Skip to content
  • Type:
    Categories:
    Sub-Categories:

    Albert Hirschman argued that planners in underdeveloped nations often benefit from what he called the Hiding Hand, which hides, and thus makes planners unable to anticipate, serious obstacles to development projects. The Hiding Hand turns out to be benevolent, because once the obstacles arise, human creativity, which is also unanticipated, comes to the rescue. Planners would not have authorized the relevant projects if the Hiding Hand had not hidden the obstacles, but fortunately, unanticipated solutions often emerge. This brief essay, the foreword to a new Brookings Press edition of Hirschman’s Development Projects Observed, explores the relationship between Hirschman’s Hiding Hand and behavioral findings involving unrealistic optimism and the planning fallacy. It also discusses the relationship between behavioral economics and Hirschman’s preferred approach, which did not involve identification of testable hypotheses, but instead narrative descriptions of surprising social mechanisms. It also notes that the Benevolent Hiding Hand has an evil sibling, the Malevolent Hiding Hand.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Type:
    Categories:
    Sub-Categories:

    For policymakers, the idea of active choosing has a great deal of appeal, not least because it avoids the charge of paternalism. In many contexts, however, an insistence on active choosing is a form of paternalism, not an alternative to it. The reason is that people might choose not to choose. People are often aware that when the area is complex, difficult, and unfamiliar, active choosing may impose high costs on choosers, who might ultimately err and thus suffer serious harm. In such cases, there is a strong argument for a default rule rather than for active choosing. But if the area is one that choosers understand well, if people’s situations are diverse, and if policymakers lack the information that would enable them to devise accurate defaults, then active choosing would be best. A simple framework, based on the costs of decisions and the costs of errors, can provide solutions in a wide range of situations in which policymakers are deciding between active choosing and default rules.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Within the federal government, official decisions are a product of both substantive judgments and institutional constraints. With respect to discounting, current practice is governed by OMB Circular A-4 and the 2010 and 2013 technical support documents of the Interagency Working Group on the Social Cost of Carbon. Reconsideration of existing judgments must be subjected to a demanding process of internal review (and potentially to external review as well). Institutional constraints, including the need to obtain consensus, can impose obstacles to efforts to rethink existing practices, especially in an area like discounting, which is at once technical and highly controversial. Both decisions costs and error costs must be considered.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Technocratic judgments can have a “cooling function.” An insistent focus on the facts, and on the likely consequences of policies, might soften political divisions and produce consensus. Within the federal government, cost-benefit analysis is a prominent example of the cooling function of technocracy. But when undertaken prospectively, such analysis is sometimes speculative and can be error-prone; in addition, circumstances change, often in unanticipated ways. For this reason, retrospective analysis, designed to identify the actual rather than expected effects, has significant advantages. The “regulatory lookback,” first initiated in 2011 and undertaken within and throughout the executive branch, has considerable promise for simplifying the regulatory state, reducing cumulative burdens, and increasing net benefits. It deserves a prominent place in the next generation of regulatory practice. Recent history also suggests that it might well soften political divisions.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Type:
    Categories:
    Sub-Categories:

