choice architecture

The Elements of Choice: Why the Way We Decide Matters
by Eric J. Johnson
Published 12 Oct 2021

Particularly if the decision-maker has conflicting goals, choice architecture will play a larger role. Deliberately Bad Choice Architecture Not all bad choice architecture results from ignorance or naivete. Neglecting choice architecture might be common but it is not universal. Some designers experiment to see what works—for example, in direct mail campaigns or by conducting A/B tests on the internet. These designers could use this knowledge to advance their interests, and not those of the choosers. The result may be malevolent choice architecture. What happens when choice architecture goes bad? Let’s start with several examples, of increasing severity.

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One benefit of reading this book, for both designers and choosers, may be to better understand when choice architecture goes bad. Choice architecture, whether it is good or bad, does the same things: it changes the information we see and changes what we recall from memory. While choice architecture appears to be about things like fonts, colors, and displays, the reason it matters is that it changes what goes on inside our heads. This book examines the different tools that designers have available, how they work, and how they work together. Without understanding the processes underlying choice architecture, we can’t be responsible designers. Knowing how choice architecture works will allow us to invent new and more effective tools. 2 Plausible Paths On the afternoon of January 15, 2009, my wife and I took off from LaGuardia Airport.

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Overall, cabbies made 5 percent more when they drove cabs with the higher tip suggestions. An accidental change in the choice architecture made cabbies better off.4 This book goes well beyond the simple idea that defaults and other choice-architecture tools can nudge people into desired behaviors. It’s much more important to understand how choice architecture changes choices. By understanding the reasons that defaults changed the tipping habits of cab riders, you can use choice architecture more effectively and responsibly. You’ll understand when it will work well, and when it might backfire. I should also mention another revolution that’s taken place in the behavioral sciences over the last ten years.

Why Nudge?: The Politics of Libertarian Paternalism
by Cass R. Sunstein
Published 25 Mar 2014

On that view, we should adopt a general rule against paternalism on rule-consequentialist grounds, not because the general rule always leads in good directions, but because it is far safer, and far better, than a case-by-case approach. Choice Architecture and Inevitable Nudges We have seen an immediate objection to the rule-consequentialist suggestion, and it cannot be repeated often enough, simply because it is so often ignored (and so please forgive the italics): Choice architecture is inevitable. The social environment influences choices, and it is not possible to dispense with a social environment. This point holds whether the social environment is a product of self-conscious designers or of some kind of invisible-hand mechanism. There can be (and often is) choice architecture without choice architects.36 Default rules are omnipresent, and they matter.

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If so, we might think that while choice architecture cannot be avoided, it is possible to avoid paternalism. Perhaps choice architects—at least if they are working for the government—can self-consciously refuse to influence or alter people’s choices (if the only concern is the effect of those choices on choosers themselves). Government officials might respect those choices, and the choice architecture that is established by the private sector, and attempt to avoid any independent effects of their own. It is true that officials can work to minimize such effects. But some choice architecture is likely to be in place from government, and no such architecture is entirely neutral.37 Whenever officials are setting up websites or cafeterias, or producing forms and applications of various kinds, their decisions will have some effect on what people select.

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But it is an empirical issue whether that question, properly answered, raises a serious problem for a proposed act of paternalism. CHOICE ARCHITECTURE AND FREEDOM Actually, there is a deeper problem, to which I briefly referred in the context of welfare: All of us could, in principle, make far more decisions than we do in fact. Every hour of every day, choices are implicitly made for us, by both private and public institutions, and we are both better off and more autonomous as a result. If we had to make all decisions that are relevant to us, without the assistance of helpful choice architecture, we would be far less free. In a literal sense, choice architecture enables us to be free. Most of us do not have to make choices about what a refrigerator or an alarm clock should look like, or how best to clean tap water, or how to build or fly an airplane, or what safety equipment should be on trains, or what medicine to take if we have strep throat, or whether chemotherapy should exist, or where highways and street signs are located.

Nudge: Improving Decisions About Health, Wealth, and Happiness
by Richard H. Thaler and Cass R. Sunstein
Published 7 Apr 2008

And by insisting that choices remain unrestricted, we think that the risks of inept or even corrupt designs are reduced. Freedom to choose is the best safeguard against bad choice architecture. Choice Architecture in Action Choice architects can make major improvements to the lives of others by designing user-friendly environments. Many of the most successful companies have helped people, or succeeded in the marketplace, for exactly that reason. Sometimes the choice architecture is highly visible, and consumers and employers are much pleased by it. (The iPod and the iPhone are good examples because not only are they elegantly styled, but it is also easy for the user to get the devices to do what they want.)

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They do less well in contexts in which they are inexperienced and poorly informed, and in which feedback is slow or infrequent—say, in choosing between fruit and ice cream (where the long-term effects are slow and feedback is poor) or in choosing among medical treatments or investment options. If you are given fifty prescription drug plans, with multiple and varying features, you might benefit from a little help. So long as people are not choosing perfectly, some changes in the choice architecture could make their lives go better (as judged by their own preferences, not those of some bureaucrat). As we will try to show, it is not only possible to design choice architecture to make people better off; in many cases it is easy to do so. The first misconception is that it is possible to avoid influencing people’s choices. In many situations, some organization or agent must make a choice that will affect the behavior of some other people.

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Social science research reveals that as the choices become more numerous and/or vary on more dimensions, people are more likely to adopt simplifying strategies. The implications for choice architecture are related. As alternatives become more numerous and more complex, choice architects have more to think about and more work to do, and are much more likely to influence choices (for better or for worse). For an ice cream shop with three flavors, any menu listing those flavors in any order will do just fine, and effects on choices (such as order effects) are likely to be minor because people know what they like. As choices become more numerous, though, good choice architecture will provide structure, and structure will affect outcomes.

The World Beyond Your Head: On Becoming an Individual in an Age of Distraction
by Matthew B. Crawford
Published 29 Mar 2015

When the choosing will is hermetically sealed off from the fuzzy, hard-to-master contingencies of the empirical world, it becomes more “free” in a sense: free for the kind of neurotic dissociation from reality that opens the door wide for others to leap in on our behalf, and present options that are available to us without the world-disclosing effort of skillful engagement. For the Mouseke-doer, choosing (from a menu of ready-made solutions) replaces doing, and it follows that such a person should be more pliable to the choice architectures presented to us in mass culture. The absence of the real from Mickey Mouse Clubhouse—indeed, the dissociative or abstract quality of children’s television in general these days—makes it an ideal vehicle for psychological adjustment; for constructing and managing the kind of selves that society requires, without meddling interference from the nature of things.

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Our current attentional environment is novel, but as we have already begun to investigate with our discussion of Kant, it was prepared by a long intellectual history. To repeat a formulation I used in the previous chapter, if choosing replaces doing for the mouse-clicking Mouseke-doer, it figures that such a disengaged self should be especially pliable to the “choice architectures” that get installed in public spaces. As we shall see, in the darker precincts of capitalism things are being designed to foster disengagement, to the point of inducing a kind of autism. 5 AUTISM AS A DESIGN PRINCIPLE: GAMBLING When my oldest daughter was a toddler, we had a Leap Frog Learning Table in the house.

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I argued that all of this tends to sculpt a certain kind of contemporary self, a fragile one whose freedom and dignity depend on its being insulated from contingency, and who tends to view technology as magic for accomplishing this. For such a self, choosing from a menu of options replaces the kind of adult agency that grapples with things in an unfiltered way. Finally, I argued that such a choosy self is especially pliable to the “choice architectures” that get installed on our behalf by various functionaries of psychological adjustment. These features of our world are hard to criticize because, though they may be appalling once described in the way that I have, they are intimately connected to our defining virtues as modern Western people.

Think Twice: Harnessing the Power of Counterintuition
by Michael J. Mauboussin
Published 6 Nov 2012

A prominent psychologist who is popular on the speaker circuit told me a story that underscores how underappreciated choice architecture remains. When companies call to invite him to speak, he offers them two choices. Either they can pay him his set fee and get a standard presentation, or they can pay him nothing in exchange for the opportunity to work with him on an experiment to improve choice architecture (e.g., redesign a form or Web site). Of course, the psychologist benefits by getting more real-world results on choice architecture, but it seems like a pretty good deal for the company as well, because an improved architecture might translate into financial benefits vastly in excess of his speaking fee.

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This applies to a wide array of choices, from insignificant issues like the ringtone on a new cell phone to consequential issues like financial savings, educational choice, and medical alternatives. Richard Thaler, an economist, and Cass Sunstein, a law professor, call the relationship between choice presentation and the ultimate decision “choice architecture.” They convincingly argue that we can easily nudge people toward a particular decision based solely on how we arrange the choices for them.17 FIGURE 4-3 How opt-in and opt-out policies shape consent rates Source: Based on data from Eric J. Johnson and Daniel Goldstein, “Do Defaults Save Lives?”

The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Doto Get More of It
by Kelly McGonigal
Published 1 Dec 2011

Behavioral economist Richard Thaler and legal scholar Cass Sunstein have argued persuasively for “choice architecture,” systems that make it easier for people to make good decisions consistent with their values and goals. For example, asking people to become organ donors when they renew a driver’s license or register to vote. Or having health insurance companies automatically schedule annual check-ups for their members. These are things most people mean to do, but put off because they are distracted by so many other more pressing demands. Retailers already use choice architecture to influence what you buy, although usually not for any noble purpose but to make a profit.

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Instead of lining the checkout area with indulgent impulse purchases like candy and gossip magazines, stores could use that real estate to make it easier for people to pick up dental floss, condoms, or fresh fruit. This kind of simple product placement has been shown to dramatically increase healthy purchases. Choice architecture designed to manipulate people’s decisions is a controversial proposition. Some see it as restricting individual freedom or ignoring personal responsibility. And yet, people who are free to choose anything most often choose against their long-term interests. Research on the limits of self-control suggests that this is not because we are innately irrational, or because we are making deliberate decisions to enjoy today and screw tomorrow.

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Page 77—For a dramatic telling of the Easter Island tragedy, see Diamond, J. Collapse: How Societies Choose to Fail or Succeed. New York: Viking, 2004. For an economic model, see Bologna, M., and J. C. Flores. “A Simple Mathematical Model of Society Collapse Applied to Easter Island.” EPL (Europhysics Letters) 81 (2008): 480–86. Page 78—“Choice architecture”: Thaler, R. H., and C. R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. New York: Knopf, 2008. Page 79—Placement increases purchases: Just, D. R., and B. Wansink. “Smarter Lunchrooms: Using Behavioral Economics to Improve Meal Selection.” Choices 24 (2009). Chapter 4.

The Googlization of Everything:
by Siva Vaidhyanathan
Published 1 Jan 2010

More seriously, Mayer and Google fail to acknowledge the power of default settings in a regime ostensibly based on choice. T H E IRR EL EVANC E O F C H O I C E In their 2007 book Nudge: Improving Decisions about Health, Wealth, and Happiness, the economist Richard Thaler and law professor Cass Sunstein describe a concept they call “choice architecture.” Plainly put, the structure and order of the choices offered to us profoundly influence the decisions we make. So, for instance, the arrangement of foods in a school cafeteria can influence children to eat better. The positions of restrooms and break rooms can influence the creativity and communality of office staff.

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When the default was set to enroll employees automatically, while giving them an opportunity to opt out, enrollment reached 98 percent within six months. The default setting of automatic enrollment, Thaler and Sunstein explain, helped employees overcome the “inertia” caused by business, distraction, and forgetfulness.9 That choice architecture could have such an important effect on so many human behaviors without overt coercion or even elaborate incentives convinced Thaler and Sunstein that taking advantage of it can accomplish many important public-policy goals without significant cost to either the state or private firms. They call this approach “libertarian paternalism.”

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They call this approach “libertarian paternalism.” If a system is designed to privilege a particular choice, they observe, people will tend to choose that option more than the alternatives, even though they have an entirely free choice. “There is no such thing as a ‘neutral’ design.”10 It’s clear that Google understands the power of choice architecture. It’s in the company’s interest to set all user-preference defaults to collect the THE GOOGL I ZAT I ON OF US 89 greatest quantity of usable data in the most contexts. By default, Google places a cookie in your Web browser to help the service remember who you are and what you have searched.

Hooked: How to Build Habit-Forming Products
by Nir Eyal
Published 26 Dec 2013

Perhaps technology’s unstoppable progress—ever more pervasive and persuasive—has grabbed us in a fearful malaise at the thought of being involuntarily controlled. Although the fear is palpable, we are like the heroes in every zombie film—threatened but ultimately more powerful. I have come to learn that habit-forming products can do far more good than harm. Choice architecture, a concept described by famed scholars Thaler, Sunstein, and Balz in their same-titled scholarly paper, offers techniques to influence people’s decisions and affect behavioral outcomes. Ultimately, though, the practice should be “used to help nudge people to make better choices (as judged by themselves).”15 Accordingly, this book teaches innovators how to build products to help people do the things they already want to do but, for lack of a solution, don’t do.

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Damien Brevers and Xavier Noël, “Pathological Gambling and the Loss of Willpower: A Neurocognitive Perspective,” Socioaffective Neuroscience & Psychology 3, no. 2 (Sept. 2013), doi:10.3402/snp.v3i0.21592. 13. Paul Graham, “The Acceleration of Addictiveness,” (accessed Nov. 12, 2013), http://www.paulgraham.com/addiction.html. 14. Night of the Living Dead, IMDb, (accessed June 25, 2014), http://www.imdb.com/title/tt0063350. 15. Richard H. Thaler, Cass R. Sunstein, and John P. Balz, “Choice Architecture” (SSRN Scholarly Paper, Rochester, NY), Social Science Research Network (April 2, 2010), http://papers.ssrn.com/abstract=1583509. Chapter 1: The Habit Zone 1. Wendy Wood, Jeffrey M. Quinn, and Deborah A. Kashy, “Habits in Everyday Life: Thought, Emotion, and Action,” Journal of Personality and Social Psychology 83, no. 6 (Dec. 2002): 1281–97. 2.

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Kara Swisher and Liz Gannes, “Pinterest Does Another Massive Funding—$225 Million at $3.8 Billion Valuation (Confirmed),” All Things Digital (accessed Nov. 13, 2013), http://allthingsd.com/20131023/pinterest-does-another-massive-funding-225-million-at-3-8-billion-valuation/. Chapter 6: What Are You Going to Do with This? 1. For further thoughts on the morality of designing behavior, see: Richard H. Thaler, Cass R. Sunstein, and John P. Balz, “Choice Architecture” (SSRN Scholarly Paper, Rochester, New York), Social Science Research Network, (April 2, 2010), http://papers.ssrn.com/abstract=1583509. 2. Charlie White, “Survey: Cellphones vs. Sex—Which Wins?,” Mashable (accessed), http://mashable.com/2011/08/03/telenav-cellphone-infographic. 3.

Mindware: Tools for Smart Thinking
by Richard E. Nisbett
Published 17 Aug 2015

Germany has an opt-in policy. The default is that the state has no right to harvest a person’s organs unless the person specifically agrees to that. Opt-in is the policy in the United States. Scores of thousands of people have died who would have lived if the United States had an opt-out policy. Choice architecture plays a vital role in determining what decisions people make. Some ways of structuring decisions result in better outcomes for individuals and for society than other ways of structuring decisions. No one is hurt by opt-out procedures for things like organ donation; no coercion is involved because people who wish not to have their organs harvested are free to decline.

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No one is hurt by opt-out procedures for things like organ donation; no coercion is involved because people who wish not to have their organs harvested are free to decline. The deliberate design of decision frameworks that function for individual and collective good has been called “libertarian paternalism” by Thaler and Sunstein.8 The difference between choice architectures that foster the right choices and those that don’t can be subtle—at least to people who are unfamiliar with the power of loss aversion and consequent status quo bias. In a “defined contribution” retirement plan, an employer pays a fixed amount of money into a savings plan equal to some fraction of what the employee puts into the plan.

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In fact, however, about 30 percent of employees fail to sign up for such plans.9 A study in Britain of twenty-five corporations that offered defined contribution plans—and paid 100 percent of the cost—found that barely half of employees signed up for the plan!10 This is like burning up a portion of your salary. A sensible choice architecture for savings plans would not require people to opt in, which after all takes little more effort than checking a box, but would have an opt-out default, which requires even less energy than that. You are enrolled in the plan unless you ask not to be. In one plan, the opt-in approach resulted in scarcely more than 20 percent enrollment three months after starting the job and only 65 percent after three years on the job.

Inside the Nudge Unit: How Small Changes Can Make a Big Difference
by David Halpern
Published 26 Aug 2015

First, as non-psychologists they helped to break the ideas out of psychology, and applied them in an accessible form to problems that faced economists and lawmakers. Second, they blended into these existing literatures new ideas from ‘behavioural economics’, including a more formal recognition of the widespread power of defaults and ‘choice architecture’ – or the way in which choices are presented to people.1 Third, they engaged directly in policy, not least through an old Chicago friend and colleague, Barak Obama. Obama and Sunstein: ‘nudge’ comes to Washington In a move that attracted widespread attention, the new President Obama appointed the co-author of Nudge, Cass Sunstein, to be his ‘regulatory tsar’ in his government in 2008.

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Employees are still free to opt out if they wish to do so. It is transparent what the choice is, and employees are informed by law about it. In contrast, in some western countries you are obliged to save – though you may have some choice about your pension provider. There’s no neutral choice Nudgers often talk about ‘choice architecture’ – the way that options are presented. The everyday example that is often discussed is the order in which food is presented in a cafeteria. Which do you see first: the salad or the chips? It turns out that the order matters. When you walk in hungry, whichever option you see first is very likely to end up on your tray.

