Thursday, September 25, 2014

Who Knows What Is Best for You?

For those who believe that government bureaucrats should control our lives behavioral economics has been a boon.

One of its eminences, Harvard Law Professor Cass Sunstein even worked in the Obama White House. There, he was trying to modernize the principles of government regulation. One must mention that the Obama administration has issued a veritable of business-crushing regulations. It has proven to be a champion at the game.

Along with economist Richard Thaler, Sunstein developed the concept of the nudge. Government would not force people to what was in their best interest. It would nudge them in the right direction. No more compulsion; just a little paternalistic push toward the good.

Of course, this assumes that other people know better than you what is good for you.

As many people noted at the time—among them Thomas Sowell—nothing about the theory obviates the fact that regulators might have a less-than-perfect understanding of what is best for all citizens. They, like the rest of us, are human beings, subject to error.

Great thinkers like Sunstein believe that bureaucrats can make more objective judgments because they are not corrupted by the profit motive. They possess more virtue because their intentions are less venal.

One would be correct to see creeping socialism in this bit of sophistry. Were we to respond to it, we would say that, lacking a profit motive, government officials need not heed the judgment of the marketplace and have no real interest in whether their nudging works.

Who is going to regulate the regulators?

You might respond that our elected representatives should be charged with the task, but we all know that government employees belong to unions and that the unions are in the business of buying politicians.

In any event, the objections against nudging are not only coming from libertarian and conservative circles. Recently, the New York Review of Books published a review of two books by Sunstein. The author, NYU and Oxford Professor Jeremy Waldron critiques the concept from a more classically liberal perspective.

Waldron’s review is excellent and well worth your attention. By the time he is finished there is very little about Sunstein’s nudgery that is still standing.

Waldron begins by noting that Sunstein has divided people into two classes: ordinary people who don’t know and those who do know. Plato would have called the latter group a guardian class, people who have privileged access to the world of big ideas and who therefore have the right to make decisions for the first group.

In Waldron’s words:

Let’s think about the dramatis personae of Sunstein’s account. There are, first of all, people, ordinary individuals with their heuristics, their intuitions, and their rules of thumb, with their laziness, their impulses, and their myopia. They have choices to make for themselves and their loved ones, and they make some of them well and many of them badly.

Then there are those whom Sunstein refers to as “we.” We know this, we know that, and we know better about the way ordinary people make their choices. We are the law professors and the behavioral economists who (a) understand human choosing and its foibles much better than members of the first group and (b) are in a position to design and manipulate the architecture of the choices that face ordinary folk. In other words, the members of this second group are endowed with a happy combination of power and expertise.

Of course regulators are people too. And like the rest of us, they are fallible. In the original Nudge, Sunstein engagingly confessed to many of the decisional foibles that Thaler exposed. Worse, though, is the fact that regulators are apt to make mistakes in their regulatory behavior: “For every bias identified for individuals, there is an accompanying bias in the public sphere.”

Continuing, Waldron raises the important issue of trust. If everyone is trying to nudge us in one way or another, why would we not become a nation of cynics? Are we being trained in the habit of mistrust?

In his words:

I am afraid there is very little awareness in these books about the problem of trust. Every day we are bombarded with offers whose choice architecture is manipulated, not necessarily in our favor. The latest deal from the phone company is designed to bamboozle us, and we may well want such blandishments regulated. But it is not clear whether the regulators themselves are trustworthy. Governments don’t just make mistakes; they sometimes set out deliberately to mislead us. The mendacity of elected officials is legendary and claims on our trust and credulity have often been squandered. It is against this background that we have to consider how nudging might be abused.

And then there are the questions of dignity and free will. It is certainly important that those who want to use behavioral economics to nudge us in one direction or other have no real use for free will.

What happens when we are no longer accorded the option of making a mistake, even of learning from a mistake?

Waldron writes:

Deeper even than this is a prickly concern about dignity. What becomes of the self-respect we invest in our own willed actions, flawed and misguided though they often are, when so many of our choices are manipulated to promote what someone else sees (perhaps rightly) as our best interest? Sunstein is well aware that many will see the rigging of choice through nudges as an affront to human dignity: I mean dignity in the sense of self-respect, an individual’s awareness of her own worth as a chooser. The term “dignity” did not appear in the book he wrote with Thaler, but in Why Nudge? Sunstein concedes that this objection is “intensely felt.” Practically everything he says about it, however, is an attempt to brush dignity aside.

