeah, it's really command and control. We need to be really careful. So, they start the process of passing this. And then again, it gets blocked by Cass Sunstein's OIRA department. The reason that he gives for blocking this is that the EPA is obligated to revisit these regulations every five years. It's on a five-year cycle. So, he's like-- Okay, they passed this in 2008, so the review is in 2013, and right now it's 2011.
Peter: Oh, my God.
Michael: So, there's no reason for us to look at this now. We're just going to have to look at it again in two years. Actual people who work at the EPA and who know this stuff point out, "That's not how it works. It's a five-year cycle from when you pass the regulation." At no point, does he ever actually argue with the lives that it will save or the cases of asthma? He's just like, "I just don't think this is the right plan for us right now." The regulation gets killed.
Peter: Oh, my God.
Michael: But this is his MO in government. It's like, he will insert himself as a block for all of these regulations that are just straightforwardly good. He will result in them getting delayed by years or killed. And then when people are like, "Hey, dude, why did you kill this regulation?" He's like, "[gasps] I didn't kill it."
Peter: Right.
Michael: "I don't understand why you would say that. I have this kind of power. All I'm doing is bringing all stakeholders to the table and having a conversation."
Peter: God damn it. It's wild to me that we have not accepted as a society that men like this are functionally murderers.
Michael: Yes, sociopaths.
Peter: Right.
Michael and Peter: You have to be.
Peter: You have to be.
Michael: It's very hard to look at what he did with power, and not conclude that this was always the project of nudge as well.
Peter: Yeah.
Michael: The book is very openly just a manifesto for the government to do less.
Peter: Yeah. It's interesting, because the book is not a particularly good idea. You can look at it on its own and be like, "This is libertarianism dressed up." And yet, Cass Sunstein is actually even worse than that, right?
Michael: Yeah. [laughs]
Peter: He didn't even have the loose sympathies with progressive ideals that he alludes to in the book. It's remarkable.
Michael: Every time I think I'm being too hard on this guy, I read more about what he actually did in power and I'm like, "No, got to go harder, man." [laughs] This guy [crosstalk]
Peter: Yeah. It seems like they want to present themselves in the book as solutions guys, but the role they end up serving appears to be problem identifiers, right?
Michael: Right.
Peter: Not that they are coming up with anything productive on their own. They are just making sure that existing policies follow the bullshit guidelines that they think should dictate what makes a good policy or a bad policy.
Michael: This is actually super palpable. When you read descriptions of other nudge units, there's now been a number of surveys published of what various countries are doing with nudges, right? 51 countries set up nudge units. One of the most interesting documents that I read was from the EU nudge unit and it was just like an alphabetical list of all of the nudge units and all of the nudges.
Peter: Uh-huh.
Michael: I only made it to L. I only made it to Lichtenstein because after a while they were really same-y.
Peter: Well, then you're missing out on when Russia nudged into Ukrainia a few years ago.
Michael: [laughs] But if you look at the actual nudges, what improvements in society has this outlook produced? It's basically just a bunch of marketing efforts. It's like public information campaigns and fucking text message reminders. It's not regulating the kinds of things that companies are allowed to offer or meaningfully changing the choice architecture in any way. It's all like quasi-libertarian austerity adjacent efforts to just, like, tell people to behave differently.
Peter: Mm-hmm.
Michael: A huge number of them are trying to crack down on welfare cheats.
Peter: Okay.
Michael: The infamous UK nudge unit, one of the first things they did was getting people to more accurately report their income. You have to report your income every two weeks if you're on welfare in the UK. It's like, "Here's a text message reminder for people to send in their income."
Peter: No matter what era it comes from, all economic concepts eventually will just be used to crack down on welfare.
Michael: A lot of them are also like-- I don't know how else to put this, but they're trying to be cute.
Peter: Yeah, of course.
Michael: By far the largest category of nudges is weight loss efforts, trying to get people to eat different and move more. A lot of them seem like they're auditioning to be the opening anecdote of a fucking magazine article.
Peter: Okay. [chuckles]
Michael: So, I'm going to send you an example from the UK nudge unit on this.
Peter: Okay.
Michael: If you can get through it.
Peter: "The nudge unit extends the idea of encouraging exercise by reshaping the choice architecture such that more active daily routines are enjoyable in the moment. An example of this concept is piano stairs, i.e., embedding sensors in stairs to encourage people to avoid elevators and make music with their feet." Okay. [laughs]
Michael: Great work, everyone. Great work.
