Showing posts with label Richard Thaler. Show all posts
Showing posts with label Richard Thaler. Show all posts

Saturday, 28 September 2013

Organ nudges

It's hard to tell what's a nudge.

Recall the basic thesis of Thaler and Sunstein's libertarian paternalism: the choice of defaults couldn't help but influence choices, so give some thought to the default chosen.

In New Zealand, and many other countries, you're not an organ donor unless you make an explicit choice to become one: you have to choose to sign your organ donor card. Because thinking about death is unpleasant, there will be some people who would wish to sign their card but haven't gotten around to it. The default has affected the number of people signed up. Flip the default around to presumed consent, where those who do not wish to be donors have to opt out, and you'll have higher donation rates. And indeed, that's what's found in most countries running presumed consent systems.

Can we call this a nudge though? A team of researchers running an international comparative study of nudge policies think so.
In early July the passage of the Human Transplantation (Wales) Bill through the Assembly made Wales the first UK nation to adopt a presumed consent system for organ donation.

The Bill, which comes into effect in 2015, should undoubtedly be celebrated: it will lead to far more people being on the Organ Donor Register in Wales, as presumed consent systems have in other countries where they have been introduced, and it will save lives.

The historic significance of the Bill, however, lies not only in the lifesaving difference it will make, but in fact that it is the most discussed aspect of a broader shift in systems of government in Wales and the UK.

This shift is characterised by the increasing use of psychological insights about the nature of human behaviour within the design of public policy.

Commonly referred to as “nudge” policies, these new ways of governing are based on the principles of soft paternalism, or the idea that governments should use policies to make it easier for people in act in ways that support their own, and the broader public’s, best interests.

Nudge policies are clearly in vogue.
It seems like a nudge. Flip in default position? Check. Easy opt-out? Check. But wait:
Bad idea? Why?
I agree with Thaler that there's nothing wrong with a prompted choice system.

I don't know enough about the system in Wales. New Zealand's opt-in system doesn't really have a list; families are asked whether or not the donor has ticked the box on the driver's licence. If they're moving in Wales from a system that never asks families while presuming you're out absent having signed an organ donor card to one where you're presumed in but your family can veto, then that does impose burden on the families. The change imposes a burden, and that burden counts:
Policy has to be very specially crafted to count as a nudge, following Thaler's setup. Thaler entirely disavows any connection between the UK's internet porn filter and his nudge prescriptions because of the burden the opt-in regime imposes on families who might prefer not to have to have explicit conversations about such things. Just because something is opt-out doesn't make it a nudge, in Thaler's view. And yet Wales's 'opt-out plus bother the family' system is being sold as a nudge.

Now, a few folks, a few years ago, were just a bit worried that the policy application of Sunstein and Thaler's insights would be rather more hamfisted and that opening up this whole nudge project would yield a pile of things that Thaler would view as shoves. Thaler dismissed those worries as variety of bathmophobia: the fear of slopes of the slippery kind.

But it isn't just the politicos who get things wrong. Here's how the research team working on the international nudge comparison project sees things:
Beyond organ donation, we can now find nudge-type policies in a range of policy areas. The default setting has been changed on company pension schemes in the UK so now it is assumed that employees want to enrol. There are also new plans to change the default setting for domestic access to internet pornography, with households having to opt in to getting access to such sites.
It's always worth keeping half an eye out for how one's bright ideas might be mangled in policy application. Whitehead et al, the research team funded by the Economic and Social Research Council to run the international comparison of nudge policies, have a few insights. While definitely counting the porn filter as a nudge, they also have a worry:
What is most concerning is that I don’t hear any researchers offering alternative viewpoints on the political value of the Nudge theory. Rather, they seem busy trying to get onto the advisory boards of various Behaviour Change research networks, centres and institutes – perhaps in order to fulfil their duties to serve policy-makers in their research and to secure research ‘impact’ – now a pre-requisite of almost any research funding in an increasingly competitive funding environment.
They perhaps could read the Cato Unbound symposium on Nudge - the one where Thaler dismissed his critics' fears as paranoid - for a few alternative viewpoints on the political value of Nudge theory.

