NUDGE: IMPROVING DECISIONS ABOUT HEALTH, WEALTH, AND HAPPINESS by Richard H. Thaler and Cass R. Sunstein Penguin Books, 2009, 312 pp, ISBN 978-0-14-311526-7This book is best described formally as a general explanation of and advocacy for libertarian paternalism, a term coined by the authors in earlier publications. Informally, it is about how leaders, systems, organizations, and governments can nudge people to do the things the nudgers want and need done for the betterment of the nudgees, or of society. It is paternalism in the sense that "it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better", (p. 5) It is libertarian in that "people should be free to do what they like - and to opt out of undesirable arrangements if they want to do so", (p. 5) The built-in possibility of opting out or making a different choice preserves freedom of choice even though people's behavior has been influenced by the nature of the presentation of the information or by the structure of the decisionmaking system. I had never heard of libertarian paternalism before reading this book, and I now find it fascinating.Written for a general audience, this book contains mostly social and behavioral science theory and models, but there is considerable discussion of structure and process that has roots in mathematical and quantitative modeling. One of the main applications of this social system is economic choice in investing, selecting and purchasing products and services, systems of taxes, banking (mortgages, borrowing, savings), and retirement systems. Other quantitative social choice systems discussed include environmental effects, health care plans, gambling, and organ donations. Softer issues that are also subject to a nudge-based approach are marriage, education, eating, drinking, smoking, influence, spread of information, and politics. There is something in this book for everyone.The basis for this libertarian paternalism concept is in the social theory called "science of choice", the study of the design and implementation of influence systems on various kinds of people. The terms Econs and Humans, are used to refer to people with either considerable or little rational decision-making talent, respectively. The various libertarian paternalism concepts and systems presented are tested and compared in light of these two types of people. Two foundational issues that this book has in common with another book, Network of Echoes: Imitation, Innovation and Invisible Leaders, that was also reviewed for this issue of the Journal are that 1 ) there are two modes of thinking (or components of the brain) - an automatic (intuitive) process and a reflective (rational) process and 2) the need for conformity and the desire for imitation are powerful forces in human behavior. …

Nudge: Improving Decisions about Health, Wealth, and Happiness

We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

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The Theory of Industrial Organization

The Environmental Protection Agency (EPA) provides access to information on a variety of topics related to the environment and strives to inform citizens of health risks. The EPA also has an extensive library network that consists of 26 libraries throughout the United States, which provide access to a plethora of information to EPA employees, scientists, and researchers. The EPA implemented a reorganization project to digitize their materials so they would be more accessible to a wider range of users, but this plan was drastically accelerated when the EPA was threatened with a budget cut. It chose to close and reduce the hours and services of some of their libraries. As a result, the agency was accused of denying users the “right to know” by making information unavailable, not providing an adequate strategic plan, and discarding vital materials. This case study explores the background of the digitization project, the practices implemented, and the critiques of the project.

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The Environmental Protection Agency

This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision-making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.

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The Economic Importance of Financial Literacy: Theory and Evidence

The COVID-19 public health emergency caused widespread economic shutdown and unemployment. The resulting surge in Unemployment Insurance claims threatened to overwhelm the legacy systems state workforce agencies rely on to collect, process, and pay claims. In Rhode Island, we developed a scalable cloud solution to collect Pandemic Unemployment Assistance claims as part of a new program created under the Coronavirus Aid, Relief and Economic Security Act to extend unemployment benefits to independent contractors and gig-economy workers not covered by traditional Unemployment Insurance. Our new system was developed, tested, and deployed within 10 days following the passage of the Coronavirus Aid, Relief and Economic Security Act, making Rhode Island the first state in the nation to collect, validate, and pay Pandemic Unemployment Assistance claims. A cloud-enhanced interactive voice response system was deployed a week later to handle the corresponding surge in weekly certifications for continuing unemployment benefits. Cloud solutions can augment legacy systems by offloading processes that are more efficiently handled in modern scalable systems, reserving the limited resources of legacy systems for what they were originally designed. This agile use of combined technologies allowed Rhode Island to deliver timely Pandemic Unemployment Assistance benefits with an estimated cost savings of $502,000 (representing a 411% return on investment).

https://dl.acm.org/doi/pdf/10.1145/3428125

Delivering Unemployment Assistance in Times of Crisis: Scalable Cloud Solutions Can Keep Essential Government Programs Running and Supporting Those in Need

This paper explores the relationship between the structure of the market for the refining and distribution of gasoline and the wholesale price of unbranded gasoline sold to independent gasoline retailers Theoretically, the effect of an increase in vertical integration is ambiguous because opposing forces act to increase and decrease wholesale prices We empirically examine the effects of vertical and horizontal market structures on wholesale prices using both a broad panel and an event analysis The panel covers twenty-six metropolitan areas from January 1993 through June 1997 The event is a merger of Tosco and Unocal in 1997 that changed the vertical and horizontal structure of thirteen West Coast metropolitan areas Both data sets show that an increase in the degree of vertical integration is associated with higher wholesale prices

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Justine S. Hastings

Papers

Delivering Unemployment Assistance in Times of Crisis: Scalable Cloud Solutions Can Keep Essential Government Programs Running and Supporting Those in Need

Vertical Integration in Gasoline Supply: An Empirical Test of Raising Rivals' Costs