Peter: Sick idea.
Michael: [laughs] I'm a fucking adult involuntarily doing that scene from big, every single time I walk up the stairs to my office. [laughs]
Peter: I don't think we need to deep dive into the piano stairs concept, but I'm going to regardless, [Michael laughs] you're presumably hearing the same little melody or-
Michael: I know.
Peter: -a similar set of melodies every single time you walk down the stairs, [crosstalk] which not only makes me want to not walk down the stairs, but would probably just drive me to the verge of actual insanity.
Michael: Absolute murder happening in those stairwells.
Peter: The other option is that there is not a preprogrammed melody. And in fact, you're just making awful noise as you walk down at this-- [laughs]
Michael: Yeah. If two or three people are using the stairs at once, it's just like [onomatopoeia]
Peter: It's just hell.
Michael: [laughs]
Peter: This is one of the worst ideas I've ever heard. It's so stupid.
Michael: Unbelievable.
Peter: That's on par with the Office Space Jump to Conclusions Mat.
Michael: [laughs] The UK one is really an outlier with the sheer insipidness of many of the interventions. Another one they have is dedicated yellow areas in shopping carts where you're supposed to put fruits and vegetables.
Peter: Okay.
Michael: That's all right.
Peter: All of these just feel like there's a fucking board meeting to produce a 0.2% change in behavior that could have very readily been produced through more reasonable means.
Michael: Exactly.
Peter: It's so fucking stupid. It's such fake smart guy bullshit.
Michael: Another thing that I did not realize until I talked to David Gall[?], this economist who's on a crusade to debunk this fucking book is that, when you have these little nudges about things like reducing food waste or reducing your climate impact through having a glowing orb that glows red when you use too much energy at these little ticky-tack nudges. There's some evidence that this actually reduces the ability to solve these things on a more structural level.
Peter: To the extent that political capital or political will is a deteriorating thing, people would be less inclined to take larger steps, because they feel like the problem has been addressed, at least to some degree.
Michael: Right. I've seen this anecdotally with people I know that are like, "I'm really into fair trade clothing. I'm opting out of the sweatshop system. So, I don't know that we need these policies for trade imports to regulate the working conditions of people."
Peter: Right.
Michael: The evidence on this is not great. A lot of it is like these kind of lab experiments on fucking sophomores that are, like, a lot of the evidence for the nudges in the first place. So, I don't want to say that this is a proven concept, but it's at least plausible that these nudges, as well as not producing any structural change actually operate as a substitute for structural change and make it harder.
Peter: Right. I do think that feels like part of the objective of the authors is that rather than dive into these big ideological debates about the shape of our institutions, et cetera, why not do these little technocratic things that can make marginal improvements that we can all agree to and put the politics behind us. It's not supplementary. This is something that is meant to indicate that they think that this is how politics should be done.
Michael: The times have changed around these guys. The times have changed since 2008, and they have not changed with the times at all. So, the other author of Nudge, Richard Thaler, he has a really telling New York Times op-ed. This is 10 years after the book comes out. It's called The Power of Nudges, for Good and Bad. He's reflecting on this idea and the legacy of this idea. So, he apparently got radicalized on this when he saw a review of his own book in the Times of London and he clicked on the website-- And of course, he got the paywall pop up. He's about to sign up for the seven-day free trial, so we can read this review. And then he looks at the fine print. It turns out that when you sign up for the free trial, you have to give them your credit card information. You'll automatically be enrolled as a subscriber. And to cancel, you have to call the Times of London at business hours London time-
Peter: Hell yeah. Okay. Nice.
Michael: -and basically talk someone into letting you out of this contract. [laughs]
Peter: Right. Wow.
Michael: He's like, "This is a nudge for evil. The primary way that we experience nudges in our lives is through scammy bullshit like this."
Peter: Uh-huh?
Michael: You receive a fucking newsletter for the rest of your natural life, because you ordered a tank top once.
Peter: Right.
Michael: He also mentions this thing where airlines are constantly trying to upsell you on this trip insurance thing.
Peter: I turn that down. I'm a master of economics.
Michael: I know. Same. Skip.
Peter: Are you sure? Your flight is dangerously unprotected.
