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 On the contrary, once society got to see prohibition in action, the law was eventually repealed.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:

• UK Nudges
• Libertarian Paternalism Is An Oxymoron
• From Nudge to Shove
• Nudge Nudge
• Nudge thyself
• Wink Wink, nudge nudge, say no more (in which this porn nudge was first discussed)

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. 

From nudge to shove

David Friedman reminds me about his great post from 2009. I particularly liked his closing paragraph:

An optional charge where the default choice is to pay it is the sort of thing Sunstein and Thaler propose, a nudge in the direction of doing what those responsible believe, possibly correctly, that most of those nudged would want to do if they took the time to think about it. But the people constructing the choice architecture know what result they want to get, they believe they are doing good and so not constrained by what they themselves would consider proper principles of morality and honesty in a commercial context, so it is very easy to make the "wrong" choice more and more difficult and obscure until what is optional in theory becomes mandatory in practice.

Add in ambiguity about what's good enough as opt-out provision and nudge seems likely to drift quickly to shoves.

Cornell's Brian Wansink and David Just worry that the large soda ban won't just be ineffective:

We've dedicated our research careers to helping people eat better, contributing to Smarter School Lunchrooms, 100-calorie packs, and the 2010 Dietary Guidelines. We fear that this ban on large soft drinks will be a huge setback to fighting obesity for two reasons: 1) unless it succeeds, it will poison the water for better solutions, and 2) it won't succeed.

First, consider the McLean Effect. McDonald's launches the visible and controversial low-calorie hamburger. It failed, becoming a byword for restaurants for the next 15 years. No one would dare introduce low-calorie fast-food offerings because "Look what happened to the McLean."

Banning larger sizes is a visible and controversial idea. If it fails, no one will trust that the next big—and perhaps better—idea will work because "Look what happened in New York City." It poisons the water for ideas that may have more potential.

This might be the case in New York, where this ban is looking particularly unpopular. For popular but ineffective bans, I worry we instead make more heavy-handed regulation more likely when the softer touch fails. Adam Ozimeck asks* current paternalists what measures they'd deem too draconian if implemented sometime down the line; if we look at the slippery slope in tobacco regulation, it's the right question to ask. Just don't expect the goalpoasts to stay put.

*  Look for the post "A Challenge for Paternalists", 5 June.

Paternalism - for children, and for the lower orders

Will Wilkinson's excellent post at The Economist highlights the less-than-hidden classist underpinnings of New York's soda ban.

GIGANTIC sugared soft drinks are disgusting. Let's just get that out of the way. Can we also agree that the high-calorie drinks rich people like to consume—red wine, artisanal beer, caramel frappuccinos, mango smoothies with wheatgrass and a protein boost—aren't at all disgusting? At any rate, we yuppie pinot-drinkers know how to look after ourselves. In contrast, the wretched classless hordes, many of them being of dubious heritage, lack the refinement of taste necessary to make autonomy unobjectionable. Those who abuse their liberty, filling the sidewalks of our great cities with repulsive shuffling blimps, can't expect to keep it, can they? 

But should we really be surprised that paternalistic regulation would be so-targeted? When I work backwards from the set of paternalistic regulations to the most plausible underlying motives, I still wind up with the conclusion I'd reached a year ago:

The behaviours of the lower orders disgust me [the regulator]. They give in to base animalistic sensory pleasures. We need to fix them. Tax and regulate them until they stop being noticeably annoying. We'll say it's for their own good, but we'll really stick to the kinds of things that annoy us. So things like making sure everyone in low decile schools takes a course in basic personal finance so they understand how hire-purchase works and avoid making mistakes with loans, we'll not worry about that. But we'll tax fatty foods because obese people are unpleasant to look at and we'll tax the kinds of booze that the lower orders drink because few things are more unpleasant than poor drunk idiots.

It's not implausible that poorer cohorts are more in need of paternalistic regulation than higher income cohorts, if only because of differences in intelligence across cohorts. Do flip back to the linked post and consider the stylized facts there presented:

• The kinds of alcohol that poor people like get taxed far more heavily relative to overall price than do the kinds of alcohol that rich people like. That isn't unreasonable where the external costs of alcohol use are proportionate to the pure alcohol consumed, but when we start going for minimum price regulation and specific taxes on RTDs, it looks an awful lot more targeted.
• Official government agencies ignore the evidence on the J-curve and instead promote an abstinence only line. The only sense I can make of this is the noble lie: dumb people who'd otherwise be tempted to drink too much if they drink at all shouldn't drink; smart people can see through the official line.
• The war on drugs is more heavily enforced against poor people than against rich people.
• "Fat taxes" would disproportionately hit the poor. The tax will be a greater portion of the purchase price of hamburger meat compared to scotch fillet, even if the fat proportions are identical. And, the higher the proportion of ingredient cost in total price (as opposed to say the input of a high quality chef), the greater will be the the proportionate burden of an ingredient tax. Any bets on whether the price of a McDonald's burger goes up by more, percentage-wise, than a Ruth's Chris steak if we put in a fat tax?
• If the point of an "internality" tax like a fat tax is to force the individual to weigh the health costs to himself when purchasing, we'd need to scale those taxes by income if we think that rich people respond less to a small per unit increase in food prices than do poor people but suffer from similar behavioural anomalies; if we think that smart rich people are already weighing up those costs and compensating with increased exercise, then it doesn't matter that the per unit charge has less effect on the that group.
• There's all kinds of talk of mandating that fast food restaurants prominently display nutritional information and calorie counts. But folks tend to overestimate calorie counts at fast food places and underestimate them at the fancier restaurants where rich people eat. Because everybody expects fast food to have lots of calories.
• Finally, high IQ folks may be better able to route around whatever regulations are put in place.

It still looks to me as though paternalistic regulation is generally targeted at annoying behaviours exhibited by poor people, with sufficient route-arounds to keep the regulations from being too annoying for higher income cohorts. Bloomberg's soda restrictions were just a bit more blatant than most. Again, pulling from last year's post:

One of the better critiques of policy prescriptions based on behavioural economics is that it requires the modeller to step out of the system and to assume that he and the regulator who implements his policies are less subject to the problems ascribed to the regulation's subjects. Public choice folks worry that the paternalistic regulators suffer from the same behavioural foibles as everyone else but have worse incentives than do individuals who have to suffer the consequences of their own decisions. But if the implicit model is that all of this behavioural stuff really only applies to those people over there - poor dumb people, then there's good reason to keep the modeller out of the system.

Recall that Berggren found very few articles in behavioural economics advancing policy prescriptions consider the possibility that regulators might also be subject to behavioural anomalies; I think it's because of a general assumption that they do in fact sit above those they're regulating.

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 state the obvious: a BAN is not a NUDGE.The opposite in fact. So don't blame Bloomberg's ban on large soda cups on us.
— Richard H Thaler (@R_Thaler) May 31, 2012

To which Justin Wolfers replied:

.@R_Thaler Disagree. Bloomberg's not banning Soda. Indeed, the big cup still exists--it's two little ones. So this IS really a nudge.
— Justin Wolfers (@justinwolfers) May 31, 2012

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?