Wednesday, 31 July 2013

Bathmophobia

Richard Thaler had a term for people with an irrational fear of slippery slopes: bathmophobes. He counted Glen Whitman among their ranks for warning that Thaler's "nudge" architecture could would up proving rather illiberal in practice. I worried, in my Mont Pelerin address, that by reducing the costs of paternalism, Nudge seemed more likely to expand the range of paternalism rather than transform existing paternalisms into softer alternatives. Paternalism gets cheaper so we get more of it. I suppose I'd have been a bathmophobe as well.

Anyway, here's Thaler on the bathmophobes:
For example, you may not be familiar with bathmophobia, which is an abnormal and persistent fear of stairs or steep slopes, or a fear of falling. Less well known is “nudgephobia,” also known as the Whitman-Rizzo syndrome, which is the fear of being gently nudged down a slope while standing on a completely flat surface. This phobia is sometimes associated with other disorders such as the fear of being given helpful directions when lost; the fear of obtaining reliable medical advice when sick; and, in rare cases, some have even suffered from a fear of having someone recommend a book or movie that you will really like.

...Another basic point that Whitman does not recognize is that paternalism of some sort is inevitable. Consider the following common problem. Most firms have an open enrollment period in November when employees can elect their benefit package for the following year. At my employer, the University of Chicago, you have a few weeks to log on to the appropriate web site and make your selections. The question is, what should the employer do for those employees who forget to log on? (Professors’ reputations for absent-mindedness are well deserved.) For each of the choices the employee has, the employer needs to select a default option for those who do not log on, and normally the default is either “same choice as last year” or “back to zero” (meaning, decline this option). At Chicago the default option for the health insurance plan is the same as last year.

...Presumably, if libertarian paternalism creates a slope risk then real paternalism must generate a “cliff” risk. But have we seen this in history? In America we started as Puritans but moved away from it. When Prohibition was passed into law it did not lead to a slew of other paternalistic interventions. On the contrary, once society got to see prohibition in action, the law was eventually repealed. Is there any evidence of a paternalistic slide? The only example Whitman gives is smoking, where there certainly has been a progression of increasingly intrusive laws passed. But there are several problems with this example. First, most of the anti-smoking laws are based on externalities, not paternalism. People do not want to fly, eat, or work in smoke-filled environments. Indeed, many smokers favor such laws. Note that while smoking bans are not nudges, they are shoves, even these shoves do not seem to have led to a batch of similar crackdowns in other domains. I have not seen any municipality institute a ban on loud talking in restaurants, for example, though come to think of it… .

In short, the risk of the slippery slope appears to be a figment of Professor Whitman’s imagination, and clear evidence of his bathmophobia. 
Remember that old Simpsons episode where Lisa convinces an amnesiac Burns about the merits of recycling? And he goes on to recycle the ocean into Little Lisa Slurry? And Lisa recoils in horror at the evil she helped enable?

I wonder if that's how Richard Thaler's feeling now. Perhaps he should be. Why? This.

I suppose it's all fine. After all, there has to be some default position on whether you wish to have a censored internet package. The choice of default "porn and dangerous thoughts allowed" will have consequences, as will the alternative of "porn and dangerous thoughts not allowed, unless you tell your ISP that you like porn and dangerous thoughts and maybe get put on some list because of it". The government cannot help but to influence outcomes by its choice of the default position. So why not ban dangerous thoughts by default. It's still Libertarian Paternalistic, because you can still opt out. And really, why would anybody need to have access to websites including "violent material", "extremist and terrorist related content", "anorexia and eating disorder websites", "suicide related websites", or websites mentioning alcohol and smoking. We know those are all bad things; the government tells us so. Switching the default is a perfect Thaler-inspired nudge.

And it's not just me calling this a nudge policy.
The Independent notes the filters implemented by the four main private internet providers will be "default-on," meaning users must explicitly choose to turn them off. Users can decide to keep certain filters while turning others off.
Making the filters default means most people will keep them, according to Open Rights Group Executive Director Jim Killock. "We know that people stick with defaults: this is part of the idea behind 'nudge theory' and 'choice architecture' that is popular with Cameron."
According to Cameron, the new parental control settings will be turned on for all new broadband subscribers "by the end of the year."
If anything, I've been inadequately bathmophobic. Here's what I wrote about this exact policy back in 2010 when it first came up:
I'm going to bet that this doesn't wind up being implemented. Here's Hansard of the debate. The Minister seemed pretty lukewarm on pushing through regulatory changes; I'll guess that the latest reports are bargaining position for either getting ISPs to do more to push subsidized Net Nanny variants to folks who want them, or for concessions on other issues altogether. Dick Puddlecote is livid (rightly so) but I'd be shorting the iPredict contract at prices higher than $0.35. It's pretty disgusting that a coalition that includes the Lib Dems would be even making noises in this direction.
I was wrong.