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Effective communication versus propaganda A lot of what BIT does, along with other similar units emerging across the world, concerns communication, at least in a broader sense. A lot of the issues we are asked to work on are about informing, encouraging and persuading. In this sense, the choice architecture is left unchanged, but the focus is on making one action feel more, or less, attractive than another. Indeed, occasionally overseas visitors look at what we do and say, ‘Isn’t this just comms?’ Some of it is clearly about ‘comms’, though we’d like to think that we’re a bit more scientific and rigorous about it than your average ad agency.

The Social Animal: The Hidden Sources of Love, Character, and Achievement
by David Brooks
Published 8 Mar 2011

Erica decided she would build her consulting business not on cultural segmentation, which the market wasn’t ready for, but on behavioral economics, which was hot and in demand. Heuristics Erica read the major behavioral economists. Behind every choice, they said, there is a choice architecture, an unconscious set of structures that helps frame the decision. This choice architecture often comes in the forms of heuristics. The mind stores certain “if … then …” rules of thumb, which get activated by context and can be trotted out and applied in appropriate or near-appropriate circumstances. First, for example, there is priming.

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HQ801.B76 2011 305.5′130973—dc22 2010045785 www.atrandom.com v3.1 Contents Cover Other Books by This Author Title Page Copyright INTRODUCTION CHAPTER 1 DECISION MAKING CHAPTER 2 THE MAP MELD CHAPTER 3 MINDSIGHT CHAPTER 4 MAPMAKING CHAPTER 5 ATTACHMENT CHAPTER 6 LEARNING CHAPTER 7 NORMS CHAPTER 8 SELF-CONTROL CHAPTER 9 CULTURE CHAPTER 10 INTELLIGENCE CHAPTER 11 CHOICE ARCHITECTURE CHAPTER 12 FREEDOM AND COMMITMENT CHAPTER 13 LIMERENCE CHAPTER 14 THE GRAND NARRATIVE CHAPTER 15 MÉTIS CHAPTER 16 THE INSURGENCY CHAPTER 17 GETTING OLDER CHAPTER 18 MORALITY CHAPTER 19 THE LEADER CHAPTER 20 THE SOFT SIDE CHAPTER 21 THE OTHER EDUCATION CHAPTER 22 MEANING ACKNOWLEDGMENTS NOTES About the Author INTRODUCTION THIS IS THE HAPPIEST STORY YOU’VE EVER READ.

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She felt liberated not having to follow the guardrails of some other person’s thinking. She was going to create a consulting firm that would be unlike any other. It would be humanist in the deepest sense. It would treat people not as data points, but as the fully formed idiosyncratic creatures they are. She was utterly convinced she would succeed. CHAPTER 11 CHOICE ARCHITECTURE SOMETIME BACK IN THE PHARAOHS’ DAY, A SHOPKEEPER DISCOVERED he could manipulate the unconscious thoughts of his customers simply by manipulating the environment in his store. Merchandisers have been following his lead ever since. For example, shoppers in grocery stores usually confront the fruit-and-vegetable section first.

Futureproof: 9 Rules for Humans in the Age of Automation
by Kevin Roose
Published 9 Mar 2021

* * * — The fact that machines can shape our preferences is not a secret in Silicon Valley. In fact, there is an entire subdiscipline of product design, called “choice architecture,” that uses subtle design elements to change the things users click, buy, and pay attention to. Some choice architecture can be helpful—it’s good, for example, that Yelp shows you nearby and well-reviewed restaurants by default and doesn’t make you sort through an alphabetical list of all the restaurants in your city. But choice architecture can also steer our attention to things we don’t want, that aren’t beneficial for us, and that we wouldn’t have sought out on our own.

Misbehaving: The Making of Behavioral Economics
by Richard H. Thaler
Published 10 May 2015

I had recently bought my first iPhone, a device so easy to use that it didn’t need an instruction manual. What if we could design policies that were equally easy to create “user-centered” choice environments? At some point we adopted the term “choice architecture” to describe what we were trying to do. In curious ways, simply having that phrase to organize our thoughts helped us create a checklist of principles for good choice architecture, with many of the ideas borrowed from the human design literature. Designing good public policies has a lot in common with designing any consumer product. Now that we had our new set of tools, one big choice we had to make was which policy issues to try to address with them.

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I already mentioned two such papers earlier in the book: Justine Hastings and Jesse Shapiro’s paper on the mental accounting of gasoline, and the paper by Raj Chetty and his team analyzing Danish data on pension saving. Recall that the Chetty team finds that the economic incentive for saving via tax breaks has virtually no effect on behavior. Instead, 99% of the work is done by the choice architecture of the plans, such as the default saving rate—in other words, SIFs. This paper is just one of many in which Chetty and his team of collaborators have found behavioral insights can improve our understanding of public policy. When all economists are equally open-minded and are willing to incorporate important variables in their work, even if the rational model says those variables are supposedly irrelevant, the field of behavioral economics will disappear.

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See also World Bank (2015). 353 repeatedly and rigorously tested: See Post et al. (2008) and van den Assem, van Dolder, and Thaler (2012) on game shows, Pope and Schweitzer (2011) on golf, Barberis and Thaler (2003) and Kliger, van den Assem, and Zwinkels (2014) for reviews of behavioral finance, and Camerer (2000) and DellaVigna (2009) for surveys of empirical applications of behavioral economics more generally. 353 intriguing finding by Roland Fryer: Fryer (2010). 354 The team of Fryer, John List, Steven Levitt, and Sally Sadoff: Fryer et al. (2013). 354 a recent randomized control trial: Kraft and Rogers (2014). 355 Field experiments are perhaps the most powerful tool we have: Gneezy and List (2013). 356 “If you don’t write it down, it doesn’t exist”: Ginzel (2014). 356 his recent book The Checklist Manifesto: Gawande (2010), pp. 176–77. 356 Into Thin Air: Krakauer (1997). 357 99% of the work is done by the choice architecture: Another example is Alexandre Mas who (sometimes collaborating with Alan Krueger) has shown that after labor disputes that go badly for workers, the quality of work declines. See Mas (2004) on the value of construction equipment after a dispute, Mas and Krueger (2004) on defects in tires after a strike, and Mas (2006) on police work after arbitration.

The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)
by Phil Thornton
Published 7 May 2014

The EU’s competition authority used behavioural economics in the recent Microsoft competition case when it insisted that its products offered a selection of rival internet browsers as well as Microsoft’s own Explorer. 234 The Great Economists We have seen how Thaler coined the term endowment effect to capture and expand on Kahneman’s finding that people value things more highly once they own them. Thaler, who is a professor of behavioural science and economics at Chicago University, built on the Prospect Theory to devise a positive theory of consumer choice – how people actually make decisions compared with how they should. He coined the phrase choice architecture with law professor Cass Sunstein to describe the way in which decisions may (and can) be influenced by how the choices are presented. Thaler has developed many strands of thinking in behavioural economics, encapsulated in his book written with Sunstein aimed at a mass market, Nudge: improving decisions about health, wealth and happiness, which makes use of Kahneman’s three heuristics.

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Index A Theory of Moral Sentiments (Smith, 1759) 2, 5–6 Adelman, Irma 110 American Economic Association 170 An Inquiry into the Nature and Causes of the Wealth of Nations see The Wealth of Nations anarchism 156 apartheid system in South Africa 199 Ariely, Dan 234 Arrow, Kenneth 191, 213 AT&T 22 austerity versus stimulus debate 43–4, 140–1 Austrian School of Economics 121–2 autarky concept 184 bank bailouts in the financial crisis 162 Bank of England 161 Barro, Robert 43 Barro-Ricardo equivalence 43–4 Becker, Gary (1930– ) 193–216 approach to human behaviour 212–15 building human capital 200–2, 210 early life and influences 195–7 economic perspective on discrimination 196–7, 198–9 Economics of Discrimination (1957) 196–7, 198–9 economics of the family 213–15 family decision making 203–6 key economic theories and writings 197–212 long-term impact 212–15 new home economics 203–6 Nobel Prize (1992) 194, 195–6 on crime and punishment 207–10 on drug addiction 210–12, 215 rational choice model 197, 212– 15, 216 verdict 215–16 Becker–Posner Blog 215 behavioural economics 218–19, 233–6 Bentham, Jeremy 31, 181 Bergmann, Barbara 206 Bergson, Abram 182 Bergson–Samuelson social welfare function 182–3 Bernanke, Ben 77, 159, 162 Bernoulli, Daniel 229 bias in decision making 222–5 in financial decision making 225–32 Bitcoin currency 138 Black, Fischer 187 Blinder, Alan 215 Bloomsbury Group 94 Blunt, Anthony 94 boom and bust cycles see business cycles Bretton Woods agreement 95, 108–9 Brown, Gordon 3, 42 Burgess, Guy 94 Burns, Arthur F. 147 Bush, George H.W. 139 business cycles 57, 65 Hayek’s explanation 123–6 Samuelson’s oscillator model 174–5 Butler, Eamonn 162 Cambridge School of economics 74, 86 Cambridge spy ring 94 capital flow controls 113 capital-intensive goods, effects of increase in wages 33 capitalism exploitation of the working class (Marx) 56–8, 62–3 Index239 ‘fictitious capital’ concept (Marx) 62 seeds of its own downfall (Marx) 56–8, 61–3 capitalist production process (Marx) 54–6 Carlyle, Thomas 33 cartels evil of 10–11 regulation to prevent 21–2 central banks control of economic activity 161 over-expansion of credit 123–4 central state planning, Hayek’s opposition to 134–6, 140 certainty effect 229, 230 ceteris paribus approach to economic analysis 79–80 Chapman, Bruce 19 Chicago School of economic thought 146, 160, 194 China savings and investment imbalance with the US 113 trade imbalance with the US 45 choice architecture 234 Churchill, Winston 98 classical economics 40, 54 Coase, Ronald 73 cognitive biases (Kahneman) 222–5 communism 19, 50 Communist Manifesto (Marx and Engels) 52, 58–61 company bailouts in the financial crisis 162 comparative advantage 35–8, 183–4 complex adaptive systems, science of 138 complex financial products 61–2, 187 computer-games-based money 138 confirmation bias 227 consumer demand marginal rate of substitution 180 revealed preference theory 180–1 consumption smoothing concept 149, 163 Corn Laws, attack by Ricardo 33–5 costs of production, relationship to value 75–7 credit expansion, as a driver of boom and bust cycles 123–4 crime and punishment, views of Becker 207–10 Darling, Alistair 112 Das Kapital (Marx) 52, 53–4, 59–61, 62, 67–8 decision making biases and errors in financial decisions 225–32 heuristics and bias in 222–5 Prospect Theory (Kahneman) 228–32, 234 under risk 228–32 demand side economics 127 depression Keynesian interventionist view 92–3, 94, 105–6 see also Great Depression (1930s) dialectic style of analysis 52, 54 Diamond, Peter 179 diminishing marginal utility 82 discrimination economic perspective of Becker 196–7, 198–9 views of Friedman 157 distribution of economic value (Marx) 54–6 division of labour and productivity 11–14 car production 20–1 in daily life 20–1 divorce rates 205 drug addiction, views of Becker 210–12, 215 Dubner, Stephen 234 Eastern Europe, influence of Hayek 140 Ebenstein, Larry 158 Economics: An Introductory Analysis (Samuelson, 1948) 168, 171–3, 188–9 Economics of Discrimination (Becker, 1957) 196–7, 198–9 Efficient Market theory 111, 112, 187 240Index elasticity of demand 82–4 Elizabeth II, Queen 158 emerging markets, offshoring of jobs to 41 endogenous growth 202 endowment effect 232, 234 Engels, Friedrich 52, 58–61 ethical judgements in economics 182–3 European Central Bank 161 exchange rates, impact of trade on 185–6 expected utility theory (EUT) 228, 229–30, 232 externalities 85 factor price equalisation theorem 186–7 Fama, Eugene 160, 187 family decision making economic perspective 183, 203–6, 213–15 welfare decision making 183 fiat currency 152 ‘fictitious capital’ concept (Marx) 62 financial decision making, biases and errors in 225–32 financial economics, work of Samuelson 187 First World War 95 Folbre, Nancy 206 Ford Model-T car, assembly-line production system 21 Foundations of Economic Analysis (Samuelson, 1947) 168, 169–70 Fox, Charles James 23 Freakonomics (Levitt and Dubner) 234 free-market mechanism of supply and demand 8–9 free market system view of Adam Smith 13–14, 16–18 view of Hayek 131–3 view of Friedman 155–7 free rider problem in public goods 177–8 Free to Choose (Friedman and Friedman, 1980) 158 free trade, influence of Adam Smith 22–3 Freeman, Richard 201 frictional unemployment 155 Friedman, David 156 Friedman, Milton (1912–2006) 94, 110, 145–64, 190–1, 196 advocate of the free market 155–7 belief in individualism 155–7 criticism of Keynesianism 149–50 early life and influences 147–8 economics in action 160–3 fiat currency 152 Free to Choose (1980 ) 158 influence of the Great Depression (1930s) 148 influence on modern economic theory 158–60 limited role of government in the economy 152, 155–7 long-term legacy 157–63 monetarism 151–2 monetarist rule 152 monetary policy 151–2 ‘natural’ rate of unemployment 153–5 new explanation for the Great Depression 150–1 Nobel Prize in economics (1976) 146, 147–8, 154, 161 non-accelerating inflation of unemployment (NAIRU) 153–5 permanent income hypothesis 148–50 role of money supply in the economy 151–2 verdict 163–4 Friedman, Rose (formerly Rose Director) 147, 148, 157, 158, 160 FTSE-listed plcs 86 Funk, Walter 108 Funk Plan 108 Galbraith, J.K. 159 gambler’s fallacy (misconception of chance) 224 General Agreement on Tariffs and Trade (GATT) 40 Index241 general equilibrium theory 8 genetically modified foods 42 geographical effects in economics 84–6 Giffen goods 84 global financial crisis (2007–8) 92, 174 and Keynesianism 111–13 global stimulus package 113 Marxist view 61–3 global free trade influence of Adam Smith 22–3 influence of Ricardo 40–2 global public goods 177–8 global recession (2009) see Great Recession (2009) gold standard, criticism by Keynes 95, 98, 107 government debt and the Great Recession (2009) 43 taxpayer view of (Ricardo) 38–9 government role in the economy anti-central planning view of Hayek 134–6, 140 Keynesian view 92–3, 94, 105–6 view of Adam Smith 9, 10, 16–18 view of Friedman 152, 155–7 Great Crash (1929) 98, 99 Great Depression (1930s) 19, 22–3, 85, 92 explanation of Friedman and Schwartz 150–1 influence on Friedman 148 influence on Keynes 99–100 role of the Federal Reserve 159 Great Recession (2009) 23 and government debt 43 arguments against protectionism 42 austerity versus stimulus debate 43–4, 140–1 Greece, sovereign debt crisis 113–14 Greenspan, Alan 111–12, 235 Grossman, Michael 212 Hansen, Lars Peter 160 Hayek, Friedrich (1899–1992) 110, 111, 119–42 business cycle theory 123–6 clash with Keynes 120, 126–31 collapse of the Soviet Union 140 early life and influences 120 emphasis on individual freedom 134–6, 140 explanation for boom and bust cycles 123–6 First World War 121 focus on supply side economics 127 influence in Eastern Europe 140 influence on George H.W.

The Undoing Project: A Friendship That Changed Our Minds
by Michael Lewis
Published 6 Dec 2016

Millions of U.S. corporate and government employees had woken up one day during the 2000s and found they no longer needed to enroll themselves in retirement plans but instead were automatically enrolled. They probably never noticed the change. But that alone caused the participation in retirement plans to rise by roughly 30 percentage points. Such was the power of choice architecture. One tweak to the society’s choice architecture made by Sunstein, once he’d gone to work in the U.S. government, was to smooth the path between homeless children and free school meals. In the school year after he left the White House, about 40 percent more poor kids ate free school lunches than had done so before, back when they or some adult acting on their behalf had to take action and make choices to get them

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Sunstein argued that the government needed, alongside its Council of Economic Advisers, a Council of Psychological Advisers. He wasn’t alone. By the time Sunstein left the White House, in 2015, calls for a greater role for psychologists, or at any rate for psychological insight, were coming from inside governments across the world. Sunstein was particularly interested in what was now being called “choice architecture.” The decisions people made were driven by the way they were presented. People didn’t simply know what they wanted; they took cues from their environment. They constructed their preferences. And they followed paths of least resistance, even when they paid a heavy price for it. Millions of U.S. corporate and government employees had woken up one day during the 2000s and found they no longer needed to enroll themselves in retirement plans but instead were automatically enrolled.

The Costs of Connection: How Data Is Colonizing Human Life and Appropriating It for Capitalism
by Nick Couldry and Ulises A. Mejias
Published 19 Aug 2019

New urban environments will emerge, such as the proposal by Google’s Sidewalk Labs for downtown Toronto’s waterfront district, built on personalization (“really smart, people-centered urban planning”) and iron corporate control of the “intelligent signals” generated by a datafied environment.201 To have a chance of resisting this, we must hold onto earlier forms of social knowledge: voice, public accountability and the public value of social understanding, visibility rather than opacity, contextual social explanation, and above all a concern with the role of these values in challenging injustice. Recall that the whole trajectory of data colonialism started out from the banal fact that to function, computers must capture data about their changes of state.202 It is a curious irony that B. J. Fogg, a leading developer of unconscious behavioral influence through online choice architectures, named his new science of intervention “captology.”203 Knowledge by capture, influence by appropriation. When the cutting edge of social knowledge is a tool kit for achieving power at scale (or what Walmart more comfortingly calls “personalization at scale”),204 then the stakes of the social-knowledge game just got higher and its potential contribution to social justice more tenuous.

