Showing papers by "Cass R. Sunstein published in 2017"

Should Governments Invest More in Nudging

Abstract: Governments are increasingly adopting behavioral science techniques for changing individual behavior in pursuit of policy objectives. The types of "nudge" interventions that governments are now adopting alter people's decisions without coercion or significant changes to economic incentives. We calculated ratios of impact to cost for nudge interventions and for traditional policy tools, such as tax incentives and other financial inducements, and we found that nudge interventions often compare favorably with traditional interventions. We conclude that nudging is a valuable approach that should be used more often in conjunction with traditional policies, but more calculations are needed to determine the relative effectiveness of nudging.

#Republic: Divided Democracy in the Age of Social Media

Abstract: From the New York Times bestselling author of Nudge and The World According to Star Wars, a revealing account of how today's Internet threatens democracy--and what can be done about it As the Internet grows more sophisticated, it is creating new threats to democracy. Social media companies such as Facebook can sort us ever more efficiently into groups of the like-minded, creating echo chambers that amplify our views. It's no accident that on some occasions, people of different political views cannot even understand one another. It's also no surprise that terrorist groups have been able to exploit social media to deadly effect. Welcome to the age of #Republic. In this revealing book, New York Times bestselling author Cass Sunstein shows how today's Internet is driving political fragmentation, polarization, and even extremism--and what can be done about it. He proposes practical and legal changes to make the Internet friendlier to democratic deliberation, showing that #Republic need not be an ironic term. Rather, it can be a rallying cry for the kind of democracy that citizens of diverse societies need most.

Nudges that fail

Abstract: Why are some nudges ineffective, or at least less effective than choice architects hope and expect? Focusing primarily on default rules, this essay emphasizes two reasons for this. The first involves strong antecedent preferences on the part of choosers. The second involves successful “counternudges,” which persuade people to choose in a way that confounds the efforts of choice architects. Nudges might also be ineffective, and less effective than expected, for five other reasons: (1) some nudges produce confusion in the target audience; (2) some nudges have only short-term effects; (3) some nudges produce “reactance” (though this appears to be rare); (4) some nudges are based on an inaccurate (though initially plausible) understanding on the part of choice architects of what kinds of choice architecture will move people in particular contexts; and (5) some nudges produce compensating behavior, resulting in no net effect. When a nudge turns out to be insufficiently effective, choice architects have three potential responses: (1) do nothing; (2) nudge better (or differently); and (3) fortify the effects of the nudge, perhaps through counter-counternudges, or perhaps through incentives, mandates, or bans.

Misconceptions About Nudges

Abstract: Some people believe that nudges are an insult to human agency; that nudges are based on excessive trust in government; that nudges are covert; that nudges are manipulative; that nudges exploit behavioral biases; that nudges depend on a belief that human beings are irrational; and that nudges work only at the margins and cannot accomplish much. These are misconceptions. Nudges always respect, and often promote, human agency; because nudges insist on preserving freedom of choice, they do not put excessive trust in government; nudges are generally transparent rather than covert or forms of manipulation; many nudges are educative, and even when they are not, they tend to make life simpler and more navigable; and some nudges have quite large impacts.

The intrinsic value of choice: The propensity to under-delegate in the face of potential gains and losses

Abstract: Human beings are often faced with a pervasive problem: whether to make their own decision or to delegate the decision task to someone else. Here, we test whether people are inclined to forgo monetary rewards in order to retain agency when faced with choices that could lead to losses and gains. In a simple choice task, we show that participants choose to pay in order to control their own payoff more than they should if they were to maximize monetary rewards and minimize monetary losses. This tendency cannot be explained by participants’ overconfidence in their own ability, as their perceived ability was elicited and accounted for. Nor can the results be explained by lack of information. Rather, the results seem to reflect an intrinsic value for choice, which emerges in the domain of both gains and of losses. Moreover, our data indicate that participants are aware that they are making suboptimal choices in the normative sense, but do so anyway, presumably for psychological gains.