Since we're into the range of policies-I'd-previously-thought-implausible, let's turn back to my review of Nudge in the Christchurch Press a few years ago, in which I wondered whether Sunstein and Thaler would be happy with choice architecture at the ballot box.
While Sunstein worries about our decisions over investment plans or our weakness of will at the buffet table, I worry about our decisions at the voting booth. We vote infrequently, there’s no feedback from our personal voting decision to any policy outcome (unless you happen to hit Lotto by breaking a tie), the voting decision is complex and we may have little grasp of the issues at stake let alone our own positions on those issues. In my own research, I’ve found that only about half of voters in 2005 could place National, United Future, and Labour correctly on a left-right spectrum, for example, and that individuals’ political knowledge independently affects their policy and party preferences even after controlling for income, education, race, employment, gender, and other demographic characteristics. And so I think we (by which I mean you) need a nudge. Under my libertarian paternalistic voting system, your electoral enrolment would be linked to your census details. You’d then answer a brief questionnaire when entering a computerized voting booth, and I’d tell you, through the computer’s algorithms, for whom you should vote. Trust me: I’d be choosing the option that really would be best for you, if you only understood all of the policies supported by each of the parties and had a PhD economist’s understanding of the likely effects of these policies. You’d still be free to pick some other candidate or party, but you’d have to first reject the default choice I’d pick for you. The remaining options would then be presented in an order designed to maximize the chances of your choosing the next best option.

I trust that you find this kind of scheme repugnant. I’d find it great, so long as I got to be the choice architect.
I'd given this as reductio; I wonder whether Cameron mightn't be thinking about implementing it.

Ideas have consequences.

Update: James, in comments, notes that part of this is already up for mobile broadband:
This filter is already in effect in the UK for all "mobile broadband". It's called "content lock" - and about e.g half Lindsay Mitchell's blogroll is classified as adult content by the UK's current filter (Offsetting Behaviour is currently OK).
How do you unlock it - easy. Go to a website and enter your details. All you need is a credit card. A UK credit card. With a UK Postcode. Which, of course, I don't have.
I'm glad that Offsetting isn't on Cameron's banned list as yet.

Previously:

Friday, 19 October 2012

Healthist fantasizing

I'd put low(ish) odds on these fantasies coming true. But that they're getting airtime in the New England Journal of Medicine is a tad worrying [HT: Chris Snowdon]. Mello and Cohen there argue that the Supreme Court decision in ACA gives the federal government more scope for achieving public health objectives through the tax system, and that this is a good thing.
The federal government has long used taxes to achieve public health goals, but in fairly limited ways. Taxes and tax penalties for individuals have generally been confined to products that cause health harms and associated social costs, such as tobacco, alcohol, firearms, and pollutants. Taxing of activities is rarer and confined to economic transactions; most recently, the ACA imposed a 10% tax on tanning-salon services. Broader use has been made of tax penalties and incentives to influence corporations to refrain from activities that threaten health, such as environmental contamination, or to engage in health-promoting activities such as subsidizing health insurance and wellness programs.
Roberts's opinion appears to invite more targeted, assertive interventions to promote public health. For example, instead of merely taxing tobacco sales, the federal government could require individuals to pay a tax penalty unless they declare that they haven't used tobacco products during the year. It could give a tax credit to people who submit documentation that their body-mass index is in the normal range or has decreased during the year or to diabetic persons who document that their glycated hemoglobin levels are controlled. It could tax individuals who fail to purchase gym memberships. It could require taxpayers to complete an annual health improvement plan with their physician in order to obtain a tax credit, though that might be challenged under other parts of the Constitution. These strategies depart from traditional uses of taxes by targeting omissions and noncommercial activities that are important drivers of chronic disease.
State and local governments, too, can pursue such strategies. Levying taxes to achieve regulatory aims — even taxes resembling mandates with penalties — is well within their police-power authority. They've wielded this power to impose various “sin” taxes on unhealthful products, as well as in more innovative ways, such as the insurance mandate with an SRP that Massachusetts pioneered. The Court ruling makes clear that the federal government can enter territory historically dominated by the states.
Sin taxes are unbounded in domain when anything that's less than perfectly healthy is a sin. So far so awful. But this next paragraph... egads.
Taxes are an appealing mechanism of public health regulation for several reasons. They proffer “nudges” and market-based solutions as alternatives to rigid mandates. Tax-based policies like the SRP retain an element of voluntariness, especially since lawmakers can calibrate the tax penalty to the importance of the desired behavior change. There's strong evidence that taxes affect consumption decisions. Finally, tax strategies are “win–win” for governments, either leading people to take health-enhancing steps or collecting revenue to fund health or other programs.
I hope that Richard Thaler goes and smacks these guys around. This isn't a nudge, it's a shove. Much ill is advocated in Thaler's name. Constrained to the exact mechanism that Thaler laid out, his libertarian paternalism recommendation can hardly be faulted. But it was never, ever, ever going to be constrained to that range. Thaler himself has never been clear enough on the line between a nudge and a shove.