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Jean-Francois Lyotard, in a book that noted the rise of information technologies and data, hinted at this possibility already in 1991: “What if what is ‘proper’ to human kind were to be inhabited by the inhuman” (Lyotard, Inhuman, 2)? 10. For a discussion of different more or less minimal notions of autonomy, see Yeung, “Choice Architecture.” A strong notion of autonomy as self-control might be vulnerable to the argument that we already know there is a degree of arbitrariness in our so-called “inner” selves, a point that both Nietzsche and Freud developed. True, it can be argued, following Ricoeur (Freud and Philosophy), that the point of psychoanalysis was to expand the domain of what, finally, is open to interpretation as one’s own within the process of the self (compare also Honneth, I in We, chap. 11).

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“China Pours Millions into Facial Recognition Start-Up Face++.” Financial Times, November 1, 2017. Yang, Yuan, and Yingzhi Yang. “Smile to Enter: China Embraces Facial-Recognition Technology.” Financial Times, June 7, 2017. Yegenoglu, Meyda. Colonial Fantasies. Cambridge, UK: Cambridge University Press, 1998. Yeung, Karen. “The Forms and Limits of Choice Architecture as a Tool of Government.” Law & Police 38, no. 3 (2016): 186–210. . “‘Hypernudge’: Big Data as a Mode of Regulation by Design.” Information Communication and Society 20, no. 1 (2017): 118–36. Yong, Ed. I Contain Multitudes. New York: Vintage, 2016. Young, Robert. Postcolonialism: An Historical Introduction.

The Unbanking of America: How the New Middle Class Survives
by Lisa Servon
Published 10 Jan 2017

The situation she found herself in—choosing between taking out payday loans or losing her job—overrode her knowledge; as she told me, “I know it’s bad.” The upside of this finding is that the effect of context on decision making is predictable. We can find ways to protect people at vulnerable moments. The way choices are presented—what the economists Richard Thaler and Cass Sunstein call “choice architecture”—is also critical to making a good decision. Employee enrollment in retirement plans provides a good illustration. When a worker is lucky enough to get a job that includes a retirement plan, she must usually make several decisions—whether to participate, how much to contribute, how to allocate contributions across different investments.

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Luke Shaefer, $2.00 a Day: Living on Almost Nothing in America (New York: Houghton Mifflin Harcourt, 2015). 167 a strong safety net: Michael S. Barr, Sendhil Mullainathan, and Eldar Shafir, “Behaviorally Informed Regulation,” in No Slack: The Financial Lives of Low-Income Americans, edited by Michael S. Barr (Washington, DC: Brookings Institution Press, 2012). 169 “choice architecture”: Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven, CT: Yale University Press, 2008). simply changing the default option: John Beshears et al., “The Importance of Default Options for Retirement Savings Outcomes: Evidence from the United States,” NBER Working Paper No. 12009 (Cambridge, MA: National Bureau of Economic Research, February 2006).

Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones
by James Clear
Published 15 Oct 2018

The habit stacking formula is: After [CURRENT HABIT], I will [NEW HABIT]. 6 Motivation Is Overrated; Environment Often Matters More ANNE THORNDIKE, A primary care physician at Massachusetts General Hospital in Boston, had a crazy idea. She believed she could improve the eating habits of thousands of hospital staff and visitors without changing their willpower or motivation in the slightest way. In fact, she didn’t plan on talking to them at all. Thorndike and her colleagues designed a six-month study to alter the “choice architecture” of the hospital cafeteria. They started by changing how drinks were arranged in the room. Originally, the refrigerators located next to the cash registers in the cafeteria were filled with only soda. The researchers added water as an option to each one. Additionally, they placed baskets of bottled water next to the food stations throughout the room.

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You can learn more about Fogg’s work and his Tiny Habits Method at https://www.tinyhabits.com. “One in, one out”: Dev Basu (@devbasu), “Have a one-in-one-out policy when buying things,” Twitter, February 11, 2018, https://twitter.com/devbasu/status/962778141965000704. CHAPTER 6 Anne Thorndike: Anne N. Thorndike et al., “A 2-Phase Labeling and Choice Architecture Intervention to Improve Healthy Food and Beverage Choices,” American Journal of Public Health 102, no. 3 (2012), doi:10.2105/ajph.2011.300391. choose products not because of what they are: Multiple research studies have shown that the mere sight of food can make us feel hungry even when we don’t have actual physiological hunger.

Transport for Humans: Are We Nearly There Yet?
by Pete Dyson and Rory Sutherland
Published 15 Jan 2021

We agree that if the problem is framed in narrow economic terms, the levers for change appear to be constrained. There’s no denying that building infrastructure and adding services will help, but these things take years to complete and don’t always target the root of the problem. We need solutions sooner than that. One answer comes in the form of ‘choice architecture’: how the presentation of options, the prices shown and the structure of payment can shape behaviour. Applying behavioural science to transport will make the choice between these options much more human. The best time to have made these changes was years ago, the second best time is now. Improvements can be made alongside engineering.

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This was the first stage of the Williams–Shapps Plan (formerly known as the Williams Review, named after Keith Williams, the former boss of British Airways), and it comprises the largest ever public consultation into how the fares system should be reformed to make it easier to use. It provides five guiding principles, based around the needs of the user. In table 3 (overleaf) we list those five principles along with details of how we think behavioural science can help. Using choice architecture to improve travel What do we do first? If we are searching for tickets, we need to know the departure time, the arrival time, the destination and the class of travel. In practice, though, we tend to use all this information to decide where and when to travel, not simply to purchase a ticket that matches a list of already defined criteria.

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Published 11 Mar 2024

The authors drew on research from psychology, neuroscience, and sociology to argue that the best way to improve human decision-making is to use “nudges”—subtle cues that exploit information about human psychology to influence people’s choices. Thaler and Sunstein believed that governments could use the insights about human behavior developed by behavioral economists to structure what they call the “choice architecture” of society. Exploiting small incongruities in the way humans react to information—like changing the default option on a form—can create significant changes to the way people behave, without requiring them to change their preferences and without requiring state agents to demand a certain course of action.

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For example, requiring people to opt out of becoming organ donors rather than opting in increases the likelihood that someone will consent to becoming an organ donor. The book went on to sell millions of copies. One of those copies found its way into the hands of Prime Minister David Cameron, who in 2010 announced the creation of a “nudge unit” designed to change the choice architecture of UK society and “improve economic behavior.”107 The Nudge Unit has supervised the introduction of pension autoenrollment, introduced an “opt out” system for organ donation, and supported the government’s messaging during the pandemic. The unit was so successful that the government announced plans to turn it into a private institution.108 Those who have worked in the Nudge Unit have been hired by governments around the world to set up their own versions of the program.

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For example, being able to nudge people into acting in accordance with their economic interests requires creating citizens who think of themselves and their relationships with others in terms of “interests.”128 The discipline of political economy directs itself toward producing Homo economicus—the rational, utility-maximizing, self-interested subject we find in mainstream economics.129 If people aren’t behaving how we would expect a rational, utility-maximizing agent to behave, then it makes sense that the state should alter the “choice architecture” of society. But no one ever really questions whether human beings actually are rational, utility-maximizing agents, or whose interests are served by encouraging us to think about ourselves and others in this way. The atomized agents imagined by neoliberal policymakers also have a particular kind of orientation toward state institutions.

The Age of Surveillance Capitalism
by Shoshana Zuboff
Published 15 Jan 2019

It may involve subliminal cues designed to subtly shape the flow of behavior at the precise time and place for maximally efficient influence. Another kind of tuning involves what behavioral economists Richard Thaler and Cass Sunstein call the “nudge,” which they define as “any aspect of a choice architecture that alters people’s behavior in a predictable way.”1 The term choice architecture refers to the ways in which situations are already structured to channel attention and shape action. In some cases these architectures are intentionally designed to elicit specific behavior, such as a classroom in which all the seats face the teacher or an online business that requires you to click through many obscure pages in order to opt out of its tracking cookies.

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Thus gambling devices could be ‘improved’—from the point of view of the proprietor—by introducing devices which would pay off on a variable-interval basis, but only when the rate of play is exceptionally high.”63 Technologies of behavioral engineering would not be restricted to “devices” but would also encompass organizational systems and procedures designed to shape behavior toward specific ends. In 1953 Skinner anticipated innovations such as Michael Jensen’s incentive systems designed to maximize shareholder value and the “choice architectures” of behavioral economics designed to “nudge” behavior along a preferred path: “Schedules of pay in industry, salesmanship, and the professions, and the use of bonuses, incentive wages, and so on, could also be improved from the point of view of generating maximal productivity.”64 Skinner understood that the engineering of behavior risked violating individual sensibilities and social norms, especially concerns about privacy.

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See also adolescence chilling effect, 472; and extended chilling effect, 472, 489 China: conflation of instrumentarian and authoritarian power in, 389, 393–394; crisis of social trust in, 389–390; funding Pentland’s research lab, 417; Shenzhen trade show and surveillance technology industry, 393–394, 395; Skinner’s views on, 443; social credit system in, 388–394; use of location data in, 246 China Daily, 391 chips, 189, 245, 289, 392 choice architectures, 294, 370 Chomsky, Noam, 323, 441 Choudhury, Tanzeem, 419, 420 Chrome browser, 400, 487 CIA (Central Intelligence Agency), 114, 116, 117, 321–322 Cisco, 227, 264, 417 Cisco Kinetic, 227–228 cities, 227–232 civil society organizations, 126 Clapper, James, 387 click-through rates, 76, 82, 83–84, 95–96, 277 click-wrap agreements, 48–50, 108 climate, sensors of, 206 climate change, 126, 346 cloud, the: Google’s, 188, 218; and human relationships, 410; and machine relations, 408; Microsoft’s, 400 Cohen, Jared, 103, 223 Cohen, Leonard, 255 cold war, 108, 320–321 collaboration: and contractual agreements, 333, 334, 335–336, 337; and social pressure, 435–436 collective action: confluence as new form of, 409, 413; and contractual agreements, 333; needed to challenge asymmetries of knowledge and power, 344–345, 485–486, 520–525 collective decision making, 407, 432–433 collective mind.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

In any case more feedback about our decision is so opaque that pinning down precisely what went wrong is like finding a needle in a haystack.16 This severely weakens the theorems that suggest that markets are naturally self-organising with an embedded tendency to reach optimal outcomes. But it opens up a more realistic world of imperfect decision-making that can be improved by smart interventions if we choose. The task becomes creation – usually by the government – of a ‘choice architecture’ that respects choice but guides individuals to exercise it rationally. The answer to individuals being myopic about saving, for example, is to set up schemes into which they are automatically contracted but from which they are free to exit, if they so choose. Nor is it just a question of providing information to buyers and sellers; it must be provided in a digestible, assimilable and understandable way.

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There is a need to distinguish between biases insofar as the policy responses to the underlying explanations for behaviour point in very different directions. 16 John Sterman (2000) Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin McGraw-Hill. 17 Richard Thaler and Cass Sunstein (2008) Nudge: Improving Decisions about Health, Wealth and Happiness, Yale University Press, esp. Part V. See also Jack Fuller (2009) ‘Heads, You Die: Bad Decisions, Choice Architecture, and How to Mitigate Predictable Irrationality’, Per Capita, at http://www.percapita.org.au/01_cms/details.asp?ID=215. 18 Friedrich Hayek (1945) ‘The Use of Knowledge in Society’, American Economic Review 34 (4): 519–30, at http://www.econlib.org/library/Essays/ hykKnw1.html. 19 Herbert Hart (1997) The Concept of Law, Oxford University Press. 20 HM Treasury (2007) ‘The Race to the Top: A Review of Government’s Science and Innovation Policies’, HMSO. 21 Yannis Pierrakis and Stian Westlake (2009) ‘Reshaping the UK Economy: The Role of Public Investment in Financing Growth’, report, Nesta. 22 Ibid. 23 John R.

