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Friday, October 28, 2016

This weekend, The Weekend Reader brings you Simpler: The Future Of Government by Cass Sunstein. Sunstein, a former administrator of the White House Office of Information and Regulatory Affairs  and current law professor at Harvard Law School and director of the Program on Behavioral Economics and Public Policy, explains how the government can benefit from emulating tactics from other industries. Sunstein says that the Obama administration caught on to this idea of becoming a Simpler government, and during his tenure in the White House had assisted in putting into effect policies that will shape our future and benefit Americans for years to come. 

You can purchase the book here.

Suppose that you are watching your favorite television show on channel 52, and after it ends, a show comes on that you don’t much like. Will you change the channel? If you are like a lot of other viewers, the answer is no. As shows get more popular, the shows that follow them get more popular too. Why? Because the channel that you are watching is the default—it is what you will continue to see if you do nothing at all. In Italy, a 10 percent increase in the popularity of a program has been found to lead to a 2 to 4 percent increase in the audience for the program that follows it. Unsurprisingly, television stations exploit this behavior; if they did not, they could lose up to 40 percent of their profits!

I propose the following aspiration for governments and the private sector alike, suitable for many domains: Make it automatic. For governments, the goal should be to ensure that if people do nothing at all, things will go well for them. And if people are required to take action, government should make the process is as simple and automatic as possible. Put differently, government should try to ensure, when it can, that what has to be done can be handled quickly and easily by System 1.

Many companies prosper because they excel at making things automatic. Part of the genius of Apple products is that their amazingly complex technologies build on simple patterns that people find intuitive and familiar. iPad and iPhone users never encounter complex instruction manuals filled with technical jargon and impenetrable diagrams. Why shouldn’t interactions with government be as simple as interactions with the iPad?

Both public and private institutions often require people to fill out complex forms before they can receive benefits, license, permits, grants, employment, entry, or security clearance. Are all of these really necessary? The Obama administration eliminated tens of millions of hours in paperwork requirements, and there is much more to get rid of. The federal government could eliminate many millions more—probably hundreds of millions. Time is money, and at a reasonable hourly rate, we are talking about billions of dollars in savings.

As one of my final acts in government, I directed all agencies to test their new forms to get a sense of the burdens they would impose in the real world, and then to figure out how to make them simpler. I also directed agencies to test their existing forms before renewing them, and to refine or simplify them on the basis of what they learn. (I confess that when requiring these steps, I had not forgotten my own frustration in filling out innumerable forms to qualify for federal employment.) If filling out forms cannot be automatic, at least it can be easy rather than hard and at least we can reduce the burden on those who must comply. If System 1 is unable to fill out a form, we should take steps to make sure that System 2 does not have to struggle.

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Deciding by Default

We have seen that stating points, or default rules, greatly affect outcomes. Here is a little example. Credit card machines have been installed in taxis in New York City. But what’s the tip? The machine gives you three options: 30 percent, 25 percent, or 20 percent. If you want to give less you can, but it takes a little work. Customers are effectively defaulted into one of the three options. There is every reason to think that tips are increasing as a result. Calculations are highly speculative, but according to one admittedly very rough assessment, the result has been to increase the average tip from 10 percent to 22 percent, which would mean that cabdrivers are taking in an addition $144 million each year.

In 2011, several of us organized a conference at the White House on information disclosure. Along with others, Dick Thaler, a friend and coauthor, sent out materials in advance to the 300 registrants, who came from more than sixty federal agencies. In those materials, people were told that unless they specifically requested otherwise, they would get the healthy lunch option. The materials explained: “Healthy options for lunch may include, but are not limited to, a bean sprout and soy-cheese sandwich on gluten-free soda bread.” The materials also offered a “special reward” to anyone who sent in an e-mail with the subject line: Full Disclosure.

The bean sprout and soy-cheese sandwich sounds pretty awful, and I doubt that many people actually wanted it. How many people do you think would opt out? As it happens, 80 percent of attendees failed to do so, and just 1 percent got that reward. On the morning of the event, the participants groaned when told that most of them had “selected” the soy-cheese sandwich for lunch. Now, Thaler is a nice guy, and he was joking, and people ended up with pretty good sandwiches. Still, it is noteworthy that the well-educated participants ended up signing on for a really unappealing sandwich (and missing out on a promised reward).