As always, the healthists see the main obstacle as being the powerful moneyed interests:
Yet even when proposed taxes make sense, they can be soundly defeated. Although tax credits, exemptions, and deductions tend to be well received, new taxes and penalties do not. Strong industry opposition is a formidable obstacle even when public sentiment isn't. Aggressive lobbying by the beverage industry, for example, defeated a soft-drink tax proposed for inclusion in the ACA, and a blitzkrieg by the tobacco industry sank California's Proposition 29, which would have hiked cigarette taxes by $1.00 a pack, with revenues allocated for cancer research. States, however, have sometimes had remarkable success in enacting new taxes; for example, New York passed a $1.60-per-pack increase in its cigarette tax in 2010, bringing the total state tax to $4.35 per pack, and 47 states have collectively increased their cigarette-tax rates more than 100 times in the past decade.4
And, finally, the beast that slouches towards Washington to be born:
Although no constitutional barriers block expanded federal use of tax-based strategies, political obstacles remain. Some interventions we've outlined would never survive the political process, given prevailing antitax sentiment. But such sentiment may fade as the economy recovers or become less important if Democrats regain control of the House of Representatives. Moreover, the Court decision affirms that Congress can facilitate passage of a tax by calling it something less controversial. The Court has highlighted an opportunity for passing creative new public health laws, authorized by the taxing power; this opportunity now awaits its political moment. [emphasis added]
My odds-on bet for the path that leads to the political moment:

  1. More reports come out on the costs of unhealthy behaviours, either to the government directly via the public health system, or to the public via insurance mandates that insurers cannot fully internalise the costs of individual health-related decisions via actuarially fair premiums.
    • A bunch of these are highly inflated by including costs totally internal to the individual, but journalistic accounts never ever ever parse out the costs to the public versus costs to the individual; they're all "social costs" by virtue of assuming that unhealthy decisions can never be rational.
  2. Change in framing: it's not individual choice, it's internalising the costs that unhealthy decisions impose on others.
  3. Properly nudge-style policies will fail to make enough headway against the purported costs. Harder nudges then are needed, the grounds for intervention already having been conceded. 
  4. Tax measures then are proposed to internalise the externality, even though the purported externality is mostly, well, not an externality of any kind. These get described as nudges as well (see NEJM, above). 
That's the path we've been seeing here in New Zealand and Australia around alcohol and tobacco. 

Friday, 1 June 2012

Libertarian paternalism is an oxymoron

Remember those Sci-Fi movies from the '50s where the mad scientist, who only had the good of the world at heart and proceeded with his experiments despite much warning, winds up on his knees crying out to the sky "It wasn't supposed to be like this! This isn't what I wanted!"

Here's Richard Thaler on Mayor Bloomberg's ban on soda:
To which Justin Wolfers replied:
There isn't much distance from nudge to shove, especially when preference heterogeneity keeps nudgers from recognizing when they're shoving. Justin doesn't see it as too costly, likely because he isn't a soda-fan either. So how could it be costly? A religious nudger could similarly see it as pretty costless to encourage at-home parenting by banning having a nanny employed more than 3 days a week; a parent could always opt-out by hiring a second nanny.