    The best-selling author of Simpler offers an argument for protecting people from their own mistakes.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    Behavioral findings, demonstrating human errors, have led some people to favor choice-preserving responses (“nudges”), and others to favor mandates and bans. If people’s choices lead them to err, it might seem puzzling, or even odd, to respond with solutions that insist on preserving freedom of choice. But mandates have serious problems of their own, even in the face of behavioral market failures. Mandates might not be able to handle heterogeneity; they might reflect limited knowledge on the part of public officials or the interests of powerful private groups; and they override freedom, potentially producing welfare losses and insulting individual dignity. It is true that in some cases, a behavioral market failure (such as a self-control problem) might justify a mandate on social welfare grounds, but on those very grounds, it makes sense to begin by examining choice-preserving approaches, which are far less intrusive and often highly effective.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Careful attention to choice architecture promises to open up new possibilities for environmental protection – possibilities that go well beyond, and that may be more effective than, the standard tools of economic incentives, mandates, and bans. How, for example, do consumers choose between environmentally-friendly products or services and alternatives that are potentially damaging to the environment but less expensive? The answer may well depend on the default rule. Indeed, green default rules may well be a more effective tool for altering outcomes than large economic incentives. The underlying reasons include the power of suggestion; inertia and procrastination; and loss aversion. If well-chosen, green defaults are likely to have large effects in reducing the economic and environmental harms associated with various products and activities. Such defaults may or may not be more expensive to consumers. In deciding whether to establish green defaults, choice architects should consider both consumer welfare and a wide range of other costs and benefits. Sometimes that assessment will argue strongly in favor of green defaults, particularly when both economic and environmental considerations point in their direction. But when choice architects lack relevant information, when interest-group maneuvering is a potential problem, and when externalities are not likely to be significant, active choosing, perhaps accompanied by various influences (including provision of relevant information), will usually be preferable to a green default.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    American constitutional law is dominated by four Constitutional Personae, who can be identified by their inclinations, their temperaments, their sensibilities, and their self-presentations. Indeed, many constitutional debates consist of stylized disagreements among the leading Personae: Heroes, Soldiers, Burkeans, and Mutes. Earl Warren is the iconic Hero; Oliver Wendell Holmes, Jr. is the iconic Soldier; Felix Frankfurter is the iconic Burkean; Alexander Bickel speaks for the Mute. At different times and places, and under different constitutional provisions, liberals and conservatives can be Heroes, Soldiers, Burkeans, or Mutes. While the appeal of one or another Persona undoubtedly has psychological and social sources, the choice of the appropriate Persona, in particular cases, should be a product of the proper theory of constitutional interpretation, which must in turn be chosen on the basis of pragmatic judgments about the magnitude and number of errors.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    We review literature examining the effects of laws and regulations that require public disclosure of information. These requirements are most sensibly imposed in situations characterized by misaligned incentives and asymmetric information between, for example, a buyer and seller or an advisor and advisee. We review the economic literature relevant to such disclosure and then discuss how different psychological factors complicate, and in some cases radically change, the economic predictions. For example, limited attention, motivated attention, and biased assessments of probability on the part of information recipients can significantly diminish, or even reverse, the intended effects of disclosure requirements. In many cases, disclosure does not much affect the recipients of the information but does significantly affect the behavior of the providers, sometimes for the better and sometimes for the worse. We review research suggesting that simplified disclosure, standardized disclosure, vivid disclosure, and social comparison information can all be used to enhance the effectiveness of disclosure policies.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    According to a standard principle in free speech law, the remedy for falsehoods is "more speech," not enforced silence. But empirical research demonstrates that corrections of falsehoods can actually backfire, by increasing people’s commitment to their inaccurate beliefs, and that presentation of balanced information can promote polarization, thus increasing preexisting social divisions. We attempt to explain these apparently puzzling phenomena by reference to what we call Asymmetric Bayesianism: purported corrections may be taken to establish the truth of the proposition that is being denied, and the same information can have diametrically opposite effects if those who receive it have opposing antecedent convictions. In our primary model, recipients whose beliefs are buttressed by the message, or a relevant part, rationally believe that it is true, while recipients whose beliefs are at odds with that message, or a relevant part, rationally believe that the message is false (and may reflect desperation). We also show that the same information can activate radically different memories and associated convictions, thus producing polarized responses to that information, or what we call a memory boomerang. These explanations help account for the potential influence of "surprising validators." Because such validators are credible to the relevant audience, they can reduce the likelihood of Asymmetric Bayesianism, thus ensuring that corrections are persuasive and also promoting agreement.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Behavioral economics is influencing regulatory initiatives in many nations, including the United States and the United Kingdom. The role of behavioral economics is likely to increase in the next generation, especially in light of the growing interest in low-cost, choice-preserving regulatory tools. Choice architecture—including default rules, simplification, norms, and disclosure—can affect outcomes even if material incentives are not involved. For example, default rules can have an even larger effect than significant economic incentives. Behavioral economics has helped to inform recent and emerging reforms in areas that include savings, finance, distracted driving, energy, climate change, obesity, education, poverty, health, and the environment.

  • Type:
    Categories:
    Sub-Categories:

    For over thirty years, Republican and Democratic presidents have required executive agencies to assess the costs and benefits of significant regulations, and to proceed only if the benefits justify the costs (to the extent permitted by law). The goals of the resulting processes have been to constrain unjustified regulation, to promote interagency coordination, and to allow a degree of centralized management of what can be a cumbersome bureaucratic apparatus. Unfortunately, state and local governments sometimes impose costly requirements, undisciplined by careful analysis of their likely consequences. New institutions at the state level, producing such analysis, could be highly beneficial, replacing processes sometimes driven by anecdotes, dogmas, emotions, and interest-group pressures with a form of Regulatory Moneyball.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Some of the most interesting discussions of cost-benefit analysis focus on exceptionally difficult problems, including catastrophic scenarios, “fat tails,” extreme uncertainty, intergenerational equity, and discounting over long time horizons. As it operates in the actual world of government practice, however, cost-benefit analysis usually does not need to explore the hardest questions, and when it does so, it tends to enlist standardized methods and tools. It is useful to approach cost-benefit analysis not in the abstract but from the bottom up, that is, by anchoring the discussion in specific scenarios involving trade-offs and valuations. Thirty-six stylized scenarios are presented here, alongside an exploration of how they might be handled in practice. Open issues are also discussed.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Review of Who's Bigger?: Where Historical Figures Really Rank, by Steven Skiena & Charles B. Ward (2013).