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INDEX Aberdeen University, 263 ABN AMRO, 150 Abramovitch, Roman, 64, 65, 67 accountancy firms, 296 Acemoglu, Daron, 299 aerospace, 136, 219, 268 Afghanistan, 13, 102, 144, 322 Africa, 71–2, 322, 383, 385 AIG, 152, 175, 176 airline industry, 30, 91, 109, 134, 143 Akerlof, George, 43 Alcoa, 133 alcohol policy, 335 Alessandri, Piergiorgio, 151, 153 Amazon, 253 Anderson, Elizabeth, 79 angels, business, 244, 252 Anglo Irish Bank, 181 Apple Inc., 29–30, 65–6, 71, 253 apprenticeships, 10, 295 Arculus, Sir David, 180 Argentina, 368 Aristotle, 39, 274 ‘arms race’ effects, 105 Arup Group, 66, 67, 93 Asda, 93 Ashcroft, Lord, 344 Ashdown, Paddy, 141 Asian Tiger exports, 149, 208, 355 AT & T, 133–4 Atari, 30 BAA, 8, 257–8 baby boomer generation, 34, 372–3 ‘Baby P’ case, 10, 325–6 Bagehot, Walter, 156–7 Bailey, Bob, 16, 25 Baker, Kenneth, 276 Baldacci, Emanuele, 367 Baldwin, Stanley, 315 Balls, Ed, 138, 147, 338 Bank of America, 152, 158, 175, 192 Bank of England, 4, 7–8, 129, 148, 180, 208, 250, 339, 359; lender-of-last-resort function, 157, 158, 160; Monetary Policy Committee, 185, 186, 264; reserve requirements scrapped (1979), 161, 208 Bank of International Settlements (BIS), 169, 182 Bank of Scotland, 186, 251 bankers, 4–5, 25–6, 62, 63–4, 180, 188; errors that caused the crash, 188–96, 197–204; gambling culture, 7, 8; pay see pay of executives and bankers Bankers Trust (New York), 140, 167 banking and banks: see also under entries for individual organisations; bail-out of, 3, 7–8, 19, 24, 138, 152–3, 172, 175, 176, 181, 204–5, 210, 389, 392; balance sheets, 7, 160, 164, 165, 191, 208, 210; bank runs, 9, 156–7, 158, 175–6, 202; borrow short and lend long principle, 154, 155–6, 157, 158–9; capital ratios, 151, 158, 162–3, 169, 170, 207, 208; credit-rating agencies and, 151, 196, 207; deposit insurance and, 158, 160; diversification, 154–5, 157, 165, 199, 354; fairness/desert and, 64, 206–7; interbank money markets, 164, 170, 176, 187–8, 202, 204; investment banks, 6, 28, 42, 101, 103, 150–1, 158, 165, 166, 170, 172–6, 195–6, 207; maturity transformation, 155–6, 157, 158–9; need for network of specialist banks, 251–2, 265, 371; nineteenth-century collapses, 156–7; post-crunch deleverage pressures, 359; principles and strategies, 154–6, 157; regulation of see regulation; relationship finance, 244, 251–2, 256–7; remoteness of management, 173–4; required reforms of, 205–10, 251–2, 371; short-term structure of lending, 33; banking and banks – continued socially vital role of, 155, 157; subsidiaries and special purpose vehicles, 181; unproductive entrepreneurship and, 28, 101, 103; vast assets/loans/profits, 32, 138, 147, 170, 172, 201; zero loyalty of front-line staff, 174 Barclay brothers, 327 Barclays, 24, 176, 177–8, 181, 215, 296, 363 Barker, Kate, 185 Basel system, 158, 160, 163, 169, 170–1, 196, 385 Baumol, William, 101, 111, 116, 253, 256 Bayerische Landesbank, 196 Bear Stearns, 150, 152, 158–9, 166, 173–4, 187 Bebchuk, Lucian, 198 Becht, Bart, 82–3 Beckwith, John Lionel, 179 behavioural psychology, 44, 47–50, 59–61 Bekar, Clifford, 108, 263 Bell, Alexander Graham, 221 Ben & Jerry’s, 266 Benz, Matthias, 86 Berlusconi, Silvio, 317, 328 Bettelheim, Bruno, 86 Better Government Initiative, 313, 336–7 Better Regulation Task Force, 180 Bhagwati, Jagwad, 163 Big Bang (1986), 90, 162 bin Mahfouz, Khalid Salim, 333 biotechnology, 109, 229, 240, 263, 268 Birt, John, 324 Bischoff Inquiry, 178 BISTRO (broad index secured trust offering), 169, 170, 196 Black, Fisher, 191 Blair, Tony, 5, 17, 138, 141–3, 144, 148–9, 276–7, 313, 328, 342; centralisation of power, 14–15, 313, 334, 337, 341; Iraq War and, 14, 36, 144; Rupert Murdoch and, 318; neo-conservative economics and, 388; ‘third-way’ as enthronement of resignation, 389–90; welfare reforms, 81 Blanchflower, Danny, 264–5 Blanden, Jo, 283–4 Blankfein, Lloyd, 42, 63, 168 BMW, 91 Boeing, 136, 256 Bologna University, 261 Born, Brooksley, 182–3 Bowen, Jeremy, 323 Boyle, Susan, 314 BP, 216–17, 392 Branson, Richard, 30 Brazil, 354–5, 385 Bretton Woods system, 159 Brinkley, Ian, 233 Briscoe, Simon, 294 Bristol University, 263 British Airways (BA), 30, 91 British Broadcasting Company (BBC), 321, 322, 323, 329, 330–1, 350, 389 British National Party (BNP), 16, 24–5, 82 Britishness, 15–16, 124, 392–3, 395 Brompton folding bicycle, 103, 105 Brooks, Clem, 281, 282 Brown, Gordon, 5, 12, 141, 178, 302, 314, 328; centralisation of power, 14, 334, 337, 341; as Chancellor, 138, 143, 145–8, 215, 245; deal with Blair (1994), 148; Gillian Duffy blunder by, 394; general election (2010) and, 20, 378, 394; neo-conservative economics and, 144–8, 388; as visionless, 391; Where There is Greed: Margaret Thatcher and the Betrayal of Britain’s Future (1989), 144 Browne, John, 216 Brunel, Isambard Kingdom, 126 Buffett, Warren, 116, 173, 222 Building Schools for the Future programme, 371 building societies, demutualisation of, 156, 186 Buiter, Wilhelm, 172 Burrows, Paul, 59 Buscombe, Baroness, 332 Bush, George W., 17, 36, 135, 177 Cabinet Office, 218–19, 336, 337 Cable, Vincent, 220 Cambridge University, 9, 363 Cameron, David, 20, 179, 233–4, 235, 318, 338, 342; ‘Big Society’ policy, 19–20, 234, 271, 280 Campbell, Alastair, 141, 142, 224, 312 Canada, 121, 354, 358–9, 383 capital controls, abolition of, 32, 161 capitalism: see also entrepreneurs; innovation; amorality of, 16–19; ‘arms race’ effects, 105; boom and bust cycle, 181–7, 392; deregulation (from 1970s), 159–63, 388; fairness and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; as immutable force of nature, ix, 23, 40–2; incumbent firms, 29–30, 31, 105, 106, 110, 111–12, 253–5, 257, 297; interconnectedness of markets, 200–2, 204; knowledge-entrepreneurship dynamic, 27–8, 31, 103, 110–11, 112–13; liquidity as totemic, 199, 200, 202, 240, 243; need for ‘circuit breakers’, 197, 199, 202, 203; network theory and, 199–204, 206; required reforms of, 205–9, 215–16; stakeholder, x, 148–9; undue influence of, 32–3 Carlaw, Kenneth, 108, 263 Carnegie, Andrew, 195, 303 cars, motor, 91, 108, 109, 134, 269 Castells, Manuel, 317 Cayne, Jimmy, 173–4 CCTV cameras, 10 celebrity culture, 282, 314 central banks, 154, 157, 158, 160, 182, 185, 187, 208; see also Bank of England; Federal Reserve, 169–70, 176, 177, 183 Cerberus Capital Management, 177 Cervantes, Miguel de, 274 Channel 4, 330, 350 Charles I, King of England, 124–5 Charter One Financial, 150 chavs, mockery of, 25, 83, 272, 286–8 child poverty, 12, 21, 74–5, 83, 278, 279, 288–90, 291 China, x, 101, 112, 140, 144, 160, 226, 230, 354–5, 385; consumption levels, 375–6, 379, 380, 381; economic conflict with USA, 376–7, 378–80, 381, 382, 383; export led growth, 36, 169, 208, 226, 355–6, 375–7, 379–81, 382–3; rigged exchange rates, 36, 169, 355, 377, 378–9; surpluses of capital and, 149, 154, 169, 171, 208, 226, 375; unfairness of world system and, 383, 385 Christianity, 53, 54, 352, 353 Church of England, 128 Churchill, Winston, 138, 273, 313 Churchill Insurance, 150 Cisco, 253 Citigroup, 152, 158, 172, 177, 184, 202, 203, 242, 247 city academies, 278, 307 City of London, 34, 137, 138, 178–9, 252, 359; as incumbent elite, 14, 26, 31, 32–3, 210, 249, 355; in late nineteenth-century, 128–30; light-touch regulation of, 5, 32, 138, 145, 146–7, 151, 162, 187, 198–9; New Labour and, x–xi, 5, 19, 22, 142, 144–5, 355; remuneration levels see pay of executives and bankers civic engagement, 86, 313 civil service, 13, 221, 273, 312, 343 Clasper, Mike, 178 Clayton Act (USA, 1914), 133 Clegg, Nick, 22, 218, 318, 327–8, 342, 391 Clifton, Pete, 321 Clinton, Bill, 140, 177, 183 coalition government (from May 2010), 14, 20, 22, 37, 307, 311, 343, 346, 390–2; abolition of child trust fund, 302; capital spending cuts, 370–1; deficit reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2; emergency budget (June 2010), 369–70; market fundamentalism and, 370; political reform commitment, 35, 341, 343–4, 346, 350, 390, 391; proposed financial reforms, 208, 209, 245, 252, 371; repudiation of Keynesian economics, xi, 390–1 Cohan, William, 158–9 Cohen, Ronald, 12, 245 collapse/crash of financial system, x, xi, 4, 9, 41, 144, 146, 152–4, 158–9, 168; costs of, 7, 19, 138, 152–3, 172, 214–15; errors responsible for, 136, 187–96, 197–204; global interconnectedness, 375, 382–3; lessening of internationalism following, 376–83; need to learn from/understand, 36–7; predictions/warnings of, 148, 153, 180, 182–5; recommended policy responses, 215–16; results of previous credit crunches, 358, 359–60, 361–2 collateralised debt obligations (CDOs), 155, 167–8, 174 colonialism, 109, 124 Commodity Future Trading Commission, 182–3 communism, collapse of in Eastern Europe, 16, 19, 135, 140, 163 competition, 29, 30, 33, 51, 156, 185, 186, 207–8, 251; see also ‘open-access societies’; City of London and, 160, 178, 179, 198–9; deregulated banking and, 160, 161, 163, 164, 178, 179, 181; European Union and, 251, 258, 259; fairness and, 89–90, 99, 272; incumbent elites/oligarchs and, 104, 114, 129–30, 131–4, 257; innovation and, 40, 114, 257–60; national authorities/regimes, 201–2, 257–60, 316, 318; state facilitation of, 31 Competition Commission, 257–8 computer games, 233 Confederation of British Industry (CBI), 4, 6–7 Conservative Party, xi, 5, 11, 14, 97–8, 220, 343, 378; broken Britain claims, 16, 227, 271; budget deficit and, 19, 224, 357, 360–1, 368, 379; City/private sector funding of, 179, 257, 344; decline of class-based politics, 341; deregulation and, 32, 160, 161; fairness and, 83, 302, 374, 390; general election (1992) and, 140–1; general election (2010) and, 20, 97, 227, 234, 271, 357, 374, 379, 390; Conservative Party – continued government policies (1979-97), 32, 81, 275–6, 290; inheritance/wealth taxes and, 74, 302–3; market fundamentalism and, 5, 17, 138, 147, 160, 161; poverty and, 21, 279; reduced/small state policy, 20, 22, 233–4, 235 construction industry, 5, 33, 268 consumer goods, types of, 266–7 Continental Illinois collapse, 152, 162 Convention on Modern Liberty, 340 Cook, Robin, 142 Cootner, Paul, 194–5 Copenhagen climate change talks (2009), 226, 231, 385 Corporate Leadership Council, US, 93 Corzine, Jon, 177 county markets, pre-twentieth-century, 90 Coutts, Ken, 363 Cowell, Simon, 314, 315 ‘creative destruction’ process, 111, 112, 134 creative industries, 11, 71, 355 credit cards, 64, 354 credit crunch: see collapse/crash of financial system credit default swaps, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207 Crédit Lyonnais collapse, 152 credit-rating agencies, 151, 165, 175, 196, 197, 248, 269, 362, 388; funding of, 151, 196, 207 criminal activity/allegations, 7, 101, 103, 104–5, 138, 167–8 Crosby, James, 178 Cuba, 61 culture, British, 12, 187, 282, 314 Dacre, Paul, 324, 326, 329 Daily Mail, 218, 286, 288, 315, 324, 325–7, 339, 342 Daily Telegraph, 288, 317, 319, 327 Darling, Alistair, 149, 204, 252 Darwin, Charles, 31 Data Monitor, 186 Davies, Howard, 198 Davies, Nick, Flat Earth News, 319, 321, 323–4, 326, 331–2 de Gaulle, Charles, 65 debt, 33, 155, 209, 351–63; corporate/commercial, 8, 29, 181, 245, 248, 352, 354, 359, 363, 374; moral attitudes towards, 351–4, 357, 360–1; necessity of, 155, 351, 353, 354; private, 5, 186, 187, 210, 226, 279–80, 354–7, 359, 363, 373; public, 9, 34, 164, 166, 167, 182, 203, 214, 224–6, 356–7, 362–3, 375, 388, 393; sustainable level of, 356–7, 368–9 Defence Advanced Research Projects Agency (DARPA), 265 defence and armed forces, 34, 372 deficit, public, 4, 34, 213, 224–6, 335, 364–74; coalition’s reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2, 393; need for fiscal policy, 224–5, 226, 357–8, 364, 365–9, 370, 374; speed of reduction of, 213, 224–5, 360–1, 368, 371 Delingpole, James, 287 Delong, Brad, 27, 106 democracy, 13–15, 235, 310–16, 333–48; centralisation of power and, 14–15, 35, 217, 313, 334, 337, 342; fair process and, 86, 89, 96–9; incumbent elites and, 35, 99; industrial revolution and, 128; media undermining of, 315–16, 317–18, 321–9, 333, 350; ‘open-access societies’ and, 136, 314 Democratic Party, US, 18, 140, 183, 379 Demos, 289 Deng Xiao Ping, 140 Denham, John, 21 deprivation and disadvantage, 10, 34, 288–93, 307–8, 393; low-earning households, 11–12, 13, 291, 361; weight of babies and, 13; young children and, 74–5, 83, 288–90 derivatives, 140, 145, 150–1, 164–8, 171, 175, 188, 207, 209; City of London and, 32, 137, 150–1, 157, 199; mathematical models (‘quants’) and, 188, 191; regulation and, 183, 197–8, 199 desert, due, concept of, 4, 24, 38–43, 45–7, 50–63, 64–8, 73–7, 80–2, 223, 395; see also effort, discretionary; proportionality; big finance and, 40–2, 82, 167, 174, 176, 210; debt and, 351–2; diplomacy/international relations and, 385–6; Enlightenment notions of, 53–6, 58–9, 112; luck and, 70, 73–7, 273; poverty relief systems and, 80–2, 277–8; productive entrepreneurship and, 102–3, 105–6, 112, 222, 392–3; taxation and, 40, 220, 266 Deutsche Bank, 170 developing countries, 71–2, 160, 354–5, 375, 376, 385 Diamond, Bob, 24 Dickens, Charles, 353 digitalisation, 34, 231, 320, 349, 350 Doepke, Matthias, 115–16 dot.com bubble, 9, 193 Drugs Advisory Panel, 11 Duffy, Gillian, 394 Durham University, 263 Dworkin, Ronald, 70 Dyson, James, 28, 33 East India Company, 130 Easyjet, 28, 233 eBay, 136 economic theory, 43–4, 188–9, 366; see also Keynesian economics; market fundamentalism economies of scale, 130–1, 254–5, 258 The Economist, 326, 330, 349 economy, British: see also capitalism; financial system, British; annual consumption levels, 375; balance of payments, 363–4; as ‘big firm’ economy, 254; change in landscape of trading partners, 230–1; coalition capital spending cuts, 370–1; collapse of tax base, 224, 368; cumulative loss of output caused by crash, 138, 153, 172, 214–15; desired level of state involvement, 234–5; domination of market fundamentalism, 16–17; economic boom, 3–4, 5–6, 12, 143, 173, 181–7, 244–5; fall in volatility, 365; fiscal deficit, 368; fiscal policy, 208, 224–5, 226, 357–8, 364–9, 370, 374; growth and, 9–10, 214–15, 218–19, 224, 359, 363; inefficient public spending, 335; investment in ‘intangibles’, 232–3; in late nineteenth-century, 128–30; ‘leading-edge’ sectors, 218–19; need for engaged long term ownership, 240–4, 249–51; as non-saver, 36, 354; potential new markets/opportunities, 231–3; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; required reforms of, 20, 239–44, 249–52, 264–6, 371–4 see also national ecosystem of innovation; ‘specialising sectors’, 219; urgent need for reform, 36–7; volatility of, 297–8; vulnerability of after credit crunch, 358–64 economy, world: acute shortfall of demand, 375–6; Asian and/or OPEC capital surpluses and, 149, 153–4, 169, 171, 208, 226, 354, 375; conflicts of interest and, 137, 138; deregulation (from 1970s), 159–63; emerging powers’ attitudes to, 226; entrenched elites and, 137–8, 210; fall in volatility, 365; international institutions as unfair, 383, 385; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; need for international cooperation, 357–8, 379–80, 381–3, 384, 385–6; post-crunch deleverage pressures, 359–60, 374–5; protectionism dangers, 36, 358, 376–7, 378, 379, 382, 386; savers/non-savers imbalance, 36, 169, 208, 222, 355, 356, 375–6, 378–83; shift of wealth from West to East, 36, 383–4; sovereign debt crises, 167, 203, 214; unheeded warnings, 182–5; wrecking of European ERM, 140, 144 Edinburgh University, 145 education, 10, 20–1, 128, 131, 272–4, 276, 278, 292–5, 304–8, 343; Building Schools for the Future programme, 371; cognitive and mental skills, 288–90, 304–6; private, 13, 114, 264–5, 272–3, 276, 283–4, 293–5, 304, 306 effort, discretionary, 50, 53, 54–5, 58–60, 80, 90–1, 114, 134; see also desert, due, concept of; fair process and, 91–4; indispensability and, 65–7; innovation and invention, 62, 65, 102–3, 105–6, 112, 117, 131, 223, 262–3, 392–3; luck and, 26–7, 65, 67, 70, 71, 73–4, 75–7; productive/unproductive, 43, 46–7, 51–2, 62, 64–5, 102–3, 392–3; proportionate reward for, 26, 39–40, 44, 47, 61, 74, 76–7, 84, 122, 272, 273, 2 84 egalitarianism, 27, 53–4, 55–6, 61, 75, 78–80, 144, 341, 343; Enlightenment equal worth concept, 53, 55, 59–60 Ehrenfeld, Rachel, 333 Eisman, Steve, 207 electoral