Should we blame Thaler? Here's what he had to say two years ago when pressed on whether his libertarian paternalism wouldn't lead to bans and harder paternalism:
In short, the risk of the slippery slope appears to be a figment of Professor Whitman’s imagination, and clear evidence of his bathmophobia. To be fair to him, this phobia is hardly unique to him and Professor Rizzo. Slope-mongering is a well-worn political tool used by all sides in the political debate to debunk any idea they oppose.
...
Instead of slope-mongering we should evaluate proposals on their merits. (We devote a chapter of Nudge to an evaluation of the choice architecture used in Sweden’s social security experience.) Helping people make better choices, as judged by themselves, is really not a controversial goal, is it?
For all the protests that "nudge" was supposed to have strong opt-out provisions, it was awfully predictable that it wouldn't turn out that way in practice. I don't know how much time Thaler spent  working to ensure choice was preserved in his proposed choice-preserving architecture, but he did spend a bit of time telling libertarians that this sort of thing couldn't happen.

I still like my old review of Nudge, in which I proposed some nudges at the ballot-box:
While Sunstein worries about our decisions over investment plans or our weakness of will at the buffet table, I worry about our decisions at the voting booth. We vote infrequently, there’s no feedback from our personal voting decision to any policy outcome (unless you happen to hit Lotto by breaking a tie), the voting decision is complex and we may have little grasp of the issues at stake let alone our own positions on those issues. In my own research, I’ve found that only about half of voters in 2005 could place National, United Future, and Labour correctly on a left-right spectrum, for example, and that individuals’ political knowledge independently affects their policy and party preferences even after controlling for income, education, race, employment, gender, and other demographic characteristics. And so I think we (by which I mean you) need a nudge. Under my libertarian paternalistic voting system, your electoral enrolment would be linked to your census details. You’d then answer a brief questionnaire when entering a computerized voting booth, and I’d tell you, through the computer’s algorithms, for whom you should vote. Trust me: I’d be choosing the option that really would be best for you, if you only understood all of the policies supported by each of the parties and had a PhD economist’s understanding of the likely effects of these policies. You’d still be free to pick some other candidate or party, but you’d have to first reject the default choice I’d pick for you. The remaining options would then be presented in an order designed to maximize the chances of your choosing the next best option.

I trust that you find this kind of scheme repugnant. I’d find it great, so long as I got to be the choice architect. But opinions surely would vary, and I’d surely oppose the scheme if anyone other than me got to be the architect. The problem is that most of the arguments against my scheme cut similarly against Sunstein’s. More worrying, Sunstein seems pretty happy to blur the line between nudges and shoves: increasing cigarette taxes to discourage smoking is surely paternalistic, but is a bit stronger than a nudge. And, honestly, even the choice preserving nudges, like cars that nag you about the petrol you could save by easing up on the pedal, sound thoroughly unpleasant: I’d be nudged into learning enough automotive electronics to cut the right wires.

Update: It's occurred to me that I can't assume that everybody in the world has read the brilliant piece that started all this: Sunstein and Thaler's "Libertarian Paternalism Is Not An Oxymoron". Restricting it to choice of defaults, it's pretty tough to fault their argument. Except it never gets restricted to choice of defaults, now, does it?

Tuesday, 9 November 2010

UK Nudges

I've been pretty critical of Sunstein and Thaler's "Nudge" programme of libertarian paternalism. The emphasis seems to be pretty heavily on the latter. In theory, we could imagine replacing a lot of existing paternalistic regulations with nudge-style interventions that would reduce the total amount of coercion; however, it's seemed rather more likely that nudges would be added on to the existing set of regulations to increase the scope of paternalism rather than to make existing paternalism less onerous. Richard Thaler's objected that this isn't the point of libertarian paternalism:
The point of libertarian paternalism is precisely to devise policies that help but don’t intrude. I don’t like most pure paternalism either. But I really feel that the best way to fend off pure paternalism is by utilizing nudges instead of shoves, and by insisting that we keep the nudges as gentle as possible. Can any true libertarian really disagree?
But let's see how the UK Cabinet Office's Nudge Unit is implementing Thaler's advice.
The application of behavioural economics does not imply a paradigm shift in policy-making. It certainly does not mean giving up on conventional policy tools such as regulation, price signals and better information. Sophisticated behavioural programmes to reduce smoking or excess drinking don‟t imply giving up on taxes on cigarettes and alcohol. Similarly, programmes to persuade us to eat five portions of fruits or vegetables a day mean still have to address practical barriers such as how the lack of supply of fresh food in poorer neighbourhoods.
Nudges are complements to standard paternalistic regulation, not substitutes for it. The total amount of paternalism increases.