  • Type:
    Categories:
    Sub-Categories:

    Review of The Bet: Paul Ehrlich, Julian Simon, and Our Gamble Over Earth’s Future, by Paul Sabin (2013)).

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Cass R. Sunstein, How to Humble a Wingnut and Other Lessons from Behavioral Economics (Univ. Chi. Press 2013).

    Type:
    Categories:
    Sub-Categories:

    "In How to Humble a Wingnut, leading constitutional scholar, behavioral economist, and former Administrator of the White House Office of Information and Regulatory Affairs Cass R. Sunstein examines the unconventional impetuses behind human decision-making. Why it is that people often choose to behave so strangely? Sunstein’s incisive commentaries point to recent empirical findings to demonstrate how and why people convince themselves they are right despite evidence to the contrary; fear dangers they are unlikely to encounter; and ignore real risks. Mining developments in recent behavioral studies for tips on everything from holiday shopping and political biases to staying healthy and clear thinking in general, Sunstein nudges his reader towards that rarest of grounds—understanding." --Publisher

  • Type:
    Categories:
    Sub-Categories:

    Review of Scarcity: Why Having Too Little Means So Much, by Sendhil Mullainathan & Eldar Shafir (2013).

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Review of Happy Money: The Science of Smarter Spending, by Elizabeth Dunn & Michael Norton (2013).

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Type:
    Categories:
    Sub-Categories:

    A growing body of psychological and neuroscientific research links dual-process theories of cognition with moral reasoning (and implicitly to legal reasoning as well). The relevant research appears to show that at least some deontological judgments are connected with rapid, automatic, emotional processing, and that consequentialist judgments (including utilitarianism) are connected with slower, more deliberative thinking. These findings are consistent with the claim that deontological thinking is best understood as a moral heuristic – one that generally works well, but that also misfires. If this claim is right, it may have large implications for many debates in politics, morality, and law, including those involving the role of retribution, the free speech principle, religious liberty, the idea of fairness, and the legitimacy of cost-benefit analysis. Nonetheless, psychological and neuroscientific research cannot rule out the possibility that consequentialism is wrong and that deontology is right. It tells us about the psychology of moral and legal judgment, but it does no more. On the largest questions, it leaves moral and legal debates essentially as they were before.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Many people have wondered why the US government conducts cost-benefit analysis with close reference to the value of a statistical life (VSL). It is helpful to answer that question by reference to the “Easy Cases,” in which those who benefit from regulatory protection must pay for it. In such cases, WTP is usually the right foundation for VSL, because beneficiaries are hardly helped by being forced to pay for regulatory protection that they believe not to be in their interests. In the Easy Cases, arguments from both welfare and autonomy support the use of WTP and VSL (with potentially important qualifications involving imperfect information and behavioral market failures). The analysis is less straightforward in harder cases, in which beneficiaries do not pay for all of the cost of what they receive (and may pay little of that cost). In such cases, arguments from welfare and autonomy might not lead in any clear direction. In the harder cases, regulation might be justified on welfare grounds even if the cost-benefit analysis (based on VSL) suggests that it is not. In principle, a direct inquiry into welfare (the master concept) would be preferable to use of cost-benefit analysis. In the harder cases, distributional considerations might also count in favor of proceeding (as prioritarianism suggests). But at the current time, direct inquiries into welfare consequences and into distributional effects are challenging in practice, and hence regulators should generally rely on cost-benefit analysis, making welfarist adjustments, or adjustments based on distributional considerations, only in compelling cases.

  • Type:
    Categories:
    Sub-Categories:

    Review of Worldly Philosopher: The Odyssey of Albert O. Hirschman, by Jeremy Adelman (2013).