He also suggests that nudging does not provide a moral education. It does not teach us how to make better decisions or how to correct our bad decisions:

Consider the earlier point about heuristics—the rules for behavior that we habitually follow. Nudging doesn’t teach me not to use inappropriate heuristics or to abandon irrational intuitions or outdated rules of thumb. It does not try to educate my choosing, for maybe I am unteachable. Instead it builds on my foibles. It manipulates my sense of the situation so that some heuristic—for example, a lazy feeling that I don’t need to think about saving for retirement—which is in principle inappropriate for the choice that I face, will still, thanks to a nudge, yield the answer that rational reflection would yield. Instead of teaching me to think actively about retirement, it takes advantage of my inertia. Instead of teaching me not to automatically choose the first item on the menu, it moves the objectively desirable items up to first place.

In the end, what Waldron calls a “nudge-world” deprives us of free will and human dignity… and it presumably does so for our own good. It is all about manipulating other people. How long can we expect that that will last?

He explains:

Still, it is another matter whether we should be so happy with what I have called “nudge-world.” In that world almost every decision is manipulated in this way. Choice architects nudge almost everything I choose and do, and this is complemented by the independent activity of marketers and salesmen, who nudge away furiously for their own benefit. I’m not sure I want to live in nudge-world, though—as a notoriously poor chooser—I appreciate the good-hearted and intelligent efforts of choice architects such as Sunstein to make my autonomous life a little bit better. I wish, though, that I could be made a better chooser rather than having someone on high take advantage (even for my own benefit) of my current thoughtlessness and my shabby intuitions.

10 comments:

Sam L. said...

They KNOW they know better than we what's best for us. We, however, know that what they know is not true. And they can't conceive of not knowing something themselves, only of us.

Anonymous said...

I've worried about govt over-reach since early 90s. We have so many laws, regs, mandates, etc, everybody is made an outlaw, or anyway law-breaker.

It's for our own good, of course. It started w/cigarettes. I was certain more would come.

When I left CivSvc, a word, glance, or other mild thing could get you fired. An "offended" person of a protected minority. I was reprimanded for saying "uvula", and again for describing the life cycle of the Botfly.

Health & Safety Czars are busy. High fructose, bicycle helmets, smoking in the open air, on and on. Now it's Football.

Freedom. Just another word now. --- Rich Lara

n.n said...

Our superiors operate in a universal frame, if only as a matter of perception. This is why they have conducted a war on alternative faiths, most notably against God (not gods)-centered faith.

There is, in fact, no conflict between people's faith in a hands-off, extra-universal entity and the scientific domain. The conflict arises when people question the legitimacy of mortal beings' claims to operate in a universal frame, thereby undermining these presumptive mortal gods' authority, status, and privilege.

Anyway, there are two competing faiths for people's attention and submission: atheism and theism. The former demands faith in mortal gods, which is often accompanied with promises of instant or immediate gratification (e.g. elective abortion, aka "pro-choice") without consequences. While the latter requires faith in a divine God, with a promise of a post-mortem judgment. The former is not a religion, since it does not have a moral foundation, which is especially enticing to libertines (i.e. amoral or immoral) individuals. The latter is a religion with a moral foundation established by a divine philosopher, God, who in every realization demands self-moderating behaviors, egos, etc.

The opiate of the masses is dissociation of risk, which is why the elites (e.g. mortal gods, "experts", regulators) are especially prone to suffer progressive corruption.

Ares Olympus said...

re: One must mention that the Obama administration has issued a veritable of business-crushing regulations.

Hmmmm... one must mention references when making abstract assertions. But of course such a statement is too vacuous to have any meaning, except cherry-picked facts whose context and alternatives are never considered.