politics: see also general election (6 May 2010); general elections, 97, 138, 277, 315; fair process and, 96–9; franchise, 128; general election (1992), x, 138, 140–1, 144, 148, 277; general election (1997), x, 138, 141 electricity, 134, 228, 256 electronic trading, 105 elites, incumbent, 23, 31–3, 99, 131; City of London, 14, 26, 31, 32–3, 210, 249, 355; competition and, 104, 113, 114, 129–30, 131–4, 257; democracy and, 35, 99; Enlightenment and, 122; history of (from 1880s), 131–4; history of in Britain (to 1900), 124–30; innovation and, 29–30, 110, 111–12, 113, 114, 115, 116; modern big finance and, 135, 137–8, 180, 210, 387–9; in ‘natural states’, 111, 113, 114–15, 116, 123–4, 127; New Labour’s failure to challenge, x–xi, 14, 22, 388, 389–90; world economy and, 137–8, 210 EMI, 28, 247, 248 employment and unemployment, 6, 75, 291–3, 295, 300, 373, 393; employment insurance concept, 298–9, 301, 374; lifelong learning schemes, 300, 301; lifelong savings plans, 300; unemployment benefit, 81, 281 Engels, Friedrich, 121–2 English language as lingua franca, 124 Enlightenment, European, 22, 30–1, 146, 261, 314–15; economics and, 104, 108–9, 116–17, 121–3; notions of fairness/desert, 53–6, 58–9, 112, 122–3, 394; science and technology and, 31, 108–9, 112–13, 116–17, 121, 126–7 Enron affair, 147 entrepreneurs: see also innovation; productive entrepreneurship; capitalist knowledge dynamic, 27–8, 31, 110–11, 112–13; challenges of the status quo, 29–30; Conservative reforms (1979-97) and, 275; private capital and, 241; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; rent-seeking and, 61–2, 63, 78, 84, 101, 105, 112, 113–14, 116, 129, 135, 180; unproductive, 28–9, 33, 61–2, 63, 78, 84, 101–2, 103–5, 180 environmental issues, 35–6, 71–2, 102, 226, 228, 231, 236, 385, 390, 394; due desert and, 68; German Greens and, 269 Erie Railroad Company, 133 Essex County Council, 325, 332 European Commission, 298 European Exchange Rate Mechanism (ERM), 140, 144, 166 European Union (EU), 11, 82, 179, 379–80, 383–4, 385; British media and, 15, 328, 378; Competition Commissioner, 251, 258, 259; scepticism towards, 15, 36, 328, 377, 378, 386 eurozone, 377 Fabian Society, 302–3 factory system, 126 fairness: see also desert, due, concept of; proportionality; abuse/playing of system and, 24–5, 27; asset fairness proposals, 301–3, 304; behavioural psychology and, 44, 47–50, 59–61; Blair’s conservative view of, 143; Britishness and, 15–16, 392–3, 395; capitalism and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; challenges to political left, 78–83; coalition government (from May 2010) and, 22, 37; commonly held attitudes, 44, 45–7; deficit reduction and, 226, 227, 374; economic and social determinism and, 56–8; Enlightenment notions of, 53–6, 58–9, 112, 122–3, 394; fair process, 84–94, 96, 98–9, 272; as foundation of morality, 24, 26, 45, 50; individual responsibility and, 39, 78–9; inequality in Britain, 78, 80, 275–6, 277–8, 342; international relations and, 226, 385–6; ‘Just World Delusion’, 83; luck and, 72–7; management-employee relationships, 90–2; models/frameworks of, 43–58; need for shared understanding of, 25, 37, 43; partisanship about, 42–3; politicians/political parties and, 22, 83, 271–2, 302–3, 374, 391–2; popular support for NHS and, 75, 77, 283; pre-Enlightenment notions, 52–3; shared capitalism and, 66, 92–3; state facilitation of, ix–x, 391–2, 394–5; welfare benefits to migrants and, 81–2, 282, 283, 284 Farnborough Sixth Form College, 294 Federal Reserve, 169–70, 176, 177, 183 Fees Act (1891), 128 Fertile Crescent, 106 feudalism, European, 53–4, 74, 104, 105 financial instruments, 103, 148, 157, 167–8 Financial Services and Markets Act (2001), 198 Financial Services Authority (FSA), 24, 147, 162, 178, 198–9, 208 financial system, British: see also capitalism; economy, British; Asian and/or OPEC capital surpluses and, 149, 154, 354; big finance as entrenched elite, 136, 137–8, 176, 178–80, 210, 387–9; declining support for entrepreneurship, 241; deregulation (1971), 161; fees and commissions, 33; importance of liquidity, 240, 243; lack of data on, 241; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; massive growth of, 137, 138, 209, 219; need for tax reform, 209–10; regulation and see regulation; required reforms to companies, 249–50; savings institutions’ share holdings, 240–1; short termism of markets, 241, 242–3; unfairness of, 138, 210 Financial Times, 12, 149, 294, 330, 349, 361 Fink, Stanley, 179 fiscal policy, 208, 224–5, 226, 357–8, 364–9, 374; coalition rejection of, 370 fish stocks, conservation of, 394 Fitch (credit-rating agencies), 248 flexicurity social system, 299–301, 304, 374 Forbes’ annual list, 30 Ford, Henry, 195, 302 foreign exchange markets, 32, 161, 164, 165, 168, 363, 367; China’s rigged exchange rate, 36, 169, 355, 377, 378–9; currency options, 166, 191; eurozone, 377 foreign takeovers of British firms, 8, 388 Fortune magazine, 94 Foster, Sir Christopher, 313 foundation schools, 307 France, 51–2, 123–4, 163, 372, 375, 377 free trade, 163, 334, 379 Frey, Bruno, 60, 86 Friedman, Benjamin, 282–3 Fukuyama, Francis, 140 Fuld, Dick, 192 Future Jobs Fund, 373 G20 countries, 209, 358, 368, 374 Galliano, John, 143 Gardner, Howard, 274, 305–6 gated communities, 13 Gates, Bill, 71 Gates, Bill (Senior), 222 Gaussian distribution, 190–1, 194 ‘gearing’, 6 general election (6 May 2010), 97, 142, 179, 214, 217, 227, 234, 271, 314, 318, 327–8, 334, 378; Gillian Duffy incident, 394; result of, xi, 20, 345–6, 390 ‘generalised autoregressive conditional heteroskedasicity’ (GARCH), 194 genetically modified crops, 232 Germany, 36, 63, 244, 262, 269, 375–6, 379, 380; export led growth, 355–6, 375, 381–2; Fraunhofer Institutes, 252, 264; Greek bail-out and, 377; pre-1945 period, 128, 129, 134, 382, 383 Gieve, Sir John, 339–40 Gilligan, Andrew, 329 Gladwell, Malcolm, 76–7 Glasgow University, 323 Glass-Steagall Act, 162, 170, 202–3 Glastonbury festival, 143 globalisation, 32, 98, 140, 143, 144, 153–4, 163, 182, 297, 363, 366, 380 Goldman Sachs, 42, 63, 103, 150, 167–8, 174, 176, 177, 205 Goodwin, Sir Fred, 7, 150, 176, 340 Google, 131, 136, 253, 255, 258, 262 Goolsbee, Austin, 52 Gorbachev, Mikhail, 140 Gough, Ian, 79 Gould, Jay, 133 Gould, Philip, 142 government: see also democracy; political system, British; cabinet government, 312, 334, 337; centralisation of power, 14–15, 35, 217, 313, 334, 337, 341, 342; control of news agenda, 14, 224, 313; disregard of House of Commons, 14–15, 223, 339, 345; Number 10 Downing Street as new royal court, 14, 337, 338, 346, 347; press officers/secretaries, 14, 180, 224, 312; Prime Ministerial power, 337, 344, 345, 346 GPS navigation systems, 233, 265 Gray, Elisha, 221 Great Depression, 159, 162, 205, 362 Greece: classical, 25, 26, 38, 39, 44–5, 52–3, 59, 96, 107, 108; crisis and bail-out (2010), 167, 371, 377, 378 Green, Sir Philip, 12, 29, 33 Green Investment Bank, proposed, 252, 371 Greenhead College, Huddersfield, 294 Greenspan, Alan, 145–6, 165, 177, 183, 184, 197–8 Gregory, James, 277 growth, economic: Britain and, 9–10, 214–15, 219, 221, 359, 364; education and, 305–6; export led growth, 36, 169, 208, 226, 355–6, 375–7, 378–83; social investment and, 280–1 GSK, 219, 254 the Guardian, 319, 330, 349 Gupta, Sanjeev, 367 Gutenberg, Johannes, 110–11 Habsburg Empire, 127 Haines, Joe, 312 Haji-Ioannous, Stelios, 28 Haldane, Andrew, 8, 151, 153, 193, 214, 215 the Halifax, 186, 251 Hamilton, Lewis, 64, 65 Hammersmith and Fulham, Borough of, 167 Hampton, Sir Philip, 173 Hands, Guy, 28, 178, 246–8 Hanley, Lynsey, 291, 293, 302 Hanushek, Eric, 305–6 Hart, Betty, 289 Harvard University, 47, 62, 198 Hashimoto administration in Japan, 362 Hastings, Max, 217–18 Hauser, Marc, 47–50 Hawley, Michael, 65–6 Hayward, Tony, 216–17 HBOS, 157, 158, 178, 251 health and well-being, 9, 75, 77, 106, 232, 233, 290–1; see also National Health Service (NHS) Heckman, James, 290 hedge funds, 6, 21, 103, 157–8, 167–8, 172, 203, 205, 206, 240; collapses of, 152, 173–4, 187, 202; as destabilisers, 166–7, 168; destruction of ERM, 140, 144, 166; near collapse of LTCM, 169–70, 183, 193, 200–1 hedging, 164, 165–6 Heinz, Henry John, 302 Hermes fund management company, 242 Herrman, Edwina, 179 Herstatt Bank collapse, 152 Hetherington, Mark, 84 Hewitt, Patricia, 180 Hewlett-Packard, 30 Hills Report on social housing, 290 Hilton, Paris, 304 Himmelfarb, Gertrude, 146 Hirst, Damien, 12 history, economic, 121–36, 166, 285–6, 353–4 Hobhouse, Leonard, 220, 222, 234, 235, 261, 266 Hobsbawm, Eric, 100 Hoffman, Elizabeth, 60 Holland, 113, 124, 230 Honda, 91, 269 Hong Kong, 168 Hopkins, Harry, 300 Horton, Tim, 277 House of Commons, 14–15, 223, 312–13, 337–9, 345 House of Lords, 15, 128, 129, 312, 334, 344, 346–7 housing, social, 10, 289, 290–1, 292, 308–9 housing cost credits, 308–9 HSBC, 181, 251 Huhne, Chris, 346 Hunt family, sale of cattle herds, 201 Hurka, Thomas, 45–6 Hutton, Will, works of, x; The State We’re In, x, 148–9 IBM, 29, 164, 254 Iceland, 7, 138 ICT industry, 9, 29–30, 109, 134, 135–6, 182, 229 immigration, 11, 143, 326, 328, 342, 343, 386, 394; from Eastern Europe, 82, 281–2, 283; welfare state and, 81–2, 281–2, 283, 284 incapacity benefit, 27 the Independent, 93, 330 Independent Safeguarding Authority, 339 India, 144, 226, 230, 254, 354–5 individual responsibility, 17, 38, 39, 78–9 individualism, 54, 57, 66, 111, 221, 281, 341, 366; capitalism/free market theories and, ix, 17, 19, 27, 40, 145, 221, 234–5 Indonesia, 168 Industrial and Commercial Finance Corporation (now 3i), 250 industrial revolution, 28, 112, 115, 121–3, 124, 126–8, 130, 315 inflation, 6, 32, 355, 364, 365; targets, 163, 165, 208, 359 Ingham, Bernard, 312 innovation: see also entrepreneurs; national ecosystem of innovation; as collective and social, 40, 131, 219–22, 261, 265–6, 388; comparisons between countries, 67; competition and, 40, 114, 257–60; development times, 240, 243; discretionary effort and, 62, 65, 102–3, 105–6, 131, 222, 392–3; dissemination of knowledge and, 110–11, 112–13, 219–22, 265–6; due desert and, 40, 62, 67, 112, 117; ‘financial innovation’, 63–4, 138, 147, 149, 153–4, 182; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; high taxation as deterrent, 104, 105; history of, 107–17, 121–7, 131–4, 221; increased pace of advance, 228–9, 230, 266–7; incremental, 108, 254, 256; incumbent elites and, 29–30, 104, 106, 109, 111–12, 113, 114, 115, 116, 257; large firms and, 251–2, 254–5; as natural to humans, 106–7, 274; need for network of specialist banks, 251–2, 265, 371; in ‘open-access societies’, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; patents and copyright, 102, 103, 105, 110, 260–1, 263; private enterprise and, 100–1; regulation and, 268–70; risk-taking and, 6, 103, 111, 189; short term investment culture and, 33, 242–3, 244; small firms and, 252, 253–4, 255–6; universities and, 261–5 Innovation Fund, 21, 251, 252 Institute of Fiscal Studies, 275–6, 363, 368–9, 372 Institute of Government, 334, 335, 337, 343 insurance, 165–6, 187, 240, 242 Intel, 255, 256 intellectual property, 260–1 interest rates, 164, 191, 352–3, 354, 357, 359, 360, 361, 362, 367, 380 internal combustion engine, 28, 109, 134 International Monetary Fund (IMF), 9, 152–3, 177–8, 187, 207, 226, 383, 384; Asian currency crisis (1997) and, 168–9; proposed bank levy and financial activities tax, 209; support for fiscal policy, 367 internet, 11, 28, 52, 109, 134, 227, 256, 265; news and politics on, 316–17, 321, 349; pay-walls, 316, 349; as threat to print media, 324, 331, 349 iPods, 105, 143 Iraq War, 14–15, 18, 36, 144, 329 Ireland, 138 iron steamships, 126 Islam, 352, 353 Islamic fundamentalism, 283, 384 Israel, 251, 322–3 Italy, 101, 103, 317, 328 ITN, 330, 331 James, Howell, 180 Japan, 36, 67, 140, 163, 168, 244, 369, 375, 376, 385, 386; credit crunch (1989-92), 359–60, 361–2, 382; debt levels, 356, 362, 363; incumbent elites in early twentieth-century, 134; Tokyo Bay, 254; Top Runner programme, 269 Jenkins, Roger, 296 Jobcentre Plus, 300 Jobs, Steve, 29–30, 65–6, 71 John Lewis Group, 66, 67, 93, 246 Johnson, Boris, 179 Johnson, Simon, 177 Jones, Tom, 242 Joseph Rowntree Foundation, 21, 278–9 journalism, 318–21, 323–4, 326–7 Jovanovic, Boyan, 256 JP Morgan, 169, 191–2, 195–6 judges, 15 justice systems, 30–1, 44–5, 49; symbolised by pair of scales, 4, 40 Kahneman, Daniel, 94–5 Kant, Immanuel, 73, 112, 274 Kay, John, 175 Kennedy, Helena, 340 Keynesian economics, x, xi, 184, 190, 196–7, 354, 362, 390–1 Kindleberger, Charles, 184 King, Mervyn, 213 Kinnock, Neil, 142 kitemarking, need for, 267 Klenow, Peter, 52 Knetsch, Jack, 94–5 Knight, Frank, Risk, Uncertainty and Profit (1921), 189, 191, 196–7 knowledge: capitalist advance of, 27–8, 31, 110–11, 112–13; public investment in learning, 28, 31, 40, 131, 220, 235, 261, 265 knowledge economy, 8, 11–12, 34, 135–6, 229–33, 258, 273–4, 341, 366; credit growth and, 355; graduate entry to, 295; large firms and, 251–2, 254–5; small firms and, 252, 253–4, 255–6, 261; state facilitation of, 219–22, 229–30 Koizumi administration in Japan, 362 Koo, Richard, 360, 361–2 Kuper, Simon, 352 Kwak, James, 64, 177 labour market, 52, 62, 83, 95; flexibility, 5, 275, 276, 299, 364–5, 387 laissez-faire ideology, 153, 198–9, 259 Laker, Freddie, 30 Lambert, Richard, 6–7 language acquisition and cognitive development, 288, 289 Large Hadron Collider, 263 Latin American debt crisis, 164 Lavoisier, Antoine, 31 Lazarus, Edmund, 179 Leahy, Sir Terry, 295 Learning and Skills Council, 282, 300 left wing politics, modern, 17, 38, 78–83 Lehman Brothers, 150, 152, 165, 170, 181, 192, 204 lender-of-last-resort function, 155, 158, 160, 187 Lerner, Melvin, 83 leverage, 6, 29, 154–6, 157, 158, 172, 179, 180, 198, 204, 209–10, 254, 363; disguised on balance sheet, 181, 195; effect on of credit crunches, 358, 359, 360, 361, 374–5; excess/massive levels, 7, 147–8, 149, 150–1, 158, 168, 170, 187, 192, 197, 203; need for reform of, 206, 207, 208; private equity and, 245–6, 247 Lewis, Jemima, 282, 287 Lewis, Joe, 12 libel laws, 332–3, 348–9 Liberal Democrats, xi, 11, 98, 141, 343, 360–1, 368; general election (2010) and, 97, 142, 179, 271, 390 libertarianism, 234 Likierman, Sir Andrew, 180 limited liability (introduced 1855), 353–4, 363 Lind, Allan, 85 Lindert, Peter, 280–1 Lipsey, Richard, 108, 263 Lisbon earthquake (1755), 54 Lisbon Treaty Constitution, 328 literacy and numeracy, 20–1 livestock fairs, pre-twentieth-century, 90 Lloyds Bank, 176, 178, 186, 202, 204, 251, 259 Lo, Andrew, 195 loan sharks, illegal, 291 local government, 307, 347–8 Locke, John, 54–5, 59 London School of Economics (LSE), 246 London Stock Exchange, 90, 162 London Underground, financing of, 336, 389 lone parent families, 292 Long Term Capital Management (LTCM), 169–70, 183, 193, 194, 200–1 long-term incentive plans (LTIPs), 6 Loomes, Graham, 59 luck, 23, 26–7, 38, 39, 40, 41, 67, 68, 69–77, 222, 273, 393–4; diplomacy/international relations and, 385–6; disadvantaged children and, 74–5, 83, 288–90; executive pay and, 138; taxation and, 73–4, 75, 78, 303 Luxembourg, 138 MacDonald, Ramsey, 315 Machiavelli, Niccolo, 62 Machin, Steve, 283–4 Macmillan Committee into City (1931), 179 Madoff, Bernie, 7 mafia, Italian, 101, 104–5 Major, John, 138, 180, 279, 334 Malaysia, 168 malls, out-of-town, 143 Mandelbrot, Benoit, 194, 195 Mandelson, Peter, 21, 24, 142, 148, 220 manufacturing sector, decline of, 5, 8, 219, 272, 292, 341, 363 Manza, Jeff, 281, 282 Marconi, 142–3 market fundamentalism, 9–19, 32–3, 40–2, 366; belief in efficiency of markets, 188–9, 190, 193, 194, 235–9, 366; coalition government (from May 2010) and, 370; collapse of, 3–4, 7–9, 19, 20, 219–20, 235, 392; Conservative Party and, 5, 17, 138, 147, 160, 161; domination of, 5–6, 14, 16–17, 163, 364–5, 387–90; likely resurgence of, 5, 8; New Labour and, x–xi, 5, 19, 144–9, 388, 389–90; post-communist fiasco in Russia, 135; rejection of fiscal policy, 224–5, 364–5, 367 mark-to-market accounting convention, 175 Marland, Lord Jonathan, 179 Marquand, David, 328 Marsh, Jodie, 64, 65 Marx, Karl, 56–8, 121–2 Maslow’s hierarchy of needs, 232, 274–5 mass production, 109, 134, 182 Masters, Blythe, 196 mathematical models (‘quants’), 105, 149, 151, 152, 165, 169, 188, 190–6, 203; extensions and