  • Type:
    Categories:
    Sub-Categories:

    Impersonal default rules, chosen by private or public institutions, establish settings and starting points for countless goods and activities -- cell phones, rental car agreements, computers, savings plans, health insurance, websites, privacy, and much more. Some of these rules do a great deal of good, but others might be poorly chosen, perhaps because the choice architects who select them are insufficiently informed, perhaps because they are self-interested, perhaps because one size does not fit all. The existence of heterogeneity argues against impersonal default rules. The obvious alternative to impersonal default rules, of particular interest when individual situations are diverse, is active choosing, by which people are asked or required to make decisions on their own. The choice between impersonal default rules and active choosing depends largely on the costs of decisions and the costs of errors. If active choosing were required in all contexts, people would quickly be overwhelmed; default rules save a great deal of time, making it possible to make other choices and in that sense promoting autonomy. Especially in complex and unfamiliar areas, impersonal default rules have significant advantages. But where people prefer to choose, and where learning is both feasible and important, active choosing may be best, especially if people’s situations are relevantly dissimilar. At the same time, it is increasingly possible for private and public institutions to produce highly personalized default rules, which reduce the problems with one-size-fits-all defaults. In principle, personalized default rules could be designed for every individual in the relevant population. Collection of the information that would allow accurate personalization might be burdensome and expensive, and might also raise serious questions about privacy. But at least when choice architects can be trusted, personalized default rules offer most (not all) of the advantages of active choosing without the disadvantages.

  • Type:
    Categories:
    Sub-Categories:

    Under existing Executive Orders, agencies are generally required to quantify both benefits and costs, and (to the extent permitted by law) to show that the former justify the latter. But when agencies lack relevant information, they cannot quantify certain benefits. If this is so, how should agencies decide whether and how to proceed? As a matter of actual practice, agencies often engage in “breakeven analysis,” by which they explore how high the nonquantifiable benefits would have to be in order for the benefits to justify the costs. Breakeven analysis is most useful when the agency is able to identity lower or upper bounds, either through point estimates or through an assessment of expected value. If lower and upper bounds are not readily available, agencies might be able to make progress by exploring comparison cases in which relevant values have already been assigned (such as for a statistical life). When agencies cannot identify lower or upper bounds, and when helpful comparisons are unavailable, breakeven analysis may not be a great deal more than a hunch or a conclusion, or perhaps (when agencies choose to proceed) a way of announcing a decision in favor of precaution. Even if so, breakeven analysis does have the virtues of helping to identify what information is missing, of specifying the conditions under which benefits would justify costs (“conditional justification”), and of explaining why some cases are especially hard. An understanding of breakeven analysis in regulatory policy has implications for how to approach nonquantifiable variables in many domains of public policy and ordinary life.

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Since its creation in 1980, the Office of Information and Regulatory Affairs (OIRA), a part of the Office of Management and Budget, has become a well-established institution within the Executive Office of the President. This Commentary, based on public documents and the author’s experience as OIRA Administrator from 2009 to 2012, attempts to correct some pervasive misunderstandings and to describe OIRA’s actual role. Perhaps above all, OIRA operates as an information aggregator. One of OIRA’s chief functions is to collect widely dispersed information – information that is held by those within the Executive Office of the President, relevant agencies and departments, state and local governments, and the public as a whole. Costs and benefits are important, and OIRA does focus closely on them (as do others within the executive branch, particularly the National Economic Council and the Council of Economic Advisers), especially for economically significant rules. But for most rules, the analysis of costs and benefits is not the dominant issue in the OIRA process. Much of OIRA’s day-to-day work is devoted to helping agencies work through interagency concerns, promoting the receipt of public comments on a wide range of issues and options (for proposed rules), ensuring discussion and consideration of relevant alternatives, promoting consideration of public comments (for final rules), and helping to ensure resolution of questions of law, including questions of administrative procedure, by engaging relevant lawyers in the executive branch. OIRA seeks to operate as a guardian of a well-functioning administrative process, and much of what it does is closely connected to that role.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    A growing body of evidence demonstrates that in some contexts and for identifiable reasons, people make choices that are not in their interest, even when the stakes are high. Policymakers in a number of nations, including the United States and the United Kingdom, have used this evidence to inform regulatory initiatives and choice architecture. Both the resulting actions and the relevant findings have raised the possibility that an understanding of human errors opens greater space for paternalism (and thus raises doubts about John Stuart Mill’s famous “harm principle”). Such errors can be thought of as behavioral market failures, and they are an important supplement to the standard account of market failures. Actions taken to correct behavioral market failures can sometimes be justified, even if the resulting actions are paternalistic. While hard forms of paternalism cannot be ruled out of bounds, a general principle of behaviorally informed regulation—its first and only law—is that the appropriate responses to behavioral market failures usually consist of nudges, generally in the form of disclosure, warnings, and default rules. Some people invoke autonomy as an objection to paternalism, but the strongest objections are welfarist in character. Official action may fail to respect heterogeneity, may diminish learning and self-help, may be subject to pressures from self-interested private groups (the problem of “behavioral public choice”), and may reflect the same errors that ordinary people make. Where paternalism is optional, the objections, though plausible, are unhelpfully abstract; they depend on empirical assumptions that may not hold in identifiable contexts. There are many opportunities for improving human welfare through improved choice architecture.

