If you are eager to achieve a specific goal that involvesothers, don't force or mandate, instead nudge or coax.

That's the advice the two authors of Nudge: ImprovingDecisions about Health, Wealth and Happiness have forexecutives and government officials.

In a work that marries a scholarly approach with aconversational and occasionally amusing style, Richard H. Thalerand Cass R. Sunstein argue that organizations should encouragecertain outcomes but don't force people down a certain path. Whilethe book has considerable academic heft-not surprising since Thaleris an economics professor at the University Chicago and Sunstein isa professor at Harvard Law School-the authors avoid pontificating.They have strong opinions but express them by showing, rather thantelling.

According to their definition, a nudge is anything that “alterspeople's behavior in a predictable way without forbidding anyoptions or significantly changing their economic incentives.”

Credit unions could increase their market share if morebusinesses followed one of the authors' suggestions and developedprograms to improve their employees' financial literacy.

According to research cited by the authors, classes on financialliteracy result in only a slight increase in participation incertain financial-planning programs that could increase employees'long-term economic security. These classes, which are run by creditunions in some cases, are a good starting point and Thaler andSunstein urge more companies to work with financial institutions toset them up.

But the authors want more people to take the next step, which isto put more money in their 401(k) accounts or individual retirementaccounts. Their recommended approach to achieving this goal isgreater use of the Save More Tomorrow program. Under that plan,which Thaler co-developed, people commit themselves in advance to aseries of increases in their retirement accounts timed to coincidewith pay raises. The plan is based on the premise that people wantto save more money but don't always take the time needed to followthrough and also are less inclined to save more because itdecreases how much they can spend now.

The “nudge factor” in this example also includes automaticenrollment for new hires (with an opportunity to opt out) andmaking enrollment forms readily available during financial planningand financial literacy classes.

This approach to problem solving and policy making is anideological hybrid. They describe the philosophy as “libertarianpaternalism,” which gives people considerable autonomy over keydecisions in their lives but enables companies and governments tofind ways to encourage certain outcomes.

The book is part of a growing field called “behavioraleconomics,” which contends that rules and laws should take intoaccount people's behavior patterns, not just the desiredoutcome.

Thaler and Sunstein argue that it is an approach that reflectscentrist political views of many Americans. They cite polling datathat show many people want more government intervention than thetraditional laissez faire approach of Republicans but lessintervention than the “command and control” approach of manyDemocrats.

Given that many policymakers are quite beholden to theapproaches of either the left or right, it's not clear howreceptive an audience the authors will find for their more centristapproach. Fortunately, we won't have to wait long to find out.Sunstein has been nominated by President Obama to run the Office ofManagement and Budget's Office of Information and RegulatoryAffais, which has final say over all federal regulation.

Although Thaler and Sunstein are writing for a broad audience,they can't break the habit of many academics to use more than alittle jargon. For example, they call the individuals who areresponsible for arranging the environment in which people makedecisions “choice architects.” Others might simply call thosepeople deciders.

Despite the jargon, Nudge: Improving Decisions about Health,Wealth and Happiness is an enjoyable way to learn about publicpolicy and an innovative approach to problem solving.

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