elaborations, 194; Gaussian distribution, 190–1, 194; JP Morgan and, 195–6 Matthewson, Sir George (former chair of RBS), 25 Maude, Francis, 180 Mayhew, Henry, 285–6 McCartney, Paul, 247 McGoldrick, Mark, 174 McKinsey Global Institute, 253, 358–9, 360, 363 McQueen, Alexander, 143 media, mainstream, 6, 35, 312, 315–20, 321–32, 348–50; commoditisation of information, 318–20, 321; communications technology and, 316, 320, 349; domination of state by, 14, 16, 223–4, 338, 339, 343; fanatical anti-Europeanism, 15, 328, 378; foreign/tax exile ownership of, 218; hysterical tabloid campaigns, 10–11, 298, 319–20; ‘info-capitalism’, 317–18, 327, 328, 342; lauding of celebrity, 281, 314; modern 24/7 news agenda, 13, 224, 321, 343; regional newspapers, 331; as setter of agenda/narrative, 327–31, 342; television news, 330–1; undermining of democracy, 315–16, 317–18, 321–9, 333, 350; urgent need for reform, 35, 218, 344, 348–50, 391; view of poverty as deserved, 25, 53, 83, 281, 286; weakness of foreign coverage, 322, 323, 330 Mencken, H.L., 311 mergers and takeovers, 8, 21, 33, 92, 245, 251, 258, 259, 388 Merkel, Angela, 381–2 Merrill Lynch, 150, 170, 175, 192 Merton, Robert, 169, 191 Meucci, Antonnio, 221 Mexico, 30, 385 Meyer, Christopher, 332 Michalek, Richard, 175 Microsoft, 71, 114, 136, 253, 254, 258–9 Milburn, Alan, 273 Miles, David, 186–7 Milgram, Stanley, 200 millennium bug, 319 Miller, David, 70, 76, 77 minimum wage, 142, 278 Minsky, Hyman, 183, 185 Mirror newspapers, 319, 329 Mlodinow, Leonard, 72–3 MMR vaccine, 327 mobile phones, 30, 134, 143, 229, 349 modernity, 54–5, 104 Mokyr, Joel, 112 monarchy, 15, 312, 336 Mondragon, 94 monetary policy, 154, 182, 184, 185, 208, 362, 367 monopolies, 74, 102, 103, 160, 314; history of, 104, 113, 124, 125–6, 130–4; in the media, 30, 317, 318, 331, 350; modern new wave of, 35, 135–6, 137–8, 201–2, 258–9; ‘oligarchs’, 30, 65, 104 Monopolies and Mergers Commission, 258, 318 Moody’s (credit-ratings agency), 151, 175 morality, 16–27, 37, 44–54, 70, 73; see also desert, due, concept of; fairness; proportionality; debt and, 351–4, 357, 360–1 Morgan, JP, 67 Morgan, Piers, 329 Morgan Stanley, 150 Mulas-Granados, Carlos, 367 Murdoch, James, 389 Murdoch, Rupert, 317–18, 320, 327 Murphy, Kevin, 62, 63 Murray, Jim ‘Mad Dog’, 321 Myners, Paul, 340 Nash bargaining solution, 60 National Audit Office, 340 National Child Development Study, 289–90 national ecosystem of innovation, 33–4, 65, 103, 206, 218, 221, 239–44, 255–9, 374; state facilitation of, 102, 219–22, 229–30, 233, 251–2, 258–66, 269–70, 392 National Health Service (NHS), 21, 27, 34, 92, 265, 277, 336, 371–2; popular support for, 75, 77, 283 national insurance system, 81, 277, 302 national strategy for neighbourhood renewal, 278 Navigation Acts, abolition of, 126 Neiman, Susan, 18–19 neo-conservatism, 17–18, 144–9, 387–90 network theory, 199–201, 202–4, 206; Pareto curve and, 201–2 New Economics Foundation, 62 New Industry New Jobs strategy, 21 New Labour: budget deficit and, 224, 335, 360, 368, 369; business friendly/promarket policies, x–xi, 139–40, 142, 145, 146–7, 162, 198–9, 382; City of London and, x–xi, 5, 19, 22, 142–3, 144–5, 355; decline of class-based politics, 341; failure to challenge elites, x–xi, 14, 22, 388, 389–90; general election (1992) and, 138, 140–1, 144, 148, 277; general election (2005) and, 97; general election (2010) and, 20, 271, 334, 374, 378; light-touch regulation and, 138, 145, 146–7, 162, 198–9; New Industry New Jobs strategy, 21; one-off tax on bank bonuses, 26, 179, 249; record in government, 10–11, 19, 20–2, 220, 276–80, 302, 306, 334–6, 366–7, 389–90; reforms to by ‘modernisers’, 141; responses to newspaper campaigns, 11 New York markets, 140, 152, 162; Asian and/or OPEC capital surpluses and, 169, 171, 354; London/New York axis, 149, 150–1, 157–8, 160, 188, 202 Newsweek, 174 Newton, Isaac, 31, 127, 190 NHS Direct, 372 Nicoli, Eric, 13 non-executive directors (NEDs), 249–50 Nordhaus, William, 260 Nordic countries, 262; Iceland, 7, 138; Norway, 281; Sweden, 264, 281 North, Douglas, 113, 116, 129–30 Northern Rock, 9, 156, 157, 158, 186, 187–8, 202, 204, 251, 340–1 Norton Publishing, 93 Nozick, Robert, 234, 235 nuclear non-proliferation, 226, 384, 394 Nussbaum, Martha, 79 Obama, Barack, 18, 183, 380, 382–3, 394–5 the Observer, 141, 294, 327 Office for Budget Responsibility, 360 Office of Fair Trading (OFT), 257, 258 OFSTED, 276 oil production, 322; BP Gulf of Mexico disaster (2010), 216–17, 392; finite stocks and, 230, 384; OPEC, 149, 161, 171; price increase (early 1970s), 161; in USA, 130, 131, 132 Olsen, Ken, 29 Olympics (2012), 114 open markets, 29, 30, 31, 40, 89, 92, 100–1, 366, 377, 379, 382, 384; see also ‘open-access societies’; as determinants of value, 51–2, 62; fairness and, 60–1, 89–91, 94–6; ‘reference prices’ and, 94–6 ‘open-access societies’, 134, 135, 258, 272, 273, 275, 276, 280–1, 394; Britain as ‘open-access society’ (to 1850), 124, 126–7; democracy and, 136, 314; Enlightenment and, 30–1, 314–15, 394; innovation and invention in, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; partial political opening in, 129–30; US New Freedom programme, 132–3 opium production, 102 options, 166, 188, 191 Orange County derivatives losses, 167 Organisation for Economic Co-operation and Development (OECD), 180, 337, 373 Orwell, George, 37 Osborne, George, 147, 208, 224, 245, 302, 338 Overend, Gurney and Co., 156–7 Oxbridge/top university entry, 293–4, 306 Oxford University, 261 Page, Scott, 204 Paine, Tom, 347 Pareto, Vilfredo, 201–2 Paribas, 152, 187 Parkinson, Lance-Bombardier Ben, 13 participation, political, 35, 86, 96, 99 Paulson, Henry, 177 Paulson, John, 103, 167–8 pay of executives and bankers, 3–4, 5, 6–7, 22, 66–7, 138, 387; bonuses, 6, 25–6, 41, 174–5, 176, 179, 208, 242, 249, 388; high levels/rises of, 6–7, 13, 25, 82–3, 94, 172–6, 216, 296, 387, 393; Peter Mandelson on, 24; post-crash/bail-outs, 176, 216; in private equity houses, 248; remuneration committees, 6, 82, 83, 176; shared capitalism and, 66, 93; spurious justifications for, 42, 78, 82–3, 94, 176, 216 pension, state, 81, 372, 373 pension funds, 240, 242 Pettis, Michael, 379–80 pharmaceutical industry, 219, 255, 263, 265, 267–8 Phelps, Edmund, 275 philanthropy and charitable giving, 13, 25, 280 Philippines, 168 Philippon, Thomas, 172–3 Philips Electronics, Royal, 256 Pimco, 177 piracy, 101–2 Plato, 39, 44 Player, Gary, 76 pluralist state/society, x, 35, 99, 113, 233, 331, 350, 394 Poland, 67, 254 political parties, 13–14, 340, 341, 345, 390; see also under entries for individual parties political system, British: see also democracy; centralised constitution, 14–15, 35, 217, 334; coalitions as a good thing, 345–6; decline of class-based politics, 341; devolving of power to Cardiff and Edinburgh, 15, 334; expenses scandal, 3, 14, 217, 313, 341; history of (to late nineteenth-century), 124–30; lack of departmental coordination, 335, 336, 337; long-term policy making and, 217; monarchy and, 15, 312, 336; politicians’ lack of experience outside politics, 338; required reforms of, 344–8; select committee system, 339–40; settlement (of 1689), 125; sovereignty and, 223, 346, 347, 378; urgent need for reform, 35, 36–7, 218, 344; voter-politician disengagement, 217–18, 310, 311, 313–14, 340 Pommerehne, Werner, 60 population levels, world, 36 Portsmouth Football Club, 352 Portugal, 108, 109, 121, 377 poverty, 278–9; child development and, 288–90; circumstantial causes of, 26, 283–4; Conservative Party and, 279; ‘deserving’/’undeserving’ poor, 276, 277–8, 280, 284, 297, 301; Enlightenment views on, 53, 55–6; need for asset ownership, 301–3, 304; political left and, 78–83; the poor viewed as a race apart, 285–7; as relative not absolute, 55, 84; Adam Smith on, 55, 84; structure of market economy and, 78–9, 83; view that the poor deserve to be poor, 25, 52–3, 80, 83, 281, 285–8, 297, 301, 387; worldwide, 383, 384 Power2010 website, 340–1 PR companies and media, 322, 323 Press Complaints Commission (PCC), 325, 327, 331–2, 348 preventative medicine, 371 Price, Lance, 328, 340 Price, Mark, 93 Prince, Chuck, 184 printing press, 109, 110–11 prisoners, early release of, 11 private-equity firms, 6, 28–9, 158, 172, 177, 179, 205, 244–9, 374 Procter & Gamble, 167, 255 productive entrepreneurship, 6, 22–3, 28, 29–30, 33, 61–2, 63, 78, 84, 136, 298; in British history (to 1850), 28, 124, 126–7, 129; due desert/fairness and, 102–3, 105–6, 112, 223, 272, 393; general-purpose technologies (GPTs) and, 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384 property market: baby boomer generation and, 372–3; Barker Review, 185; boom in, 5, 143, 161, 183–4, 185–7, 221; bust (1989-91), 161, 163; buy-to-let market, 186; commercial property, 7, 356, 359, 363; demutualisation of building societies, 156, 186; deregulation (1971) and, 161; Japanese crunch (1989-92) and, 361–2; need for tax on profits from home ownership, 308–9, 373–4; property as national obsession, 187; residential mortgages, 7, 183–4, 186, 356, 359, 363; securitised loans based mortgages, 171, 186, 188; shadow banking system and, 171, 172; ‘subprime’ mortgages, 64, 152, 161, 186, 203 proportionality, 4, 24, 26, 35, 38, 39–40, 44–6, 51, 84, 218; see also desert, due, concept of; contributory/discretionary benefits and, 63; diplomacy/ international relations and, 385–6; job seeker’s allowance as transgression of, 81; left wing politics and, 80; luck and, 73–7, 273; policy responses to crash and, 215–16; poverty relief systems and, 80–1; profit and, 40, 388; types of entrepreneurship and, 61–2, 63 protectionism, 36, 358, 376–7, 378, 379, 382, 386 Prussia, 128 Public Accounts Committee, 340 Purnell, James, 338 quantitative easing, 176 Quayle, Dan, 177 race, disadvantage and, 290 railways, 9, 28, 105, 109–10, 126 Rand, Ayn, 145, 234 Rawls, John, 57, 58, 63, 73, 78 Reagan, Ronald, 135, 163 recession, xi, 3, 8, 9, 138, 153, 210, 223, 335; of 1979-81 period, 161; efficacy of fiscal policy, 367–8; VAT decrease (2009) and, 366–7 reciprocity, 43, 45, 82, 86, 90, 143, 271, 304, 382; see also desert, due, concept of; proportionality Reckitt Benckiser, 82–3 Regional Development Agencies, 21 regulation: see also Bank of England; Financial Services Authority (FSA); Bank of International Settlements (BIS), 169, 182; Basel system, 158, 160, 163, 169, 170–1, 196, 385; big as beautiful in global banking, 201–2; Big Bang (1986), 90, 162; by-passing of, 137, 187; capital requirements/ratios, 162–3, 170–1, 208; dismantling of post-war system, 149, 158, 159–63; economists’ doubts over deregulation, 163; example of China, 160; failure to prevent crash, 154, 197, 198–9; Glass-Steagall abolition (1999), 170, 202–3; light-touch, 5, 32, 138, 151, 162, 198–9; New Deal rules (1930s), 159, 162; in pharmaceutical industry, 267–8; as pro-business tool, 268–70; proposed Financial Policy Committee, 208; required reforms of, 267, 269–70, 376, 377, 384, 392; reserve requirements scrapped (1979), 208; task of banking authorities, 157; Top Runner programme in Japan, 269 Reinhart, Carmen, 214, 356 Repo 105 technique, 181 Reshef, Ariell, 172–3 Reuters, 322, 331 riches and wealth, 11–13, 272–3, 283–4, 387–8; see also pay of executives and bankers; the rich as deserving of their wealth, 25–6, 52, 278, 296–7 Rickards, James, 194 risk, 149, 158, 165, 298–302, 352–3; credit default swaps and, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207; derivatives and see derivatives; distinction between uncertainty and, 189–90, 191, 192–3, 196–7; employment insurance concept, 298–9, 301, 374; management, 165, 170, 171, 189, 191–2, 193–4, 195–6, 202, 203, 210, 354; securitisation and, 32, 147, 165, 169, 171, 186, 188, 196; structured investment vehicles and, 151, 165, 169, 171, 188; value at risk (VaR), 171, 192, 195, 196 Risley, Todd, 289 Ritchie, Andrew, 103 Ritter, Scott, 329 Robinson, Sir Gerry, 295 Rogoff, Ken, 214, 356 rogue states, 36 Rolling Stones, 247 Rolls-Royce, 219, 231 Rome, classical, 45, 74, 108, 116 Roosevelt, Franklin D., 133, 300 Rothermere, Viscount, 327 Rousseau, Jean-Jacques, 56, 58, 112 Rousseau, Peter, 256 Rowling, J.K., 64, 65 Rowthorn, Robert, 292, 363 Royal Bank of Scotland (RBS), 25, 150, 152, 157, 173, 181, 199, 251, 259; collapse of, 7, 137, 150, 158, 175–6, 202, 203, 204; Sir Fred Goodwin and, 7, 150, 176, 340 Rubin, Robert, 174, 177, 183 rule of law, x, 4, 220, 235 Russell, Bertrand, 189 Russia, 127, 134–5, 169, 201, 354–5, 385; fall of communism, 135, 140; oligarchs, 30, 65, 135 Rwandan genocide, 71 Ryanair, 233 sailing ships, three-masted, 108 Sandbrook, Dominic, 22 Sands, Peter (CEO of Standard Chartered Bank), 26 Sarkozy, Nicolas, 51, 377 Sassoon, Sir James, 178 Scholes, Myron, 169, 191, 193 Schumpeter, Joseph, 62, 67, 111 science and technology: capitalist dynamism and, 27–8, 31, 112–13; digitalisation, 34, 231, 320, 349, 350; the Enlightenment and, 31, 108–9, 112–13, 116–17, 121, 126–7; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; increased pace of advance, 228–9, 253, 297; nanotechnology, 232; New Labour improvements, 21; new opportunities and, 33–4, 228–9, 231–3; new technologies, 232, 233, 240; universities and, 261–5 Scotland, devolving of power to, 15, 334 Scott, James, 114–15 Scott Bader, 93 Scott Trust, 327 Second World War, 134, 313 Securities and Exchanges Commission, 151, 167–8 securitisation, 32, 147, 165, 169, 171, 186, 187, 196 self-determination, 85–6 self-employment, 86 self-interest, 59, 60, 78 Sen, Amartya, 51, 232, 275 service sector, 8, 291, 341, 355 shadow banking system, 148, 153, 157–8, 170, 171, 172, 187 Shakespeare, William, 39, 274, 351 shareholders, 156, 197, 216–17, 240–4, 250 Sher, George, 46, 50, 51 Sherman Act (USA, 1890), 133 Sherraden, Michael, 301 Shiller, Robert, 43, 298, 299 Shimer, Robert, 299 Shleifer, Andrei, 62, 63, 92 short selling, 103 Sicilian mafia, 101, 105 Simon, Herbert, 222 Simpson, George, 142–3 single mothers, 17, 53, 287 sixth form education, 306 Sky (broadcasting company), 30, 318, 330, 389 Skype, 253 Slim, Carlos, 30 Sloan School of Management, 195 Slumdog Millionaire, 283 Smith, Adam, 55, 84, 104, 112, 121, 122, 126, 145–6 Smith, John, 148 Snoddy, Ray, 322 Snow, John, 177 social capital, 88–9, 92 social class, 78, 130, 230, 304, 343, 388; childcare and, 278, 288–90; continued importance of, 271, 283–96; decline of class-based politics, 341; education and, 13, 17, 223, 264–5, 272–3, 274, 276, 292–5, 304, 308; historical development of, 56–8, 109, 115–16, 122, 123–5, 127–8, 199; New Labour and, 271, 277–9; working-class opinion, 16, 143 social investment, 10, 19, 20–1, 279, 280–1 social polarisation, 9–16, 34–5, 223, 271–4, 282–5, 286–97, 342; Conservative reforms (1979-97) and, 275–6; New Labour and, 277–9; private education and, 13, 223, 264–5, 272–3, 276, 283–4, 293–5, 304; required reforms for reduction of, 297–309 social security benefits, 277, 278, 299–301, 328; contributory, 63, 81, 283; flexicurity social system, 299–301, 304, 374; to immigrants, 81–2, 282, 283, 284; job seeker’s allowance, 81, 281, 298, 301; New Labour and ‘undeserving’ claimants, 143, 277–8; non-contributory, 63, 79, 81, 82; targeting of/two-tier system, 277, 281 socialism, 22, 32, 38, 75, 138, 144, 145, 394 Soham murder case, 10, 339 Solomon Brothers, 173 Sony, 254–5 Soros, George, 166 Sorrell, Martin, 349 Soskice, David, 342–3 South Korea, 168, 358–9 South Sea Bubble, 125–6 Spain, 123–4, 207, 358–9, 371, 377 Spamann, Holger, 198 special purpose vehicles, 181 Spitzer, Matthew, 60 sport, cheating in, 23 stakeholder capitalism, x, 148–9 Standard Oil, 130–1, 132 state, British: anti-statism, 20, 22, 233–4, 235, 311; big finance’s penetration of, 176, 178–80; ‘choice architecture’ and, 238, 252; desired level of involvement, 234–5; domination of by media, 14, 16, 221, 338, 339, 343; facilitation of fairness, ix–x, 391–2, 394–5; investment in knowledge, 28, 31, 40, 220, 235, 261, 265; need for government as employer of last resort, 300; need for hybrid financial system, 244, 249–52; need for intervention in markets, 219–22, 229–30, 235–9, 252, 392; need for reshaping of, 34; pluralism, x, 35, 99, 113, 233, 331, 350, 394; public ownership, 32, 240; target-setting in, 91–2; threats to civil liberty and, 340 steam engine, 110, 126 Steinmueller, W.