How People Update Beliefs About Climate Change: Good News and Bad News

Abstract: People are frequently exposed to competing evidence about climate change. We examined how new information alters people's beliefs. We find that people who are not sure that man-made climate change is occurring, and who do not favor an international agreement to reduce greenhouse gas emissions, show a form of asymmetrical updating: They change their beliefs in response to unexpected good news (suggesting that average temperature rise is likely to be less than previously thought) and fail to change their beliefs in response to unexpected bad news (suggesting that average temperature rise is likely to be greater than previously thought). By contrast, people who strongly believe that manmade climate change is occurring, and who favor an international agreement, show the opposite asymmetry: They change their beliefs far more in response to unexpected bad news (suggesting that average temperature rise is likely to be greater than previously thought) than in response to unexpected good news (suggesting that average temperature rise is likely to be smaller than previously thought). The results suggest that exposure to varied scientific evidence about climate change may increase polarization within a population due to asymmetrical updating. We explore the implications of our findings for how people will update their beliefs upon receiving new evidence about climate change, and also for other beliefs relevant to politics and law.

Behavioral Insights All Over the World? Public Attitudes Toward Nudging in a Multi-Country Study

Abstract: Nudges are choice-preserving interventions that steer people’s behaviour in specific directions while allowing people to go their own way. Some nudges have been controversial, because they are seen as objectionably paternalistic. This study reports on nationally representative surveys in eight diverse countries, investigating how people actually think about nudges and nudging. The study covers Australia, Brazil, Canada, China, Japan, Russia, South Africa, and South Korea. Generally, we find strong majority support for nudges in all countries, with the important exception of Japan, and with spectacularly high approval rates in China and South Korea. We connect the findings here to earlier studies involving the United States, the United Kingdom, Italy, Denmark, France, Germany, and Hungary. The largest conclusion is that while citizens generally approve of health and safety nudges, the nations of the world appear to fall into three distinct categories: (1) a group of nations, mostly liberal democracies, where strong majorities approve of nudges whenever they (a) are seen to fit with the interests and values of most citizens and (b) do not have illicit purposes; (2) a group of nations where overwhelming majorities approve of nearly all nudges; and (3) a group of nations with markedly lower approval ratings for nudges. We offer some speculations about the relationship between approval rates and trust.

Behavioral considerations for effective time-varying electricity prices

Abstract: Wholesale prices for electricity vary significantly due to high fluctuations and low elasticity of short-run demand. End-use customers have typically paid flat retail rates for their electricity consumption, and time-varying prices (TVPs) have been proposed to help reduce peak consumption and lower the overall cost of servicing demand. Unfortunately, the general practice is an opt-in system: a default rule in favor of TVPs would be far better. A behaviorally informed analysis also shows that when transaction costs and decision biases are taken into account, the most cost-reflective policies are not necessarily the most efficient. On reasonable assumptions, real-time prices can result in less peak conservation of manually controlled devices than time-of-use or critical-peak prices. For that reason, the trade-offs between engaging automated and manually controlled loads must be carefully considered in time-varying rate design. The rate type and accompanying program details should be designed with the behavioral biases of consumers in mind, while minimizing price distortions for automated devices.

Obesity Prevention in the Supermarket-Choice Architecture and the Supplemental Nutrition Assistance Program

Abstract: The article discusses obesity-related health care costs in America in relation to a debate about whether the U.S. government should allow consumers to purchase sugar-sweetened beverages (SSBs) and other unhealthy food products through food assistance programs such as the Supplemental Nutrition Assistance Program (SNAP) as of 2017. A choice architecture concept involving decision making by consumers is examined, along with supermarkets and American public health.

