{"id":50899,"date":"2021-10-15T17:51:00","date_gmt":"2021-10-15T21:51:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=50899"},"modified":"2021-10-17T17:51:42","modified_gmt":"2021-10-17T21:51:42","slug":"kinds-of-decisions","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/kinds-of-decisions\/","title":{"rendered":"The 3 Different Kinds of Decisions in Nudge"},"content":{"rendered":"\n

What are the three kinds of decisions that warrant nudges? How can you improve your decision-making<\/a> skills?<\/p>\n\n\n\n

In the book Nudge, <\/em>Thaler and Sunstein explain that we make choices without realizing how the way they\u2019re presented affects us. Not all decisions require nudges, but there are three common types that do. <\/p>\n\n\n\n

Keep reading to learn about the three kinds of decisions that warrant nudges.<\/p>\n\n\n\n\n\n\n\n

Nudges, and the Kinds of Decisions to Nudge<\/strong><\/h2>\n\n\n\n

According to the authors of Nudge, <\/em>Thaler and Sunstein, not all decisions require nudges. (Although it\u2019s important to remember that all choices feature some<\/em> sort of design <\/strong>and so, in effect, feature nudges, whether on purpose or not<\/strong>.) The kinds of decisions that most warrant nudges are:<\/p>\n\n\n\n

1. Rare and Difficult Decisions<\/strong><\/h3>\n\n\n\n

Saving for retirement<\/a>, buying a house, or choosing a college<\/a> are each monumental decisions that come around once or rarely in a lifetime. Because we only have one or two cracks at each decision, we have no opportunity to learn if we make a mistake<\/strong>. Thus they\u2019re prime candidates for nudges.<\/p>\n\n\n\n

(Shortform note: A libertarian counterargument might be that, when it comes to major life decisions, no one, no matter how well-intentioned, should be putting their finger on the scale. But, as Thaler and Sunstein note, all choices, whether purposely or not, already feature nudges<\/em>, and so it\u2019s acceptable to curate that choice to improve outcomes<\/strong>.)<\/p>\n\n\n\n

2. Decisions With Delayed Outcomes<\/strong><\/h3>\n\n\n\n

For many decisions, the results of our choices are immediate and clear. When we use our debit card to buy a gift for a loved one, we see the consequences of that choice reflected almost instantaneously on our account statement.<\/p>\n\n\n\n

For other decisions, however, the outcomes of our choices are delayed or obscure<\/strong>. For example, someone can smoke for years and experience no negative effects\u2014until the day he or she suffers a stroke. Nudges can help us make better decisions<\/a> in situations like these, when the consequences of our actions aren\u2019t immediately apparent.<\/p>\n\n\n\n

(Shortform note: Thaler and Sunstein\u2019s assumption here is that, although the outcome is delayed for the chooser, it\u2019s immediate\u2014or at least known\u2014to the choice designer. But there are any number of choices where the ultimate outcomes are unknown to all. Take smartphone use, for example. Studies have shown that smartphones boost worker productivity<\/a>\u2014in addition to providing convenience\u2014yet the long-term health effects of consistent cell phone use remain unclear<\/a>. In this circumstance, it might be perilous to nudge someone toward or away from using a cell phone.)<\/p>\n\n\n\n

3. Decisions Requiring Specialized Knowledge<\/strong><\/h3>\n\n\n\n

Many of the most important decisions we face\u2014choosing a retirement or health care plan, for example\u2014are presented to us using specialized terms that can confuse more than inform<\/strong>. Most of us\u2014unless we work in finance\u2014would be at a loss when faced with terms like \u201cdefined contribution\u201d and \u201cexpense ratio.\u201d Given especially complex and unpredictable options, nudges can be vital.<\/p>\n\n\n\n

(Shortform note: These sorts of nudges can also be used to take advantage of the layperson<\/strong>. For example, a financial firm might nudge a client toward an investment that benefits the firm itself more than the investor.)<\/p>\n\n\n\n

Decision-Making 101<\/strong>

Nudges aren\u2019t the only way to improve people\u2019s decision-making; in fact, there\u2019s a vast literature dedicated to helping us think twice (sometimes literally!) before making a choice.

Tony Robbins\u2019s Awaken the Giant Within<\/em> teaches readers to take control of their \u201cMaster System\u201d\u2014the ideas, emotions, values, beliefs, and experiential reference points that inform any decision<\/a>.

In Atomic Habits<\/em>, James Clear shows how half of our daily actions (i.e., decisions) are force of habit. Once we become aware of our habits and how to change them, we can also improve our decision-making<\/a>.

In Multipliers<\/em>, Liz Wiseman and Greg McKeown break down the personal qualities that result in successful leadership. \u201cMultipliers\u201d\u2014those leaders who add value to whatever situation they find themselves in\u2014consult as many people as possible, especially if they have divergent viewpoints, before coming to a decision<\/a>.

In The Gifts of Imperfection<\/em>, author Bren\u00e9 Brown writes that one of the keys to living \u201cwholeheartedly\u201d is to follow your intuition when making a decision<\/a>. She advises her readers to let go of the need for certainty and simply \u201cgo with your gut.

\u201dDaniel Kahneman, in Thinking, Fast and Slow<\/em>, writes that when it comes to high-stakes decisions<\/a>, we absolutely must think twice<\/a>\u2014that is, we have to use our careful and deliberate system of cognition (System 2) to augment our intuitive, automatic system (System 1). Which approach to decision-making is the most effective? Is it better to seek out as much advice as you can (Wiseman and McKeown), think twice (Kahneman), or go with your gut (Brown)? There\u2019s evidence to support each, yet Thaler and Sunstein would likely say that the answer is immaterial: Because nudges rely <\/em>on our tendency to err, they remove\u2014or at least reduce\u2014the need for improved decision-making skills<\/strong>.<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"

What are the three kinds of decisions that warrant nudges? How can you improve your decision-making skills? In the book Nudge, Thaler and Sunstein explain that we make choices without realizing how the way they\u2019re presented affects us. Not all decisions require nudges, but there are three common types that do. Keep reading to learn about the three kinds of decisions that warrant nudges.<\/p>\n","protected":false},"author":8,"featured_media":51220,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[104,9],"tags":[132],"class_list":["post-50899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","category-psychology","tag-nudge","","tg-column-two"],"yoast_head":"\nThe 3 Different Kinds of Decisions in Nudge - Shortform Books<\/title>\n<meta name=\"description\" content=\"According to Thaler and Sunstein, there are three kinds of decisions that warrant nudges. 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