Friday, January 16, 2009

Nudge

I just finished another book that (mostly) isn't about education but which has important implications for higher ed. The book is Nudge: Improving Decisions about Health, Wealth, and Happiness by Cass Sunstein and Richard Thaler.

Sunstein and Thaler start by drawing a distinction between Econs--the ideal human being who appears only in economic theory--and Humans--real people. Humans tend to make a lot of decisions that aren't in their best interests because they don't fully understand the implications, or they used outmoded heuristics, or because the decision systems available to them don't help.

S and T propose a regime of "libertarian paternalism" to help these people while not diminshing their freedom (much). Libertarian paternalism relies on "nudges" to encourage people to make good decisions without forcing them to do so. And one of the most important nudges is to set up the default option in any complex decision process so that it does good for the decider.

For example, a surprisingly high proportion of people fail to sign up for retirement plans at work, even though the employer contributes the bulk of the money to it. S and T suggest that to get past this problem, the default ought to be to sign all employees up for a plan that invests retirement funds into a balanced portfolio. People are absolutely free to opt out, but if they don't they will--lo and behold--be saving money for retirement.

Colleges and universities, by and large, are places where both libertarianism and paternalism exist in a quiet but consequential state of war (in part because they assume that students are simultaneously Econs and Infants.) The libertarian part of a campus might tell students that they are welcome to sign up for whatever classes they wish (after all, we don't want to act like their parents, do we?). But after a period of libertarianism, the students run up against paternalism--the requirement, for example, that students must have an exact mix of courses from the right disciplines and with the right number of credit hours in order to graduate. The result is that college students take far longer than necessary to graduate, costing them thousands of dollars in excess tuition not to mention the opportunity cost of being in school instead of the workforce.

A libertarian paternalist approach to this problem would ensure that students are automatically enrolled in courses that will get them to their desired goal (a degree in history, for example) in an educationally sound and efficient manner. If they wish to diverge from that path, they are welcome to without penalty. All they have to do is meet with an advisor and make the change.

The result would be both a smoother, more integrated educational experience and more frequent contact between students and advisors--both good outcomes.

(S and T, by the way, have asked people to compile their favorite nudges. To do so just go to www.nudges.org)

3 comments:

Peter said...

Not to be a skeptic, but this text sounds a bit odd. For example, why do intelligent companies put money in to retirement accounts for people but then require them to sign up. If they are putting the money there anyway, why do the employees have to sign up? Unless of course the firm does not want the people to actually take the money. Hum...

As for students, why must they go through in an efficient manner? Perhaps they might take some courses to figure out what they want to do with their lives?

I really need to read the book before I become too skeptical.

Bryce said...

Peter makes a good point here about not confusing efficiency with quality or effectiveness because there are times when they might be at odds with each other. However, I think that Sunstein & Thaler would argue that the main objective of a system like Gary has proposed (one with "nudges" that prod a student along on their educational path) isn't necessarily to move students through their college experience in as little time as possible. The real benefit seems to be in helping students make better decisions about the learning experiences (in this case, what courses to take) they select for themselves.

Most students (especially first-year students) are so unfamiliar with the University system and the course offerings that to expect them to act like "Econs" might be naive at best. Designing a system that helps them make informed choices (or, in some cases, that makes the choice for them by defaulting to a pre-set schedule) seems necessary and useful as they become oriented to their new environment. As time goes on students may make intentional decisions to shop around, as Peter suggests. The system wouldn't prevent this, but the "aimless" shopping that some students do would be prevented.

gary said...

Peter,
I think T and S would say that students don't HAVE to go through in an efficient manner, but that if you set the default for efficiency, then they would have to make a purposeful choice to be inefficient. Such a choice would be more likely to have the sort of valuable exploratory outcomes you're hinting at, at least when compared with students who explore by making a bunch of only partially thought through decisions.

(BTW, on the retirement accounts--Thaler is an economist. His argument is that it is stupid to miss out on free money by not signing up for the retirement plan. Think about Westminster, where if you set aside X% of your pay, Westminster matches with a larger portion. If you don't set aside X%, you don't get the college's money either.)

Your overall point, though, deserves more attention than T and S give it. They don't want to force people to make certain choices, but they do think that on key issues they know what good choices look like and they want to find the means to encourage people to make those choices.