Michael: [laughs] So, he basically lays out what is plainly true that we're constantly being nudged. A lot of these nudges are just total bullshit, right?
Peter: Mm-hmm.
Michael: Then the final paragraph of his op-ed, he says, "As customers, we can help one another by resisting these come-ons. The more we turn down questionable offers like trip insurance and scrutinize one-month trials, the less incentive companies will have to use such schemes. Conversely, if customers reward firms that act in our best interests, more such outlets will survive and flourish, and the options available to us will improve." He's just so close to getting it.
Peter: Yeah.
Michael: It's like, "This fucking scammy behavior by companies is all around us and it sucks shit." And his solution to it is like, "Well, don't sign up for the trial."
Peter: Nudges are bad and everyone hates them.
Michael: [laughs]
Peter: God, I think that there's a real problem with these pop science authors that we sometimes see when you circle back a decade later or so. It's that when your career gets tied to this type of concept, the admission that it sucks and is useless is, it's impossible. You can no longer bring yourself to be like, "Oh, yeah, that was a bad idea that we put into that book."
Michael: Yeah.
Peter: Because your entire career is now an outgrowth of it.
Michael: Right. And also, it's back to the dog shit political analysis. These kinds of consumer protections are fucking wildly popular. "Hey, if you sign up for something online, you have to be able to cancel with one click online." People love this shit. Getting rid of scam phone calls, regulating fucking nutritional supplements like used car dealerships. The extent to which you are surrounded in the United States by fucking scams does not become clear to you until you live abroad.
Peter: How are all of our politics about trans swimmers?
Michael: Yeah. [laughs]
Peter: Meanwhile, I get three phone calls a day from someone who is actively trying to rob me.
Michael: I want to end with a quote from a very good Harper's essay by Robert Kuttner about Cass Sunstein and the legacy of this book. He says, "At a moment when capitalism needed a major overhaul, and the citizenry needed an inspiring leader, libertarian paternalism and visionary minimalism proved woefully inadequate as theory, policy, and politics." That's really, I think, the main legacy of this book and this era. We had this promise of non-ideological technocratic policy making. And as a theory, it's all over the place. You and me can't even fucking agree on what a nudge is.
Peter: [laughs]
Michael: As policy, it hasn't produced anything all that useful in the end. We have shopping carts that are cordoned off. Then as politics, it's also dog shit. People don't like this stuff.
Peter: Right. Well, it doesn't address the problems.
Michael: Exactly. And on a personal note, I don't know another way to put it, but I felt really betrayed looking into this book, because honestly, when I started looking into it, I thought the organ donation thing held up. I thought it was going to be like, "Okay, this works for organ donation, but a lot of problems don't have the same kind of structure as organ donation."
Peter: Right. It's just a matter of scale, right?
Michael: Yeah.
Peter: This isn't a scalable solution to various problems.
Michael: But then when I was talking to David Gall, this behavioral economist who's written a lot about this book, we were talking about the importance of being fair in an episode like this. And I was like, "Yeah, it's really important to mention." Like, "Oh, it works for the organ donation stuff." And he's like, "Oh, do you not know that that's fake? Do you not know that that doesn't hold up?"
Peter: Uh-huh.
Michael: Then, he sent me a bunch of articles, which is how I went down the rabbit hole that we ended last episode with. But what is so frustrating and hurtful to me is that, I was really into this stuff. I watched all of the animated explainer videos, I read all of these fucking books, and the spinoff books, I watched talks by the authors. At no point, did anyone really say to me, "This organ donation thing, the central example of the success of this book, doesn't fucking work."
I'm sure that it was in there somewhere as a folded in little footnote to be sure but this total indifference to outcomes and this prioritizing of cute solutions over effective solutions is one of the most corrosive impacts of this brand of airport book.
Peter: Now, there's a lesson here, I think, which is that, if you simply don't read books, [Michael laughs] you are not at risk of accidentally buying into some bullshit like nudge, right?
Michael: Yeah.
Peter: That's why I am so successful in this role.
Michael: Dude, a friend of mine who's a literal librarian, she was telling me about how she was trying to pick the next book to read, and she was like, "Mike's just going to debunk these on his show eventually, anyway." I was like, "Fuck, did we ruin reading for you?"
Peter: That's right.
Michael: This is not what I wanted to do with this show.
Peter: Do not humiliate yourself by reading a book.
Michael: [laughs]
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