Moral Commitments in Cost-Benefit Analysis

Abstract: The regulatory state has become a cost-benefit state, in the sense that under prevailing executive orders, agencies must catalogue the costs and benefits of regulations before issuing them, and in general, must show that their benefits justify their costs. Agencies have well-established tools for valuing risks to health, safety, and the environment. Sometimes, however, regulations are designed to protect moral values, and agencies struggle to quantify those values; on important occasions, they ignore them. That is a mistake. People may care deeply about such values, and they suffer a welfare loss when moral values are compromised. If so, the best way to measure that loss is through eliciting private willingness to pay. Of course it is true that some moral commitments cannot be counted in cost-benefit analysis, because the law rules them off-limits. It is also true that the principal reason to protect moral values is not to prevent welfare losses to those who care about them. But from the welfarist standpoint, those losses matter, and they might turn out to be very large. Agencies should take them into account. If they fail to do so, they might well be acting arbitrarily and hence in violation of the Administrative Procedure Act. These claims bear on a wide variety of issues, including protection of foreigners, of children, of rape victims, of future generations, and of animals.

Should Governments Invest More in Nudging

Abstract: Governments are increasingly adopting behavioral science techniques for changing individual behavior in pursuit of policy objectives. The types of “nudge” interventions that governments are now adopting alter people’s decisions without resorting to coercion or significant changes to economic incentives. We calculate ratios of impact to cost for nudge interventions and for traditional policy tools, such as tax incentives and other financial inducements, and we find that nudge interventions often compare favorably to traditional interventions. We conclude that nudging is a valuable approach that should be used more in conjunction with traditional policies, but more relative effectiveness calculations are needed.

On Mandatory Labeling, with Special Reference to Genetically Modified Foods

Abstract: As a result of movements for labeling food with genetically modified organisms (GMOs) Congress enacted a mandatory labeling requirement in 2016 These movements, and the legislation, raise recurring questions about mandatory product labels: whether there is a market failure, neoclassical or behavioral, that justifies them, and whether the benefits of such labels justify the costs The first goal of this essay is to identify and to evaluate the four competing approaches that agencies now use to assess the costs and benefits of mandatory labeling in general The second goal is to apply those approaches to the context of GM foodAssessment of the benefits of mandatory labels presents especially serious challenges Agencies have (1) claimed that quantification is essentially impossible; (2) engaged in breakeven analysis; (3) projected various endpoints, such as health benefits or purely economic savings; and (4) relied on private willingness to pay for the relevant information All of these approaches run into serious normative and empirical challenges In principle, (4) is best, but in practice, (2) is sometimes both the most that can be expected and the least that can be demandedMany people favor labeling GM food on the ground that it poses serious risks to human health and the environment, but with certain qualifications, the prevailing scientific judgment is that it does no such thing In the face of that judgment, some people respond that even in the absence of evidence of harm, people have “a right to know” about the contents of what they are eating But there is a serious problem with this response: there is a good argument that the benefits of such labels would be lower than the costs Consumers would obtain no health benefits from which labels To the extent that they would be willing to pay for them, the reason (for many though not all) is likely to be erroneous beliefs, which are not a sufficient justification for mandatory labels Moreover, GMO labels might well lead people to think that the relevant foods are harmful and thus affirmatively mislead themSome people contend that GMOs pose risks to the environment (including biodiversity), to intelligible moral commitments, or to nonquantifiable values Many people think that the key issue involves the need to take precautions in the face of scientific uncertainty: Because there is a non-zero risk that GM food will cause irreversible and catastrophic harm, it is appropriate to be precautionary, through labels or through more severe restrictions The force of this response depends on the science: If there is a small or uncertain risk of serious harm, precautions may indeed be justified If the risk is essentially zero, as many scientists have concluded, then precautions are difficult to justify The discussion, though focused on GM foods, has implications for disclosure policies in general, which often raise difficult questions about hard-to-quantify benefits, the proper use of cost-benefit balancing, and the appropriate role of precautionary thinking

