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Description: An economist named Richard Thaler just won the Nobel prize in Economics for his work in an area called Behavioral Economics. What is behavioral economics? Well it is the study of how human beings make decisions. Sound like Psychology, well yes it does because it really is. I am not getting Psychologically petty and picky here but Daniel Kahneman along with Vernon Smith won the 2002 Nobel prize in economics for his work in behavioral economics based in his cognitive science work on human judgement and decision making. Psychology IS everywhere, but that is not what I want you to think about here. Both Kahneman and Thaler have contributed mightily our understanding of how non-rational and illogical human thinking can be. Despite what we might like to believe (that most of the time we are clear rational thinkers) it turns out we are actually influenced by biases and use heuristics (quick solutions) rather than logic. Thaler built on Kahneman’ s (much done with Amos Tversky prior to his death in 1996) work and developed applications to consumer behavior and to health related human decision making. Basically Thaler has shown that while we typically know what is good for us and we would like to believe that we make decisions in rational ways that are to our short and long term benefit we simply do not. We eat too much we eat the wrong things we do not get enough exercise we do not agree to donate out organs if we die unexpectedly. Economic theorists call the person we are NOT (that we like to think we are) Homo Economicus (rational thinking and rational investor of time, money and other choices). Thomas Leonard, the author of the book (Thaler’s) review linked below suggests we are instead Homer Economicus (after that prototypical self-serving irrational thinker Homer Simpson). Now, while the psychology of human irrationality is become well established and known what Thaler’s work has given rise to is interesting. He suggests that what is needed in order for us to behave better (in ways that are “better” for us and for us to make “better” decisions) we need Nudges. That is, we need to be lightly bumped into better decisions and better behavior. An example? Well when people are asked to check of a box on their driver license application indicating that they would be willing to donate their organs and tissues when they die about 10% of drivers do so and the health care community bemoans the resulting long wait times and lost transplant opportunities that result. However, many jurisdictions have simply moved to a negative option (a kind of nudge) in which license applicants are asked to check a box if they do not wish to donate their organs and in those countries 90% of drivers “agree” to donate their organs. Other “nudges” include outlawing or heavily taxing super large sugared soft drinks as many cities are doing, allowing only fruit, water and milk in school vending machines, and heavily taxing cigarette and alcohol. Arguable all of these things are economics that are good for us. As sometimes happens at various points in the development of a scientific area of enquiry, what a line of research tells us about ourselves raised philosophical questions often having to do with whether we are comfortable not with the results of the research but with what the results lead psychologists and economists to suggest about how we should proceed in dealing with or managing human behavior and human decisions. You can and should read the articles linked below and figure out what your own thoughts are on these questions but let me suggest that what we should consider is how comfortable we are with Thaler’s “Nudge” approach to marketing and human decision driving. There is a paternalistic feel to what Thaler is suggesting. If we are Homer Economicus then someone better nudge us in the direction of better behavior. But who? Do you recall Plato’s allegory of the cave from a philosophy class you may have taken? If I recall correctly (and my philosophy course was a long time ago), he suggested that most people see only the reflections or shadows of the world on the walls of the caves they are living in and that only philosopher kings, the truly enlightened, who have seen the real outside world, should be making decisions for all the rest of us. The third article linked below is by a philosopher and he discusses this particular question. So give the articles a read and then see what you think. Should we resist where psychology done by economists is taking us or should we all embrace it and go in to marketing as there may be a lot of money to be made with this Nobel prize winning research in hand.

Source: Various, see links below

Date: October 14, 2017

Photo Credit:  Scott Olson/Getty Images and PD-USGov-NIH

Links:  Article Links — https://www.forbes.com/sites/frankarmstrong/2017/10/13/richard-thaler-a-giant-in-economics-awarded-the-nobel-prize/#350088323a10

https://blog.nus.edu.sg/henrylim/files/2015/04/Leonard_Review-Nudge-1z2qpyn.pdf

https://beta.theglobeandmail.com/opinion/like-it-or-not-we-need-a-nudge-to-make-better-choices/article36570743

So, I have no bright snappy conclusions to draw at this point as I believe the questions are too big for quick conclusions to be drawn. It IS, however, important to at least be aware of the philosophical issues arising from well-regarded front line psychological research and it is the case that when philosophy pops up in psychology ethical reflection and possible policy guidelines should not be far behind.

Questions for Discussion:

  1. How rational or human decision makers??
  2. Should we try to be rational thinkers?
  3. Should we dive into the task of figuring out what nudges are needed to improve the lives of the general population?

References (Read Further):

Leonard, T. C. (2008). Richard H. Thaler, Cass R. Sunstein, Nudge: Improving decisions about health, wealth, and happiness. Constitutional Political Economy, 19(4), 356-360. (Second link above)

Thaler, R. H., Sunstein, C. R., & Balz, J. P. (2014). Choice architecture. https://www.researchgate.net/profile/C_Sunstein/publication/269517913_Choice_Architecture/links/548db1850cf225bf66a5f4e6.pdf

Oullier, O., Cialdini, R., Thaler, R. H., & Mullainathan, S. (2010). Improving public health prevention with a nudge. Economic Perspectives, 6(2), 117-36. http://oullier.free.fr/files/2010_Oullier-Cialdini-Thaler-Mullainathan_Neuroscience-Prevention-Public-Health_Nudge-Behavioral-Economics.pdf

Blumenthal-Barby, J. S., & Burroughs, H. (2012). Seeking better health care outcomes: the ethics of using the “nudge”. The American Journal of Bioethics, 12(2), 1-10. http://www.academia.edu/download/7908886/AJOB%20PROOF%20FINAL%20NUDGE.pdf

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