The Impulse Society: America in the Age of Instant Gratification
by Paul Roberts
Published 1 Sep 2014

Walter Mischel, the researcher behind the famous “marshmallow study” from the 1970s, has developed effective strategies to train impatient children to be patient—an important success, given that impatient children have a high likelihood of growing up to be impatient adults.14 There are other potentially fruitful ventures, such as what Richard Thaler (of the two-self model) and coauthor Cass Sunstein call “choice architecture.” The term refers to carefully designed technologies, infrastructure, and other pieces of the built environment that subtly “nudge” us to act with more patience and long-term thought. An example: smartphone apps that automatically track our daily expenses and warn us when we’re exceeding our budget.

…

Only by breaking rules do we discover who we are.”15) Or consider the growing research showing that myopia and short-termism actually increase when we’re uncertain about the future—something our new economic model seems to have made more likely. Further, some of the most troubling myopia occurs not at the consumer level, where “choice architecture” or nudges might have some positive effect, but at the institutional level, in government and especially in business. In many industries, today’s senior managers wield an increasingly impressive set of tools, technologies, and other capabilities that can deliver ever-faster returns. Yet not only do these managers face the same inclination to discount future costs, but they also operate in a corporate culture that itself is increasingly limbic and shortsighted.

#Republic: Divided Democracy in the Age of Social Media
by Cass R. Sunstein
Published 7 Mar 2017

I do not suggest that government should force people to see things that they wish to avoid. But I do contend that in a democracy deserving the name, lives—including digital ones—should be structured so that people frequently come across views and topics that they have not specifically selected. That kind of structuring is, in fact, a form of choice architecture from which individuals and groups greatly benefit. Here, then, is my plea for serendipity. Second, many or most citizens should have a wide range of common experiences. Without shared experiences, a heterogeneous society will have a much more difficult time addressing social problems. People may even find it hard to understand one another.

…

M., 243–44 Berners-Lee, Tim, 183 best practices, 223–25 bias: appropriately slanted stories and, 62–63; citizens and, 169; confirmation, 123; cybercascades and, 123–25, 135; elitism and, 151–53; Facebook and, 15, 123; freedom of speech and, 205; general-interest intermediaries and, 148; groupism and, 63–68; homogeneous society and, 135; magazines and, 152; newspapers and, 151–52; polarization and, 63, 92, 97; prejudices and, 43; radio and, 64; scandals and, 43; social media and, 135; spreading information and, 148, 151–53, 155; television and, 64, 151–52 biased assimilation, 92, 97 bicameralism, 47 Big Brother, ix, 257 Bill of Rights, 50–52 bin Laden, Osama, 234, 239 Black Lives Matter movement, 59, 79–80, 154, 259 blogs: conservatives and, 231; cybercascades and, 124; decline of, 22–23; diversity and, 231; improving, 231; liberals and, 231; microblogs and, 22; polarization and, 63, 79; popularity of, 22–23; spreading information and, 154–55 Bobadilla-Suarez, Sebastian, 127 Bohnett, David, 60 bombs, 192, 235–37 books, Amazon and, 22, 31–33, 150, 188, 222, 229; consumption and, 3, 19, 27, 31–33, 98, 104, 118, 140, 150, 153, 171, 192, 256–57; long tail and, 171; public sphere and, 153; shared experiences and, 140 Bosnia, 239 boyd, dana, 81 Brandeis, Louis: constitutional doctrine and, 52–56, 145, 203, 220, 228, 247–48, 250–51; freedom of speech and, 55–56, 203–4, 248; inert people and, ix, 56, 145, 204, 261; on sovereignty, 52–57 Brave New World (Huxley), x, 21 Brexit, 7, 11 British Broadcasting Network, 64 browsing habits, 5, 21–22, 116, 124 Bush, George W., 93–94, 104 campaign finance, 193–94 Carnegie, Dale, 160 CBS, 19, 152, 179–81, 185, 197–98, 228 censorship: authoritarianism and, 11; China and, 160–62; citizens and, 160–61, 164; regulation and, 6, 11, 34, 160–61, 164, 200, 208, 246, 248, 256, 261 CERN (European Organization for Nuclear Research), 183 chance encounters, 7–8, 19, 24, 32 Chechnya, 239 checks and balances, 11, 46–47, 51 Chicago school of economics, 151 child-support issues, 133 China, ix, 63, 107, 137, 139, 159–62 choice architecture, 7 Christians, 185 citizens: behavior and, 160–62, 167–68; bias and, 169; Bill of Rights and, 50–52; Colorado experiment and, 68–70, 77; communications and, 157–60, 163–64, 166, 168–70, 175; conservatives and, 162; constitutional doctrine and, 157; consumers and, 25, 115–16, 157–62, 166–75, 223, 231, 256–59; crime and, 172; deliberative democracy and, 169; discrimination and, 167, 175; echo chambers and, 163; education and, 167, 170; Facebook and, 163; filtering and, 157; freedom of speech and, 159, 164; general-interest intermediaries and, 166; Internet and, 158, 160, 164, 169, 171–74; judgment and, 167, 169–70; limited options and, 164–67, 174; majority rule and, 169–70; must-carry rules and, 215, 226–29; preferences and, 157–60, 162–70, 174–75; producers and, 171; public forums and, 13, 34–44, 58, 84, 88, 142, 156, 166, 204–5, 226–27, 256–57, 267; radio and, 165–66; shared experiences and, 158; social media and, 157, 160–65, 168; television and, 158, 165–66, 169, 173; terrorism and, 163; Twitter and, 162, 166; unanimity and, 169–70 Citizens United case, 193–94 civic virtue, 5, 23, 46, 260 civility, 217–18 climate change: cybercascades and, 97, 107, 127–31; environmental issues and, 1, 3–4, 7, 9, 11, 35, 42, 57, 67, 74, 96–97, 99, 107, 127–31, 217; global warming and, 68–69, 88, 217; greenhouse gases and, 9, 127, 130–32, 218 Clinton, Bill, 104, 109 Clinton, Hillary, 15, 59, 75, 117 CNN, 62, 64–65, 115, 126, 228–29 Cole, Benjamin, 237 Cole, Jon, 237 Colorado experiment, 68–70, 77 commercial speech, 193, 205, 207 common experiences, 7, 34, 140–41, 144–45, 147, 214, 254 communications: advertising and, 28 (see also advertising); baseline for, 23–24: citizens and, 157–60, 163–64, 166, 168–70, 175; consumer sovereignty and, 260; curation and, 1; cybercascades and, 119, 134–35; deliberative democracy and, 228; disclosure policies and, 215, 218–23; diversity and, 18, 23, 214; evaluating market of, 53–54; fairness doctrine and, 84–85, 207, 221, 227; FCC and, 84, 179, 198, 219–20, 227; fewer shared experiences and, 144–46; filtering and, 6, 28 (see also filtering); forms of neutrality and, 207–10; fragmentation and, 5, 7, 11, 13, 16, 23, 51, 57, 64, 77, 83–86, 98, 140–41, 146, 149, 151–55, 213, 221, 230, 253, 259, 266n14; freedom of speech and, 193–98, 204, 207, 209; free society and, 18; future of, 261; gated, 8; improving, 214–15, 219–20, 223, 226–28; Internet and, 19 (see also Internet); Jacobs on, 12–13; legal issues and, 177–79, 220, 227; manipulation and, 17, 28–29, 95, 164; mass media and, 19 (see also mass media); must-carry rules and, 226–29; net neutrality and, 29; opposing viewpoints and, 71, 84, 207, 215, 231–33, 255; overload and, 63–68; personalized market for, 1, 155–56, 257, 259; plethora of options in, 5; polarization and, 25, 60, 63–64, 70, 75, 84–86, 89–92; politics and, 54; President’s Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters and, 196–98; producers and, 28, 215; public forums and, 13, 34–44, 58, 84, 88, 142, 156, 166, 204–5, 226–27, 256–57, 267; Putnam on, 267n2; Red Lion Broadcasting v.

Nobody's Fool: Why We Get Taken in and What We Can Do About It
by Daniel Simons and Christopher Chabris
Published 10 Jul 2023

DealDash’s fine print also includes hard-to-parse statistics like “54% of auction winners save 90% off Buy It Now prices or more.” 10. N. Augenblick, “The Sunk-Cost Fallacy in Penny Auctions,” Review of Economic Studies 83 (2016): 58–86 [doi.org/10.1093/restud/rdv037]. 11. K. Mrkva, N. A. Posner, C. Reeck, and E. J. Johnson, “Do Nudges Reduce Disparities? Choice Architecture Compensates for Low Consumer Knowledge,” Journal of Marketing 85 (2021): 67–84 [https://doi.org/10.1177/0022242921993186]. 12. When you’re buying a house, you might think little of raising your offer by $10,000 to close a deal, even if $10,000 is a sum you would agonize over for any other purchase.

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Brainard, “‘Zombie Papers’ Just Won’t Die: Retracted Papers by Notorious Fraudster Still Cited Years Later,” Science, June 27, 2022 [https://www.science.org/content/article/zombie-papers-wont-die-retracted-papers-notorious-fraudster-still-cited-years-later], and a meta-analysis on the effectiveness of nudging included many of Brian Wansink’s faulty studies and thereby came to an incorrect conclusion; see S. Mertens, M. Herberz, U. J. J. Hahnel, and T. Brosch, “The Effectiveness of Nudging: A Meta-Analysis of Choice Architecture Interventions Across Behavioral Domains,” Proceedings of the National Academy of Sciences 119 (2022): e2107346118 [https://doi.org/10.1073/pnas.2107346118]; note that this paper has incorporated significant corrections since its initial publication. 20. Information about the membership of the Theranos board can be found in J.

Rationality: What It Is, Why It Seems Scarce, Why It Matters
by Steven Pinker
Published 14 Oct 2021

This is the basis for the philosophy of governance whimsically called libertarian paternalism by the legal scholar Cass Sunstein and the behavioral economist Richard Thaler in their book Nudge. They argue that it is rational for us to empower governments and businesses to fasten us to the mast, albeit with loose ropes rather than tight ones. Informed by research on human judgment, experts would engineer the “choice architecture” of our environments to make it difficult for us to do tempting harmful things, like consumption, waste, and theft. Our institutions would paternalistically act as if they know what’s best for us, while leaving us the liberty to untie the ropes when we are willing to make the effort (which in fact few people exercise).

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M., 264 base rates change in, 167 conditional probabilities and, 134, 138–39, 141 conjunction probabilities and, 130 forbidden, 62, 163–66 neglect of, 154–57, 349–50nn6,27 as priors in Bayesian reasoning, 167–69 random sampling, 168 as reference class, 167 relevance of, 167–68 Baumeister, Roy, 124 Bayesian reasoning base-rate neglect, 154–57, 349–50nn6,27 base-rates, forbidden, 62, 163–66 causal Bayesian networks, 260–63, 261, 263 changes in base rates, 167 credence in a hypothesis, 151 definition, 149–50, 151 equation for, 151–53 “extraordinary claims require extraordinary evidence,” 159, 161 forecasting and, 162–63 medicine and, 150–51, 152, 153–54, 167, 169–70, 321 and miracles, argument against, 158–59 morality of, 166–69 myside bias and, 297 numerical calculation of, 154 odds, 159 political commentary and, 162–63 posterior probability, 151, 153 random sampling of examples, 168 reference class, 167–68 reframing of single-event probabilities into frequencies, 168–70, 349–50n27 replicability crisis and, 159–61 San people and, 4, 166 Signal Detection Theory and, 202, 205, 213, 214, 351n6 subjectivist probability and, 115, 151 updating, 157–58 visualization of, 170–71 —“likelihood” term in equation, 152–54 bell curves as plot of, 205, 205, 351 definition, 152, 351n6, 352n6, 352n21 statistical significance as, 224–25, 352n21 —“marginal” term in equation, 153–54 —“prior” term in equation, 152–53 base rates used as, problems with, 167–69 low priors, and decreased credence, 157–63 low priors, and signal detection, 213, 214 myside bias and, 297 Bayes, Reverend Thomas, 151, 158 Beccaria, Cesare, 332–33 begging the question, 89 beliefs distal vs. testable, 298–99 factually unsupported, 300, 301–3, 304 imposed by force, 43–44, 245–46, 290 justified true, 36–37, 344n1 realist vs. mythological, 298–303 reflective vs. intuitive, 298–99 bell curve, 204–5 Central Limit Theorem and, 205, 351n5 fat-tailed, 204–5 regression to the mean and, 253 signal noise detection and, 206–11, 219 Belling the Cat, 231, 232 Bem, Daryl, 159–60 Bentham, Jeremy, 333–35 The Better Angels of Our Nature (Pinker), 183–84 Bezos, Jeff, 251 bias bias, 291 biased assimilation, 290–91 biased evaluation, 291, 294 Biden, Joe, 6, 130 Black Lives Matter, 26, 124–25 Blackstone, William, 217–18 Bodin, Jean, 335 bounded rationality, 184–88 Boy or Girl paradox, 137 brain, vs. deep learning networks, 107–9 Breyer, Stephen, 191 broken-leg problem, 279–80 Bruine de Bruin, Wändi, 323–24 burden of proof fallacy, 89 Bush, George W., 11, 218 Butler, Judith, 90 butterfly effect, 114 Calvin, John, 330–31 Carlin, George, 283, 299 Carroll, Lewis, 38, 75, 96, 225 Carroll, Sean, 160 Castellio, Sebastian, 330–31 Categorical Imperative (Kant), 69 causation all-or-none fallacy, 269 conditions and, 259, 260 confounding (epiphenomena), 246, 257, 260, 263, 265 confounding, ruling out, 267–68, 270–71 counterfactuals, 64, 257, 259, 264 definition, 256–57 fundamental problem of, 258 mechanisms, 258–59 overdetermination and, 259, 260 paradoxes of, 259–61, 260 preemption and, 259, 260 probabilistic, 259–60 reverse causation, 246, 263, 267, 269–70 San people and awareness of, 3, 4–5 temporal stability, 258 unit homogeneity, 258 See also randomized controlled trial —causal networks overview, 260 Bayesian networks, 260–63, 261, 263 causal chain, 261–62, 261 causal collider fallacy, 261, 262–63 causal fork, 261, 262 endogeneity, 263 Matthew Effect, 263–64, 354n21 multicollinearity, 263 unpredictability of human behavior and, 280–81 —multiple causes overview, 272–73 interacting causes, 273–76, 273–74 interaction, 273, 275, 277–78 main effect, 273, 274, 275, 278 nature and nurture, 273, 275–77, 276 regression equations and, 278 talent and practice, 272–73, 277–78, 278 Chagnon, Napoleon, 307 chaos, 114 Chapman, Loren and Jean, 251 cheater detection, 15–16 chemtrails, 299 chess, 277–78, 278 Chicken game, 59–61, 235–36, 237, 344n29 children adoption of, 63 heights of, 252–54 IQs of, 252–53 low birth weights, 262–63 probability of boy vs. girl at birth, 128–29, 132–33, 136–38 ultimate vs. proximate goals and, 46–47 China, 24 choice architecture, 56 Chomsky, Noam, 71, 90 CIA, 91 Circe, 53, 55 circular explanations, 89 Clark, Sally, 129–30 Clegg, Liam, 231 climate change availability bias and perception of energy sources, 121–22, 347n22 avoidance of sectarian symbolism, 312 discounting the future and, 51–52 game theory and, 227–28, 242–44 Public Goods games and, 242–43, 244 —denial of argument from authority and, 90, 91 credibility of universities and, 314 openness to evidence vs., 311 politicization of, 295, 310, 312 Trump and, 284 clinical vs. actuarial judgment, 278–80 Clinton, Bill, 25, 101 Clinton, Hillary, 82, 117, 285, 299, 306 close-mindedness.

Digital Transformation at Scale: Why the Strategy Is Delivery
by Andrew Greenway,Ben Terrett,Mike Bracken,Tom Loosemore
Published 18 Jun 2018

If it takes you a year to write a business case, you want the investment it supports to last a lot longer than that – five or ten years, at least. Again, this is not a motivation well suited to the rapidly evolving world of digital technology. Nobody has a 10-year mobile phone contract. There’s a reason for that. Fixing the choice architecture for how money is spent in large organisations is no small task, especially those under the heavy scrutiny experienced by governments. The battle to win as a digital team is two-fold. You need a process that allows digital delivery teams to spend small amounts of money, quickly, in exchange for those teams demonstrating that the cash they’ve been given has allowed them to reduce the risk of scaling up their service for more people to use.

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
by William Thorndike
Published 14 Sep 2012

The Outsider’s Checklist Checklists have proved to be extremely effective decision-making tools in fields as diverse as aviation, medicine, and construction. Their apparent simplicity belies their power, and thanks to Atul Gawande’s excellent recent book, The Checklist Manifesto, their use is a hot topic these days.1 Checklists are a particularly effective form of “choice architecture,” working to promote analysis and rationality and eliminate the distractions that often cloud complex decisions. They are a systematic way to engage system 2, and for CEOs, they can be highly effective vaccines, inoculating against conventional wisdom and the institutional imperative. Gawande advises that these lists are best kept to ten items or fewer, and we will conclude with a checklist drawn from the experiences of these outsider CEOs, to aid in making effective resource allocation decisions (and hopefully avoiding value-destroying ones).