Moral Commitments in Cost-Benefit Analysis

Abstract: The regulatory state has become a cost-benefit state, in the sense that under prevailing executive orders, agencies must catalogue the costs and benefits of regulations before issuing them, and in general, must show that their benefits justify their costs. Agencies have well-established tools for valuing risks to health, safety, and the environment. Sometimes, however, regulations are designed to protect moral values, and agencies struggle to quantify those values; on important occasions, they ignore them. That is a mistake. People may care deeply about such values, and they suffer a welfare loss when moral values are compromised. If so, the best way to measure that loss is through eliciting private willingness to pay. Of course it is true that some moral commitments cannot be counted in cost-benefit analysis, because the law rules them off-limits. It is also true that the principal reason to protect moral values is not to prevent welfare losses to those who care about them. But from the welfarist standpoint, those losses matter, and they might turn out to be very large. Agencies should take them into account. If they fail to do so, they might well be acting arbitrarily and hence in violation of the Administrative Procedure Act. These claims bear on a wide variety of issues, including protection of foreigners, of children, of rape victims, of future generations, and of animals.

Verhaltensbasierte Regulierung (Nudging)

Abstract: Die Verbraucherpolitik verfugt uber ein breites Instrumentarium, bestehend aus weichen Instrumenten wie Information und Beratung, Bildung und Befahigung, Organisation und Ermachtigung sowie harten Instrumenten wie Steuern, Abgaben, Subventionen und der Regulierung durch Recht. In jungerer Zeit wird verstarkt eine evidenzbasierte Politik angestrebt, die auf einem real-empirischen Bild des Verbrauchers basiert. In diesem Zusammenhang wird ein neues Instrument diskutiert, die so genannte verhaltensbasierte Regulierung. Verhalten soll hier uber so genannte „Nudges“ oder Verhaltensstimuli beeinflusst werden, die individuelle Entscheidungen – ohne Zwang auszuuben oder etwas zu verbieten – in eine bestimmte Richtung „stupsen“ sollen. In der politischen Praxis hat sich gezeigt, dass die verhaltensbasierte Regulierung eine wirkungsvolle Erganzung zum bestehenden Instrumentarium sein kann, ohne dieses ersetzen zu wollen. Der Beitrag erlautert zunachst das Konzept der verhaltensbasierten Regulierung, skizziert seine theoretischen und methodischen Grundlagen und stellt konkrete Anwendungen, Typen und Formen von Nudges vor. Schlieslich werden Kritikpunkte an der verhaltensbasierten Regulierung benannt. Der Beitrag schliest mit einer Bewertung des Regulierungskonzepts fur die Verbraucherpolitik sowie Uberlegungen fur die Verbraucherforschung.

Deliberative Democracy in the Trenches

Abstract: In the last decades, many political theorists have explored the idea of deliberative democracy. The basic claim is that well-functioning democracies combine accountability with a commitment to reflection, information acquisition, multiple perspectives, and reason-giving. Does that claim illuminate actual practices? Much of the time, the executive branch of the United States has combined both democracy and deliberation, not least because it has placed a high premium on reason-giving and the acquisition of necessary information. It has also contained a high degree of internal diversity, encouraging debate and disagreement, not least through the public comment process. These claims are illustrated with concrete, if somewhat stylized, discussions of how the executive branch often operates.

People Like Nudges (Mostly)

Abstract: In recent years, there has been a great deal of debate about the ethical questions associated with “nudges,” understood as approaches that steer people in certain directions while fully maintaining freedom of choice. Evidence about people’s views cannot resolve the ethical questions, but in democratic societies (and probably nondemocratic ones as well), those views will inevitably affect what governments are willing to do. Existing evidence, including several nationally representative surveys, supports two general conclusions. First, there is a widespread support for nudges, at least of the kind that democratic societies have adopted or seriously considered in the recent past. Importantly, that support can be found across partisan lines. Second, nudges will not receive majority approval if they steer people in directions that are inconsistent with their interests or their values.

