Why Nudges Can’t Do What They Promise

Abstract

Countless times every day, people around the world make choices in their own interests, including their wants and needs, goals and dreams, and principles and ideals, all of which are incredibly complex and multifaceted. But behavioral economists question many choices made by ordinary people because they seem to contradict the simplistic interests they assume people have, such as wealth or health. For instance, people buy lottery tickets, even though the chance of winning is astronomically small. But no one buys lottery tickets because he or she thinks it is a prudent financial decision-they buy them because it's exciting to watch the balls drop and imagine the joy of winning. Likewise, people don't eat unhealthy foods just because they don't know better or have self-control issues, but they may have other reasons to eat them-reasons that may be suspect according to a health economist but not to the people making that choice. To them, it may have been a great choice, fully in their interests, regardless of what anyone else thinks of it. Libertarian paternalists claim to nudge people to make the decisions people themselves would like to make, but this is impossible unless they know these people's true interests-and they can't. Instead, regulators point to the success of nudges in generating the choices they were designed to generate as evidence that they advance people's true interests. If people are nudged into eating more vegetables, this is taken as proof that the nudge worked, because regulators simply assume people wanted to eat more vegetables all along but somehow "couldn't" because of some cognitive defect. As this chapter explains, the only way to get even a glimpse into a person's true interest is to observe his or her choices absent any outside manipulation (or nudge). Even then, there are countless ways to explain any choice-desires, needs, principles, ideals, and so on-which reinforces the point that only a person can know his or her true interests. Nudges simply can't do what its proponents claim. If they claim nudges are effective, one has to wonder: effective at what?