To Sell Is Human: The Surprising Truth About Moving Others
by Daniel H. Pink
Published 1 Dec 2012

Wansink shows how mindlessness allows us to fall prey to hidden persuaders that make us overeat without even knowing it. Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein. Two professors harvest the field of behavioral economics to reveal how altering “choice architecture” can nudge people to make better decisions about their lives. Ask the Five Whys. Those of you with toddlers in the house are familiar with, and perhaps annoyed by, the constant why-why-why. But there’s a reason the little people are constantly asking that question. They’re trying to figure out how things work in the crazy world we live in.

To Save Everything, Click Here: The Folly of Technological Solutionism
by Evgeny Morozov
Published 15 Nov 2013

This last set of assumptions accounts for the proliferation of what Cass Sunstein and Richard Thaler call “nudges”: clever manipulations of default settings—what the authors call “choice architecture”—to get you to eat healthy foods or save money for retirement. Nudging is to manipulation what public relations is to advertising: it gets things done while making all the background tinkering implicit and invisible. The most effective nudges give agents a semblance of agency without giving them much choice. Brownsword sees two problems with nudges. They appear to belong firmly in the prudential register; by tinkering with our “choice architecture,” regulators try to appeal to our self-interest. But in a truly democratic society, the choice of the appropriate register, as well as shifts across them, should be subject to public debate and scrutiny as well.

Thinking, Fast and Slow
by Daniel Kahneman
Published 24 Oct 2011

The designation of joining a pension plan as the default option is an example of a nudge. It is difficult to argue that anyone’s freedom is diminished by being automatically enrolled in the plan, when they merely have to check a box to opt out. As we saw earlier, the framing of the individual’s decision—Thaler and Sunstein call it choice architecture—has a huge effect on the outcome. The nudge is based on sound psychology, which I described earlier. The default option is naturally perceived as the normal choice. Deviating from the normal choice is an act of commission, which requires more effortful deliberation, takes on more responsibility, and is more likely to evoke regret than doing nothing.

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business and leadership practices; at Google business pundits Cabanac, Michel cab driver problem cabdrivers, New York City Californians Camerer, Colin cancer; surgery vs. radiation for Cantril Self-Anchoring Striving Scale Carroll, Lewis cars and driving; brakes in; driving tests; fuel economy and; pleasure from cash box categories causal base rates causal interpretations; correlation and; regression effects and causal situations causal stereotypes causes, and statistics CEOs; optimistic certainty effect CFOs Chabris, Christopher chance and randomness; misconceptions of changing one’s mind Checklist Manifesto, A (Gawande) chess children: caring for; depressed; time spent with China Choice and Consequence (Schelling) choice architecture choices: from description; from experience; see also decisions, decision making; risk assessment “Choices, Values, and Frames” (Kahneman and Tversky) CIA Clark, Andrew climate Clinical vs. Statistical Prediction: A Theoretical Analysis and a Review of the Evidence (Meehl) Clinton, Bill Coelho, Marta coffee mug experiments cognitive busyness cognitive ease; in basic assessments; and illusions of remembering; and illusions of truth; mood and; and writing persuasive messages; WYSIATI (what you see is all there is) and cognitive illusions; confusing experiences with memories; of pundits; of remembering; of skill; of stock-picking skill; of truth; of understanding; of validity Cognitive Reflection Test (CRT) cognitive strain Cohen, David coherence; see also associative coherence Cohn, Beruria coincidence coin-on-the-machine experiment cold-hand experiment Collins, Jim colonoscopies colostomy patients competence, judging of competition neglect complex vs. simple language concentration cogndiv height="0%"> “Conditions for Intuitive Expertise: A Failure to Disagree” (Kahneman and Klein) confidence; bias of, over doubt; overconfidence; WYSIATI (what you see is all there is) and confirmation bias conjunction fallacy conjunctive events, evaluation of “Consequences of Erudite Vernacular Utilized Irrespective of Necessity: Problems with Using Long Words Needlessly” (Oppenheimer) contiguity in time and place control cookie experiment correlation; causation and; illusory; regression and; shared factors and correlation coefficient cost-benefit correlation costs creativity; associative memory and credibility Csikszentmihalyi, Mihaly curriculum team Damasio, Antonio dating question Dawes, Robyn Day Reconstruction Method (DRM) death: causes of; life stories and; organ donation and; reminders of Deaton, Angus decisions, decision making; broad framing in; and choice from description; and choice from experience; emotions and vividness in; expectation principle in; in gambles, see gambles; global impressions and; hindsight bias and; narrow framing in; optimistic bias in; planning fallacy and; poverty and; premortem and; reference points in; regret and; risk and, see risk assessment decision utility decision weights; overweighting; unlikely events and; in utility theory vs. prospect theory; vivid outcomes and; vivid probabilities and decorrelated errors default options denominator neglect depression Detroit/Michigan problem Diener, Ed die roll problem dinnerware problem disclosures disease threats disgust disjunctive events, evaluation of disposition effect DNA evidence dolphins Dosi, Giovanni doubt; bias of confidence over; premortem and; suppression of Duke University Duluth, Minn., bridge in duration neglect duration weighting earthquakes eating eBay Econometrica economics; behavioral; Chicago school of; neuroeconomics; preference reversals and; rational-agent model in economic transactions, fairness in Econs and Humans Edge Edgeworth, Francis education effectiveness of search sets effort; least, law of; in self-control ego depletion electricity electric shocks emotional coherence, see halo effect emotional learning emotions and mood: activities and; affect heuristic; availability biases and; in basic assessments; cognitive ease and; in decision making; in framing; mood heuristic for happiness; negative, measuring; and outcomes produced by action vs. inaction; paraplegics and; perception of; substitution of question on; in vivid outcomes; in vivid probabilities; weather and; work and employers, fairness rules and endangered species endowment effect; and thinking like a trader energy, mental engagement Enquiry Concerning Human Understanding, An (Hume) entrepreneurs; competition neglect by Epley, Nick Epstein, Seymour equal-weighting schemes Erev, Ido evaluability hypothesis evaluations: joint; joint vs. single; single evidence: one-sided; of witnesses executive control expectation principle expectations expected utility theory, see utility theory experienced utility experience sampling experiencing self; well-being of; see also well-being expert intuition; evaluating; illusions of validity of; overconfidence and; as recognition; risk assessment and; vs. statistical predictions; trust in expertise, see skill Expert Political Judgment: How Good Is It?

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

For instance, economics predicts that rational consumers will use APRs to compare the cost of loans, but if that were the case none of us would borrow on credit cards, never mind take out payday loans. This means behavioural economics may prove more effective in policies ranging from financial and consumer regulation to social policy. Yet the idea of ‘choice architecture’ to ‘nudge’ people towards decisions that are better for them—albeit on their own criteria—inevitably turns economists into paternalists, or even the policy wonk equivalents of Vance Packard’s Hidden Persuaders (1957) showing how marketers and advertisers could manipulate consumers. It implies that economic analysts know what people’s ‘true’ preferences would be, if only they were not vulnerable to behavioural ‘biases’ (Sugden 2020).

Average Is Over: Powering America Beyond the Age of the Great Stagnation
by Tyler Cowen
Published 11 Sep 2013

Haven’t thousands of articles from psychology and behavioral economics outlined major weaknesses in human perception and decision-making abilities? There are the works of Daniel Kahneman, Dan Ariely, and many others. Haven’t we all heard about “nudge,” the concept so eloquently outlined by Cass Sunstein and Richard Thaler? In that worldview, experts know the biases of other decision makers and design the choice architecture to manipulate better human choices, such as changing the default options for which pension plan you will enroll in. Yes, but the chess result differs. Computer chess is pointing out some imperfections in the world’s experts, or you might say it is pointing out imperfections in those who, in other contexts, might be nudgers themselves.

Badvertising
by Andrew Simms

Dutch research in 2005 showed that children as young as two years old were already ‘brand aware’ due significantly to exposure to television advertising.7 They were already capable of recognising a majority of brands when shown the logos of companies including: McDonald’s (fast food), Lay’s (potato crisps), Wall’s (ice cream), M&Ms (sweets), Cheetos (ultra processed snacks), Duplo (toys), Snuggle (fabric softener). Some of these are perhaps more likely than others, and it is a list including a lot of junk food, but it also contained: Mercedes (cars), Nike (sportswear), Heineken (beer), Shell (oil company) and Camel (cigarettes). Not only is advertising creating a ‘choice architecture’ for children’s lifestyles which can have a lifelong effect on their habits, health and wellbeing, it can have very immediate effects. In another study looking at the effect of exposure to television advertising, pre-school children were found to recognise more unhealthy food brands than healthy ones.

Uberland: How Algorithms Are Rewriting the Rules of Work
by Alex Rosenblat
Published 22 Oct 2018

Tarleton Gillespie, Pablo Boczkowskie, and Kristen Foot (Cambridge, MA: MIT Press, 2014); Angele Christin, “Algorithms in Practice: Comparing Web Journalism and Criminal Justice,” Big Data & Society (2017): 1–4, http://journals.sagepub.com/doi/pdf/10.1177/2053951717718855. 7. On nudging as “choice architecture,” see, e.g., Cass R. Sunstein, “Nudging: A Very Short Guide,” Journal of Consumer Policy 37, no. 4 (2014): 583–588, doi:10.1007/s10603–014–9273–1. 8. Josh Horwitz, “Uber Customer Complaints from the US Are Increasingly Handled in the Philippines,” Quartz, July 30, 2015, https://qz.com/465613/uber-customer-complaints-from-the-us-are-increasingly-handled-in-the-philippines/. 9.

Gnomon
by Nick Harkaway
Published 18 Oct 2017

‘But what would be more interesting, and much more disturbing and illegal, would be whether it was possible to create a mould for a text which would move the broad shape of an audience member’s connectome closer to that of a given desired shape. Not putting a person into a book, but iterating that person in the minds of anyone who read it.’ ‘Like choice architecture.’ The use of big data and nuance to influence political decision-making: the attempt to corrupt the political process by deliberate manipulation of the cognitive limitations of the human mind. Almost all restaurant menus use it, and even knowing what it is, diners are still influenced: the steak or the lobster is always mountainously expensive.

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With a very little adulteration, they cease to be smart at all, and become remarkably stupid, or indeed self-harming. They are susceptible to stampeding by demagogues, poisoning by bad information. They can be made afraid, and when they do they become mobs. They can be divided by scapegoating and prejudice, bought off in fragments, even just romanced by pretty faces. And of course there’s choice architecture: the very thing we use at Tidal Flow to smooth your journey through London or to design serendipitous social spaces in the new developments of the capital. Effectively deployed bad practice under the System is a disaster. It would place the most absolute surveillance machine in history in the hands of villainous actors or mob instincts.’

Gene Eating: The Science of Obesity and the Truth About Dieting
by Giles Yeo
Published 3 Jun 2019

It ended up working a treat and lowering cleaning bills, so much so that the fly (or flying saucer, or skull and crossbones, or flower) in the urinal is now much mimicked throughout the world. It was a theory first mooted by Richard Thaler in the book Nudge – Improving Decisions about Health, Wealth and Happiness, which he published with Cass Sunstein in 2008. In it they write: ‘A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not’.18 You will note that a ‘nudge’ has no negative reinforcement, it doesn’t involve any penalty, economic or otherwise, and it cannot be mandatory.

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
by Kate Raworth
Published 22 Mar 2017

Indeed one Wikipedia page lists over 160 cognitive biases, like a jumbo-size game of spot-the-difference between rational economic man and his fallible human equivalent.36 What to do in the face of such irrational shortcomings? Introduce nudge policies, say Richard Thaler and Cass Sunstein, which they define as ‘any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives’.37 Thanks to Edward Bernays, brands and retailers have been nudging us for almost a century in the implicit messaging of advertisements, in the placements of products in shops and TV shows, and in the psychology of sales.

The Age of Entitlement: America Since the Sixties
by Christopher Caldwell
Published 21 Jan 2020

Corporate employees want to save for retirement but, when young, underestimate how much they will need. So why not require that the default option for workers be a “Save More Tomorrow” plan, which would cause their deductions to escalate automatically as the years passed? The authors called such measures “choice architecture” or “libertarian paternalism.” No one would be ordering anybody around. Authorities would just firmly steer subjects to a choice that was obviously superior. You didn’t have to contribute to your retirement, the way you did with Social Security. Rather than fine or jail you for not conforming, the government would resort to other, more intimate tools, starting with inconvenience.

Prosperity Without Growth: Foundations for the Economy of Tomorrow
by Tim Jackson
Published 8 Dec 2016

Savings accounts, marriage, norms for social behaviour, government itself in some sense: all these can be regarded as commitment devices. Mechanisms which make it a little easier for us to curtail our appetite for immediate arousal and protect our own future interests. And indeed – although this is less obvious in Offer’s exposition – the interests of affected others. The idea that paternalistic interventions in the ‘choice architecture’ can help us counter short-termism and overcome social traps has been proposed by economist Richard Thaler and Harvard law professor Cass Sunstein in their enormously popular book Nudge: Improving Decisions about Health, Wealth, and Happiness. So, for example, by placing healthy foods rather than sweets near the checkout or making people opt out of pension fund contributions rather than having them opt in are seen as ways of ‘nudging us’ towards good long-term decisions and away from bad short-term ones.18 It’s an appealing idea.

The Equality Machine: Harnessing Digital Technology for a Brighter, More Inclusive Future
by Orly Lobel
Published 17 Oct 2022

Of course, social norms and our online behaviors are entangled, and we never assume a correlation signifies causation, but these positive trajectories are worth investigating further. Technology can nudge change, but lasting changes have to come from social norms. And we also must recognize that race is salient, and significantly impacts matches, on many dating sites. As with other types of platforms and choice architecture, there is no neutral design. The design of the dating apps reflects normative choices, including about whether race plays a role in human choices, as well as AI selection, of matches. A study released in 2018 by OkCupid confirms that there is abundant racial bias in how matches are made. According to OkCupid founder Christian Rudder, “When you’re looking at how two American strangers behave in a romantic context, race is the ultimate confounding factor.”23 The study found that Black women and Asian men are the least likely to receive messages or responses on dating apps, and that white men and white women are reluctant to date outside of their race.

The Coming Wave: Technology, Power, and the Twenty-First Century's Greatest Dilemma
by Mustafa Suleyman
Published 4 Sep 2023

In truth it was a kind of empire. It’s difficult to conceive of a company like this in modern terms. We are not quite heading for a neocolonial East India Company 2.0. But I do think we have to confront the sheer scale and influence that some boardrooms have not just over the subtle nudges and choice architectures that shape culture and politics today but, more importantly, over where this could lead in decades to come. They are empires of a sort, and with the coming wave their scale, influence, and capability are set to radically expand. * * * — People often like to measure progress in AI by comparing it with how well an individual human can perform a certain task.

Work Rules!: Insights From Inside Google That Will Transform How You Live and Lead
by Laszlo Bock
Published 31 Mar 2015

And because of this, organizations can help people make better decisions. In their book Nudge, Richard Thaler and Cass Sunstein, professors at the University of Chicago and Harvard Law School, document at length how an awareness of the flaws in our brains can be used to improve our lives. They define a nudge as “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.… To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.”209 In other words, nudges are about influencing choice, not dictating it.

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants
by Maurice E. Stucke and Ariel Ezrachi
Published 14 May 2020

See also Lisbet Berg and Åse Gornitzka, “The Consumer Attention Deficit Syndrome: Consumer Choices in Complex Markets,” Acta Sociologica 55, no. 2 (2012): 159, 171–72, https://doi.org/10.1177/0001699312440711. 18.Botti and Iyengar, “The Dark Side of Choice,” 30. A study of the Swedish premium pension system also revealed how overabundance of choice possibilities led to adverse consumption decisions in the available choice architecture. Sławomir Czech, “Choice Overload Paradox and Public Policy Design. The Case of Swedish Pension System,” Equilibrium 11, no. 3 (September 2016): 559, https://www.researchgate.net/publication/313037400_Choice_Overload_Paradox_and_Public_Policy_Design_The_Case_of_Swedish_Pension_System. 19.Peters et al., “More Is Not Always Better,” 118; Rebecca J.

A City on Mars: Can We Settle Space, Should We Settle Space, and Have We Really Thought This Through?
by Kelly Weinersmith and Zach Weinersmith
Published 6 Nov 2023

GO TO NOTE REFERENCE IN TEXT Conclusion: Of Hot Tubs and Human Destiny our species must: Joseph Campbell, The Inner Reaches of Outer Space: Myth as Metaphor and as Religion (Novato, CA: New World Library, 2018), xxi. GO TO NOTE REFERENCE IN TEXT OceanofPDF.com Partial Bibliography Abdel-Motaal, Doaa. Antarctica: The Battle for the Seventh Continent. Santa Barbara, California: Praeger, 2016. Abood, Steven. “Martian Environmental Psychology: The Choice Architecture of a Mars Mission and Colony.” In The Human Factor in a Mission to Mars: An Interdisciplinary Approach, edited by Konrad Szocik, 3–34. Space and Society. Cham, Switzerland: Springer International Publishing, 2019. https://doi.org/10.1007/978-3-030-02059-0_1. Adams, Gregory R., Vincent J.

Empire of Things: How We Became a World of Consumers, From the Fifteenth Century to the Twenty-First
by Frank Trentmann
Published 1 Dec 2015

But, by showing us how this upward momentum came about, the same history also provides us with lessons about the types of interventions that might help change lifestyles in a more sustainable direction. Today, the discussion of change is mainly framed in terms of choice, markets and the sovereign consumer. Behavioural economists have added the concept of ‘choice architecture’ to show that consumers do not make decisions in a vacuum but are influenced by available information as well as their own inertia, procrastination or unfounded optimism.20 Their analysis has encouraged a libertarian paternalism, a mix of measures that gently nudges people towards more sustainable behaviour by improving the ‘architecture’ with the help of more salient information, default rules and opinion from valued groups, while preserving freedom of choice overall.