Boundedly Rational Patients? Health and Patient Mistakes in a Behavioral Framework

Abstract: During medical visits, the stakes are high for many patients, who are put in a position to make, or to begin to make, important health-related decisions. But in such visits, patients often make cognitive errors. Traditionally, those errors are thought to result from poor communication with physicians; complicated subject matter; and patient anxiety. To date, measures to improve patient understanding and recall have had only modest effects. This paper argues that an understanding of those cognitive errors can be improved by reference to a behavioral science framework, which distinguishes between a “System 1” mindset, in which patients are reliant on intuition and vulnerable to biases and imperfectly reliable heuristics, and a “System 2” mindset, which is reflective, slow, deliberative, and detailed-oriented. To support that argument, we present the results of a randomized-assignment experiment that shows that patients perform very poorly on the Cognitive Reflection Test and thus are overwhelmingly in a System 1 state prior to a physician visit. Assigning patients the task of completing patient-reported outcomes measures immediately prior to the visit had a small numerical, but not statistically significant, shift towards a reflective frame of mind. We describe hypotheses to explain poor performance by patients, which may be due to anxiety, a bandwidth tax, or a scarcity effect, and outline further direction for study. Understanding the behavioral sources of errors on the part of patients in their interactions with physicians and in their decision-making is necessary to implement measures improve shared decision-making, patient experience, and (perhaps above all) clinical outcomes.

The Morality of Administrative Law

Abstract: As it has been developed over a period of many decades, administrative law has acquired its own morality, closely related to what Lon Fuller described as the internal morality of law. Reflected in a wide array of seemingly disparate doctrines, but not yet recognized as such, the morality of administrative law includes a set of identifiable principles, often said to reflect the central ingredients of the rule of law. An understanding of the morality of administrative law puts contemporary criticisms of the administrative state in their most plausible light. At the same time, the resulting doctrines do not deserve an unambiguous celebration, because many of them have an ambiguous legal source; because from the welfarist point of view, it is not clear if they are always good ideas; and because it is not clear that judges should enforce them.

The American Nondelegation Doctrine

Abstract: An American nondelegation doctrine is flourishing. Contrary to the standard account, it does not forbid Congress from granting broad discretion to executive agencies. Instead it is far narrower and more targeted. It says, very simply, that executive agencies cannot make certain kinds of decisions unless Congress has explicitly authorized them to do so. In so saying, the American nondelegation doctrine promotes the central goals of the standard doctrine, by preventing Congress from shirking and by requiring it to focus its attention on central questions, and also by protecting liberty. The abstract idea of “certain kinds of decisions” is currently filled in by, among other things, the canon of constitutional avoidance; the rule of lenity; and the presumptions against retroactivity and extraterritoriality. More recent nondelegation canons, not yet firmly entrenched, require agencies to consider costs and forbid them from interpreting statutes in a way that produces a large-scale increase in their regulatory authority. The cost-consideration canon makes a great deal of sense, especially as a way of disciplining the modern regulatory state; the “major questions doctrine,” as it is sometimes called, is less obviously correct. and its proper provenance depends on the nature of the relevant statute.

A World-Wide Consensus on Nudging? Not Quite, But Almost

Abstract: Nudges are choice-preserving interventions that steer people’s behaviour in specific directions while allowing people to go their own way. Some nudges have been controversial, because they are seen as objectionably paternalistic. This study reports on nationally representative surveys in eight diverse countries, investigating how people actually think about nudges and nudging. The study covers Australia, Brazil, Canada, China, Japan, Russia, South Africa, and South Korea. Generally, we find strong majority support for nudges in all countries, with the important exception of Japan, and with spectacularly high approval rates in China and South Korea. We connect the findings here to earlier studies involving the United States, the United Kingdom, Italy, Denmark, France, Germany, and Hungary. The largest conclusion is that while citizens generally approve of health and safety nudges, the nations of the world appear to fall into three distinct categories: (1) a group of nations, mostly liberal democracies, where strong majorities approve of nudges whenever they (a) are seen to fit with the interests and values of most citizens and (b) do not have illicit purposes; (2) a group of nations where overwhelming majorities approve of nearly all nudges; and (3) a group of nations that usually show majority approval, but markedly reduced approval rates. We offer some speculations about the relationship between approval rates and trust.

