Economist and University of Chicago Professor Richard Thaler kicked off the Yahoo Labs 2010 Big Thinkers Speaker Series with a talk about his New York Times bestselling book, “Nudge: Improving Decisions about Health, Wealth, and Happiness.” In short, people have to make decisions every day that affect every aspect of their lives, personally and professionally. The way people make decisions is often impacted by human fallibility such as bounded self-interest, willpower, and rationality, according to Thaler, they could do with a little help, or “nudge”, in making such decisions. Addressing a packed room at the Great America Parkway campus of Yahoo Labs, Thaler described two goals of the book: a) to take the work he’s done and apply it to real-world problems, and b) to meet the “ridiculously ambitious goal” of offering a new approach to politics that is party-belief free. Having been endorsed by several world leaders (including President Obama) regardless of different political affiliation, it seems like Thaler is well on his way to reaching goal number two. One approach to policy is a new movement Thaler describes as “libertarian paternalism” – seemingly an oxymoron, and both extremely unpopular terms. But breaking down the two concepts should appease everyone – libertarian relates to caring about the outcomes people obtain and protecting individuals’ right to choose, and paternalism relates to helping people make choices that they’d make if they had the expertise to make them. Thaler says it’s possible to achieve these goals with better choice architectures. According to Thaler, a choice architect is anyone who helps shape the situations in which people encounter choices. The example Thaler provided was that of a school cafeteria – where food is placed will influence what kids actually eat, and ultimately influence their nutritional choices and health. In what manner should the food be presented? Regardless of the options that choice architects have, Thaler stresses that “some choice has to be made.” One key principle in good choice architecture involves appropriately setting defaults. The choice architect has to decide what happens in a system if the user does nothing. Thaler also points out that choice architects should anticipate common errors, provide choosers with useful feedback, and make complex choice information more comprehensible. Thaler concluded his talk by emphasizing how easy it is to nudge people toward better decisions and experiences. “Yahoo and Google should be in the business of helping people make decisions,” he said. “Humans are imperfect – we need all the help we can get.”

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