The latest Per Capita paper summarises the research on various cognitive biases (loss aversion, endowment effect, etc) and makes suggestions for policymakers about ‘choice architecture’ that helps people make better, less irrational, decisions. For example, default options of sensible choices where people have to opt out to avoid them preserves freedom to choose while encouraging decisions that will benefit most people.
It’s the kind of argument Cass Sunstein has been making for years, and on which he co-wrote with Richard Thaler a widely-cited 2008 book called Nudge: Improving Decisions About Health, Wealth and Happiness (which is strangely not cited in Jack Fuller’s Per Capita paper; if Sunstein did not coin ‘choice architecture’ he’s certainly its main populariser).
I don’t doubt that these cognitive biases exist, or that their negative effects can be reduced by ‘choice architecture’. But I do want to take issue with another example of the annoying rhetorical strategy of setting up straw man opponents:
Our institutions … are calibrated in the belief that we fully calculate the costs and benefits of every decision. … policymakers have had to ignore evidence that people make the same mistakes over and over again. They have assumed not only that everyone is perfectly rational, but that we have perfect self-control, and perfect self-interest. This is a common view of human nature. It is not entirely wrong. But it is narrow, out of touch with the latest science, and – applied to policy – it is damaging.
Fuller needs to get out of the neuroscience lab more often. The assumption that people are insufficiently rational to make good decisions, plans for the future and take prudent risks is at the core of modern government – why a vast array of potentially harmful actions are banned, why the welfare state compulsorily insures us against a huge number of life’s misfortunes, and why we are continuously lectured by state authorities to give up smoking, lose weight, practice safe sex etc etc.
Fuller’s ‘choice architecture’ could be turned around to partly de-nanny the nanny state. It is an alternative not to citizen irrationality but to default options of government services. For example, in schools we could assume that in a well-informed market (with government mandating or otherwise assisting in providing information, as is now happening) we can assume that most people are rational enough to make choices which are as good as or better than public education.
Well-designed ‘choice architecture’ is as much an alternative to under- as over-assuming citizen irrationality.