Boundedly rational patients? Part 1: Health and patient mistakes in a behavioral framework

Abstract: During medical visits, the stakes are high for many patients, who are put in a position to make, or to begin to make, important health-related decisions. But in such visits, patients often make cognitive errors. Traditionally, those errors are thought to result from poor communication with physicians; complicated subject matter; and patient anxiety. To date, measures to improve patient understanding and recall have had only modest effects. This paper reviews the current literature on behavioral insights in the patient experience and argues that an understanding of those cognitive errors can be improved by reference to a behavioral science framework, which distinguishes between a "System 1" mindset, in which patients are reliant on intuition and vulnerable to biases and imperfectly reliable heuristics, and a "System 2" mindset, which is reflective, slow, deliberative, and detailed-oriented.

Introduction: Agency and Control

Abstract: For most people, control has some intrinsic value; people care about maintaining it and will pay something to do so. Whenever a private or public institution blocks choices or interferes with agency, some people will rebel, even if exercising control would not result in material benefits or might produce material harms. On the other hand, people sometimes want to relinquish control, because exercising agency is burdensome or costly.

'They Ruined Popcorn': On the Costs and Benefits of Mandatory Labels

Abstract: Do consumers benefit from mandatory labels? How much? These questions are difficult to answer, because assessment of the costs and benefits of labels presents serious challenges. In the United States, federal agencies have (1) claimed that quantification is essentially impossible; (2) engaged in “breakeven analysis”; (3) projected various endpoints, such as health benefits or purely economic savings; and (4) relied on private willingness-to-pay for the relevant information. All of these approaches run into serious normative, conceptual, and empirical objections. Approach (3) will exaggerate what consumers gain, because many people suffer welfare losses when they see labels, whether or not they end up making different choices. (Part of that loss is captured in one reaction to mandatory calorie labels: “They ruined popcorn!”) In principle, approach (4) is usually best, but people may lack the information that would permit them to say how much they would pay for (more) information, and sometimes tastes and values shift over time, which means that willingness to pay may fail to capture welfare effects. These points raise fundamental conceptual, normative, and empirical questions about welfarist approaches to public policy.

Changing Climate Change, 2009-2016

Abstract: In 2009, the Obama Administration entered office in the midst of a serious economic recession. Nonetheless, one of its priorities was to address the problem of climate change. It ultimately did a great deal -- producing, with the aid of market forces, significant reductions in greenhouse gas emissions, which ultimately helped make an international agreement possible. This essay offers an account of some of the central domestic reforms, including the “endangerment finding”; the selection of a social cost of carbon; fuel economy regulations for motor vehicles; controls on new and existing power plants; and energy efficiency regulations. At various points, potentially challenging issues of law and policy are identified, and different imaginable paths are specified. The various reforms show the extraordinary extent to which the executive branch, relying on pre-existing regulatory authorities, can reorient national policy in an area in which the national legislature is blocked. To that extent, the climate change initiatives offer an illuminating case study in the contemporary operation of the system of separation of powers. There is a brief discussion of whether the reforms are likely to prove enduring. Appendices offer an assortment of tables on relevant costs and benefits.

'Better Off, as Judged by Themselves': A Comment on Evaluating Nudges

Abstract: Many nudges are designed to make people better off, as judged by themselves. This criterion, meant to ensure that nudges will increase people’s welfare, contains some ambiguity. It is useful to distinguish among three categories of cases: (1) those in which choosers have clear antecedent preferences, and nudges help them to satisfy those preferences (often by increasing “navigability”); (2) those in which choosers face a self-control problem, and nudges help them to overcome that problem; and (3) those in which choosers would be content with the outcomes produced by two or more nudges, or in which ex post preferences are endogenous to nudges, so that without additional clarification or work, the “as judged by themselves” criterion does identify a unique solution for choice architects. Category (1) is self-evidently large. Because many people agree that they suffer self-control problems, category (2) is large as well. Cases that fall in category (3) create special challenges, which may lead us to make direct inquiries into welfare or to explore what informed, active choosers typically select.