  • Type:
    Categories:
    Sub-Categories:

    Links:

  • Type:
    Categories:
    Sub-Categories:

    Many studies find that presentation of balanced information, offering competing positions, can promote polarization and thus increase preexisting social divisions. We offer two explanations for this apparently puzzling phenomenon. The first involves what we call asymmetric Bayesianism: the same information can have diametrically opposite effects if those who receive it have opposing antecedent convictions. Recipients whose beliefs are buttressed by the message, or a relevant part, rationally believe that it is true, while recipients whose beliefs are at odds with that message, or a relevant part, rationally believe that the message is false (and may reflect desperation). The second explanation is that the same information can activate radically different memories and associated convictions, thus producing polarized responses to that information, or what we call a memory boomerang. An understanding of these explanations reveals when balanced news will produce unbalanced views. The explanations also account for the potential influence of "surprising validators." Because such validators are credible to the relevant audience, they can reduce the likelihood of asymmetric Bayesianism, thus promoting agreement.

  • Type:
    Categories:
    Sub-Categories:

    Review of Against Autonomy: Justifying Coercive Paternalism, by Sarah Conly (2012).

  • Type:
    Categories:
    Sub-Categories:

    Links:

    According to Article II, Section 2, Clause 3 of the U.S. Constitution (sometimes referred to as the “Recess Appointments Clause”), “The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” This past January, the D.C. Circuit held in Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), that the President’s recess appointment power extends only to recesses between sessions of the Senate — not within a single session — and only to positions that become vacant during such intersession recesses.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    Many judges are minimalists. They favor rulings that are narrow, in the sense that they govern only the circumstances of the particular case, and also shallow, in the sense that they do not accept a deep theory of the legal provision at issue. In law, narrow and shallow decisions have real advantages insofar as they reduce both decision costs and error costs; make space for democratic engagement on fundamental questions; and reflect a norm of civic respect. In many cases, however, minimalism is hard to justify in these ways. Sometimes small steps increase the aggregate costs of decisions; sometimes they produce large errors, especially when they export decision-making burdens to fallible people. Predictability is an important variable, and minimalist decisions can compromise predictability. Sometimes large, nonminimalist steps serve democratic values and do not compromise the norm of civic respect. It follows that the justifications for minimalism are unconvincing in many contexts. The debate between minimalists and their adversaries is closely related to the debate between those who prefer standards and those who prefer rules, though there are some important differences.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    Many people have argued for cost-benefit analysis on economic grounds. In their view, a primary goal of regulation is to promote economic efficiency, and cost-benefit analysis is admirably well suited to that goal. Arguments of this kind have been met with sharp criticism from those who reject the efficiency criterion or who believe that in practice, cost-benefit analysis is likely to produce a kind of regulatory paralysis (“paralysis by analysis”) or to represent a bow in the direction of well-organized private groups.

  • Type:
    Categories:
    Sub-Categories:

    Simpler government arrived four years ago. It helped put money in your pocket. It saved hours of your time. It improved your children’s diet, lengthened your life span, and benefited businesses large and small. It did so by issuing fewer regulations, by insisting on smarter regulations, and by eliminating or improving old regulations. Cass R. Sunstein, as administrator of the most powerful White House office you’ve never heard of, oversaw it and explains how it works, why government will never be the same again (thank goodness), and what must happen in the future. Cutting-edge research in behavioral economics has influenced business and politics. Long at the forefront of that research, Sunstein, for three years President Obama’s “regulatory czar” heading the White House Office of Information and Regulatory Affairs, oversaw a far-reaching restructuring of America’s regulatory state. In this highly anticipated book, Sunstein pulls back the curtain to show what was done, why Americans are better off as a result, and what the future has in store. The evidence is all around you, and more is coming soon. Simplified mortgages and student loan applications. Scorecards for colleges and universities. Improved labeling of food and energy-efficient appliances and cars. Calories printed on chain restaurant menus. Healthier food in public schools. Backed by historic executive orders ensuring transparency and accountability, simpler government can be found in new initiatives that save money and time, improve health, and lengthen lives. Simpler: The Future of Government will transform what you think government can and should accomplish.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions. The person who creates that environment is, in our terminology, a choice architect. In this paper we analyze some of the tools that are available to choice architects. Our goal is to show how choice architecture can be used to help nudge people to make better choices (as judged by themselves) without forcing certain outcomes upon anyone, a philosophy we call libertarian paternalism. The tools we highlight are: defaults, expecting error, understanding mappings, giving feedback, structuring complex choices, and creating incentives.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    When risks threaten, cognitive mechanisms bias people toward action or inaction. Fearsome risks are highly available. The availability bias tells us that this leads people to overestimate their frequency. Therefore, they also overreact to curtail the likelihood or consequences of such risks. More generally, fear can paralyze efforts to think clearly about risks. We draw on a range of environmental risks to show the following: (1) Fear leads us to neglect probability of occurrence; (2) As fearsome environmental risks are usually imposed by others (as externalities), indignation stirs excess reaction; (3) We often misperceive or miscalculate such risks. Two experiments demonstrate probability neglect when fearsome risks arise: (a) willingness-to-pay to eliminate the cancer risk from arsenic in water (described in vivid terms) did not vary despite a 10-fold variation in risk; (b) the willingness-to-accept price for a painful but non dangerous electric shock did not vary between a 1 and 100% chance. Possible explanations relate to the role of the amygdala in impairing cognitive brain function. Government and the law, both made by mortals and both responding to public pressures, similarly neglect probabilities for fearsome risks. Examples relating to shark attacks, Love Canal, alar and terrorism are discussed.

  • Type:
    Categories:
    Sub-Categories:

  • Type:
    Categories:
    Sub-Categories:

    In recent years, social scientists have been incorporating empirical findings about human behavior into economic models. These findings offer important insights for thinking about regulation and its likely consequences. They also offer some suggestions about the appropriate design of effective, low-cost, choice-preserving approaches to regulatory problems, including disclosure requirements, default rules, and simplification. A general lesson is that small, inexpensive policy initiatives can have large and highly beneficial effects. In the United States, a large number of recent practices and reforms reflect an appreciation of this lesson. They also reflect an understanding of the need to ensure that regulations have strong empirical foundations, both through careful analysis of costs and benefits in advance and through retrospective review of what works and what does not.

  • Type:
    Categories:
    Sub-Categories:

    Symposium on Regulatory Reform in the EU and the US.

  • Type:
    Categories:
    Sub-Categories:

    Links:

    The concept of ‘irreversibility’ plays a large role in many domains, including public health, medical practice and environmental protection. Indeed, the concept is explicit in some statements of the precautionary principle. But the idea of irreversibility remains poorly defined. Because of the flow of time, any loss is, in a sense, irreversible. On one approach, irreversibility might be understood as a reference to the value associated with taking precautionary steps that maintain flexibility for an uncertain future (‘option value’). On another approach, irreversibility might be understood to refer to the qualitatively distinctive and even unique nature of certain losses—a point that raises a claim about incommensurability. The two conceptions fit different problems. These ideas can be applied to a wide assortment of environmental and public health questions, including overuse of antibiotics, genetic modification of food, avian flu and climate change.

  • Type:
    Categories:
    Sub-Categories:

    "Since the earliest days of philosophy, thinkers have debated the meaning of the term happiness and the nature of the good life. But it is only in recent years that the study of happiness—or “hedonics”—has developed into a formal field of inquiry, cutting across a broad range of disciplines and offering insights into a variety of crucial questions of law and public policy. Law and Happiness brings together the best and most influential thinkers in the field to explore the question of what makes up happiness—and what factors can be demonstrated to increase or decrease it. Martha Nussbaum offers an account of the way that hedonics can productively be applied to psychology, Cass R. Sunstein considers the unexpected relationship between happiness and health problems, Matthew Adler and Eric A. Posner view hedonics through the lens of cost-benefit analysis, David A. Weisbach considers the relationship between happiness and taxation, and Mark A. Cohen examines the role crime—and fear of crime—can play in people’s assessment of their happiness, and much more. The result is a kaleidoscopic overview of this increasingly prominent field, offering surprising new perspectives and incisive analyses that will have profound implications on public policy." --Publisher