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Nudge Theory

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Richard Thaler - Creator of nobel prize winning 'Nudge Theory' The concept is a relatively subtle policy shift that encourages people to make decisions that are in their broad self-interest.  It’s not about penalising people financially if they don’t act in certain way.  It’s about making it easier for them to make a certain decision. “By knowing how people think, we can make it easier for them to choose what is best for them, their families and society,” wrote Richard Thaler and Cass Sunstein in their book  Nudge , which was published in 2008. A good recent example can be found in UK pension policy.  In order to increase worryingly low pension saving rates among private sector workers, the Government mandated employers to establish an “automatic enrolment” scheme in 2012.  This meant that workers would be automatically placed into a firm’s scheme, and contributions would be deducted from their pay packet unless they formally requested ...
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