The World Is (Still) Drowning in Sludge

Sludge represents the administrative friction and unnecessary complexity that makes life harder for consumers, serving as the antithesis to the "nudge" concept of simplifying choices. While some sludge stems from simple incompetence, such as poorly designed doors or confusing government forms, much of it is a strategic maneuver by firms to maximize profit. In the healthcare sector, this complexity functions as a rationing mechanism, contributing to massive inefficiencies, high costs, and physician burnout. Similarly, subscription services exploit passive consumer behavior through "drip pricing" and difficult cancellation processes to maintain revenue. Economists Richard Thaler, Ben Handel, and Neale Mahoney highlight how digital platforms leverage A/B testing to refine these barriers, turning users into unpaid administrative assistants. Ultimately, this pervasive friction creates significant economic waste and disadvantages those lacking the time or resources to navigate these intentionally difficult systems.