Saturday, July 27, 2013

Simpler: Applying lessons from behavioral economics to legislation

  Cass  Sunstein is a law professor at Harvard. He was also the author of Nudge with Richard Tayler and the head of the White House Office of Information and Regulatory Affairs from 2009 till 2012. His latest book is called "Simpler" in which he discusses his time as administrator. The book provides an interesting perspective on the legislative process and the practice of politics (it took 8 months for Sunstein to have his appointment approved by the senate). Sunstein discusses how he tried to apply insights from behavioral economics (as discussed in Nudge) to the everyday practice of legislation. Many rules and regulations are very complex and confusing which lead to a lot of time wasted in filling out forms and making errors in decision making. Sunstein started the process to look at many types of legislation and find out how the legislation could be simplified so that better decisions can be made. Some people refer to Nudge as manipulation. Indeed insights on decision making can help to manipulate the way we frame the problem to make decisions the legislator wants. But this critique misses the main point. Any legislation creates a framing which affect the decisions people will make. If we develop legislation to stimulate cleaner energy use, healthy eating habits, safer roads and more effective health care it would be useful to learn from behavioral sciences to design effective implementations. It will be a waste of money and time not to try to implement legislation that people understand, where desirable outcomes are created if people do not make a decision, and does not costs much time for citizens and bureaucrats.By being more transparent (see also, we give more options to get feedback from citizens to develop tools to make better decisions and to provide feedback to the legislators.
The critique on nudge as manipulation probably caused by defining what is desirable behavior. That is the outcome of a political process for which we elect representatives to make decisions representing the preferences of majority. Nudge focuses on implementing the legislation given those political decisions. An interesting example is the healthy eating pyramid. This was a complex figure which did not provide much insight on what people need to do to eat healthy. Nevertheless this pyramid was widely used, especially in schools. The office of Sunstein developed a new way to visualize healthy eating habits with the "choose my plate" visual, which is clearer on what kind of behaviors are expected for a healthy eating habit.

If Sunstein is right, we can expect to see many changes in the way legislation is implemented. Based on insights how people actually make decisions, legislation might become more effective and less costly. Of course, whether this leads to the desired outcomes also depend on the political process which define the desired outcomes.