David Brooks offers a different analysis, tired of the generic whine that anything government does must categorically make things worse, and that the best you can do is throw more wretches into the system.

http://www.twincities.com/columnists/ci_26599474/david-brooks-snap-out-it
------
This leadership crisis is eminently solvable:
1. we need to get over the childish notion that we don't need a responsible leadership class, that power can be wielded directly by the people.
2. The elite we do have has to acknowledge that privilege imposes duties.
3. Discredit political bigotry.
4. Put congressional reform atop the national agenda.

Politics is generally the same old tasks. Rejuvenating ailing institutions. Fighting barbarians to preserve world order. Today is nothing new. Instead of sliding into fatalism, it might be a good idea to address our problems without exaggerating our plight.

Ares Olympus said...

re: Still, it is another matter whether we should be so happy with what I have called “nudge-world.” In that world almost every decision is manipulated in this way. Choice architects nudge almost everything I choose and do, and this is complemented by the independent activity of marketers and salesmen, who nudge away furiously for their own benefit.

So nudge world is the Catholic world of angels and devils, one each soldier, trying to get us to be good, or get us to be naughty.

It reminds me of C.S. Lewis's fun contrasting quote: “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

So the "Virtue" of the devils is eventually they get bored and go away, and the "Vice" of the angels is they can't "leave well enough alone" and so mission creep will always overstep good sense.

So that's the question, even assuming "good sense" can be identified, how much is enough?

If a 80oz big gulp costs 10% more than a 16oz soda, the devil will say "Take the 80oz!" and the government angel will say "Tisk, tisk, don't be such a glutton." and limit cup sizes to 40oz, and allow people free refills as a compromise. But if 40oz is better than 80oz, why not 20oz?

Where does the angel decide how much gluttony on "empty calories" is enough?

But if you take away the angels, is the world a better place, even if the angels are excitable, and prone to exaggerated worries?

My own answer is we need a new class of citizen called "A matyre adult", and when you register for this status, it'll have a checkbox list of behaviors you wisht to indulge, you are free to make all the irresponsible choices you, like, but your insurance policy gets to set rates based on your declared behavior.

Maybe that'd get individual responsibility a little "nudge"?

Charles A Pennison said...

I'm not an advocate of government regulation to control individual behavior, but, I have to admit that I don't miss all that cigarette smoke, especially on planes.

Sam L. said...

Ares: "My own answer is we need a new class of citizen called "A matyre adult", and when you register for this status, it'll have a checkbox list of behaviors you wisht to indulge, you are free to make all the irresponsible choices you, like, but your insurance policy gets to set rates based on your declared behavior. " There's no chance that those who know better than us what's good for us will allow that to happen.

Anonymous said...

Charles: I agree. I've smoked since VN, and have always been solicitous of people's discomfort, and worked to mitigate it. Many other common courtesies have disappeared, viz: airline seat anti-recliners.

But smoking has become one of the Worst Secular Sins, far beyond reason. A Scarlet Letter of the Damned. I'm the new Leper & Pariah.

Which suits me fine. I'm retired, live alone, and have always been a Hermit. The cost is punitive, but I can handle it.

I'm also pleased to be a Sinner Liberals hate & despise. They need heretics too. -- Rich Lara

n.n said...

Charles A Pennison:

It's not an all or nothing proposition. Even libertarians recognize the value in third-party oversight. The problem arises when authority is used to establish or protect monopolies or behaviors. In a similar context we also have moral hazards which are often created through selective (i.e. unprincipled) exclusion.

For example, we are in the process of normalizing a single class of dysfunctional behaviors, while selectively excluding other dysfunctional and unproductive behaviors. This coerced (i.e. authoritarian) normalization has created moral hazards which will be left to future generations to reconcile.

Another example, the coerced normalization of premeditated murder (i.e. elective abortion) for causes other than self-defense, typically for pleasure. This granted exclusive extra-legal and moral rights to women so that they may terminate human evolution at their pleasure. Even worse, the state intervened to normalize contract murder/abortions in order to override natural consequences of a dysfunctional behavior. It was a political effort to secure support from the matriarchy (i.e. generational feminists).

David Foster said...

I may have linked this here before, but see my post The Scribes and the Idea of Freedom:

http://chicagoboyz.net/archives/35405.html