The document above-linked makes few policy recommendations other than that nudge approaches be considered as part of the policymaker's toolkit. But here are some of their general suggestions.
  • Use social norms to convey examples of desired behaviours: "Most people do X" as information campaigns
  • If taxes aren't normally incorporated into the sticker price on the shelf, start adding them into the sticker price of bad things so they'll appear to be pricier (alcohol).
  • Affect matters, so aim for emotional responses to interventions.
  • People desire positive self-image; link negative self-image to targeted behaviours (smoking causes impotence, etc)
  • Because some may not approve of government pushing folks towards desired behaviours, use public campaigns with messengers "that are not seen as agents of the state": peer to peer programmes, non-government organizations
  • Encourage "opt out" contributions as part of prices to help fund public projects. Examples given are Washington State's default $5 addition to drivers' licence fees for state parks. "This has implications for policy-makers either concerned with raising revenues in a non-compulsory manner, or with more nuanced ways of regulating and adjusting for market failures."
  • Priming folks with songs with "pro-social" lyrics increases altruistic behaviour, but "more research evidence is needed before such interventions could be recommended". I'd hate to guess where they'd wind up going with this. Reduced spectrum licence fees for radio stations playing a quota of pro-social music?
  • Social marketing drawing on affect to encourage blood donation and community volunteering
  • Bottle deposit schemes use loss aversion to encourage recycling; make them mandatory.
  • Train kids in schools to provide health information to parents and grandparents.
  • Evidence that interventions affecting individual behaviour, like workplace smoking bans, may indirectly affect their peer group's behaviour and consequently "may increase the legitimacy of policies that are used to target other unhealthy behaviours."
  • "Where confusion exists in pricing structures, it may be necessary to require companies to present their prices in structured formats that allow consumers to make the choice that is best for them."
  • They note, without recommendation, that among the factors that prime folks for excessive drinking are container size. Presumably this would lead to measures making the half-pint the standard default unit rather than the pint.
  • Mood can affect choices; decisions made in "hot" states may be regretted, so "it may be useful to have a formal 'cooling off' period that allows us to come back and reconsider our decision at a later date"; insurance and personal loans are given as example.
  • Mechanisms requiring casinos, including those online operating out of the UK, to exclude problem gamblers who've signed onto self-exclusion agreements. (recall that Julia Gillard has done this one worse in Australia)
  • Default opt-out private pension contributions.
They note that getting public approval for some of their proposals might be difficult; they recommend deliberative forums where citizen juries get to hear evidence and discuss issues, with results of those forums helping to build legitimacy for proposed policies. I wonder whether they've here hoping to exploit Cass Sunstein's work finding a strong severity shift in jury deliberations.
If the event has such legitimacy, then it could be seen that some personal responsibility has been preserved because people have been able to make a considered and informed decision to allow government to change their behaviour.
Nice. Libertarian paternalism has shifted from opt-out to "if we have a forum, it's ok".

As example of judging whether an intervention might be controversial, they suggest a potential policy of "acceptable eating contracts", where the obese would sign contracts mandating certain eating behaviours; they suggest this would be less controversial than policies using priming to achieve similar ends. The Acceptable Behaviour Contracts with which they're compared are given as alternative to prosecution for low-level offending; I'm not sure whether Acceptable Eating Contracts would be entirely voluntary or "nudge" voluntary, where the NHS doctor says you'll be sent to fat camp in the alternative (but it's still your choice).

I wonder how long it'll be until the Ludovico Technique is recommended as Nudge-based policy as alternative to worse things for folks whose preferences don't conform to those of the nudgers.

HT: John Humphries and Joseph Clark.