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Cass R. Sunstein, Ruining Popcorn? The Welfare Effects of Information, 58 J. Risk & Uncertainty 121 (2019).


Abstract: Some information is beneficial; it makes people’s lives go better. Some information is harmful; it makes people’s lives go worse. Some information has no welfare effects at all; people neither gain nor lose from it. Under prevailing executive orders, federal agencies must investigate the welfare effects of information by reference to cost-benefit analysis. Federal agencies have (1) claimed that quantification of benefits is essentially impossible; (2) engaged in “breakeven analysis”; (3) projected various endpoints, such as health benefits or purely economic savings; and (4) relied on private willingness to pay for the relevant information. All of these approaches run into serious objections. With respect to (4), people may lack the information that would permit them to make good decisions about how much to pay for (more) information; they may not know the welfare effects of information. Their tastes and values may shift over time, in part as a result of information. These points suggest the need to take the willingness-to-pay criterion with many grains of salt, and to learn more about the actual effects of information, and of the behavioral changes produced by information, on people’s experienced well-being.