“Opt-in pension schemes have participation rates of around 60 per cent, while otherwise identical opt-out funds retain between 90 and 95 per cent of employees.“R. Thaler
Nudge: Improving Decisions About Health, Wealth, and Happiness | Richard H. Thaler, Cass R. Sunstein
A New York Times bestseller, Nudge is about improving your decision making and is co-authored by the 2017 Nobel Prize winning Author Richard Thaler, and Harvard law processor Cass Sunstein.
Nudge is about improving the decisions you make regarding your Health, Wealth and Happiness. Unfortunately, as Thaler explains, we often make poor choices as a result of laziness, lack of information or because of personal (internal) or influence (external) biases.
External biases can be as simple as advertising, which can use powerful behavioural and psychological tricks to convince you into a particular decision or course of action; for example purchasing and consuming junk food.
Nudge helps the reader improve their small everyday decisions. By understanding the way we think, we can apply a basic decision tree or ‘matrix’, helping nudge us toward making better and more constructive choices.
These nudges can also come from our employers, government or family; helping us to do the right thing. For example opt-out only pension plans have much higher participation rates than opt-in schemes, one reason why Australian Superannuation is mandatory with a minimum contribution – but you can up your contribution rate. You get a nice gentle nudge in the right direction, but the rest is up to you.
Over time, the positive compounding effects of these nudges result in an overall improved Health, Wealth and ideally a Happier life.