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  • Dominick Vila

    In the absence of a more viable option, government is the only way to guarantee our national security, protect and advance our interests, minimize the probability of fraud and abuse, and create and support social programs designed to help average Americans.
    From Social Security and MEDICARE to the best air traffic control system in the world, NASA, the Center for Disease Control and a myriad of programs that help every segment of our society, government has proven time and again that it can – and has – done what the private sector is reluctant to do.
    Are all government programs perfect? Far from it. Like everything else, there are always better, more effective, and more efficient ways to do things, but that does not mean our government programs should be dismantled, it means they should be changed to improve their effectiveness.
    If somebody has a better alternative, let’s hear it.

  • Elizabeth M. Lane

    what Bonnie said I am in shock that someone can profit $4051 in four weeks on the internet. did you read this website w­w­w.K­E­P­2.c­o­m

    • charleo1

      I’m in shock someone would pay $10.00 a minute, to have Bonnie,
      a 58 year old, 257 lb. Grandmother talk dirty to them! What idiot would
      put their personal information at risk by logging on to your website?
      Quit spamming!!!

    • barneybolt12

      Go away please. There I asked nicely.

  • charleo1

    If the average American were asked, as I’m sure they are from time to time. Do
    you think the role of government should be bigger, or smaller? You’re going to hear a lot people answering smaller. For one thing, people equate smaller government, with lower taxes, and you’ve got the makings of the Right Wing con job, being writ
    large, on the Country’s unsuspecting population. How many government bureaus was Rick Perry going to eliminate? So many he couldn’t remember them all. So, we can assume he’s carefully studied each agencies’ benefits, or lack thereof, and the costs of each. But the general outline of his careful study escaped him? No it didn’t. He, and those charlatans of his ilk, don’t do cost analysis studies. They are handed a script with a check stapled to it, and a list of government agencies that oversee their business practices, or their quality control, or worker safety adherence, and they would like to see them gone yesterday, if not sooner. Perry wound up looking like a buffoon. But, he really was trying to tell his corporate constituents, I know what you want, and I’m going to be 100% on board! Smaller government is how they sell it. It’s not how it works. What do I mean? I mean we have a Capitalism based economy. However, there are certain missing elements in Capitalism, which without them, it eventually impoverishes every society it encounters. It does this in several different ways. Using only the utensils at it’s disposal in it’s toolbox. First,
    it’s wage tools only work in one direction. There is no mitigation in Capitalism, to prevent the eventual elimination of the customers ability to buy the products businesses need to sell to succeed. The initial profits realized by one sector in
    market conditions allowing decreases in wages, will eventually filter throughout
    the economy, translated in softer demand, and generally lower profits for all.
    So, it’s back to the toolbox for Capitalism’s answer to softer demand.
    Consolidation. Buy your competitor’s market share. This will help in several ways.
    All of them eventually hurting the overall economy. And all of those positive attributes that competition brought to the marketplace are eliminated. Like price controls, wage supports. The ability of skilled employees to sell their labor to the highest bidder. And the driving profit motive, behind innovation. The consumer’s search to find, and buy that better mouse trap, for a better price, will be held up by
    a cornered market for years. Capitalism has no tools for preventing the eventual
    degradation of quality, service, wages, consumer choice, and the manipulation
    of the marketplace itself, caused by monopolization. There is no profit/investment
    quotient in Capitalism for public investment. That is to say, Capitalism has no mechanism in it’s toolbox that correlates a particular business’ investment in education, roads, public services like law enforcement, fire departments, food,
    and building inspection, and so forth. All work in concert to create the environment
    in which businesses may conduct their business. But to suggest the magic hand
    of the free market in, Adam Smith’s, “Wealth of Nations,” has a method that would
    allow the government to simply step back, and out of way, is absurd. And, to the
    extent we have listened to these pseudo half wits, . We have paid a high price indeed.

  • Allan Richardson

    Albert Einstein once said that an explanation of a scientific theory should be “as simple as possible, but NOT simpler.” This means that if an explanation is so simple that it is not ACCURATE, it becomes false, which is worse than being complicated. We should apply the same principle to government and taxes: do not confuse SMALL government with more EFFICIENT or more USEFUL government; and do not confuse SIMPLIFIED taxes with FAIR or LOWER taxes (there is an interesting discourse on the latter, delivered by a fictional political leader of the Galactic Empire, in the novel “Forward the Foundation” by Isaac Asimov; it is worth reading for the logical analysis of taxation).

    Furthermore, in asking whether a publicly financed product or service, such as making a toll bridge non-toll, is a NET waste of tax money, we should compare the average amount of the TAX each person must pay with the average amount of PRIVATE SECTOR expenses each person must pay if the public service is NOT available. In the case of the toll bridge, traffic is held up to pay tolls; people and vehicles “on the clock” such as trucks and salespeople lose revenue for themselves or their employers; fuel costs and pollution increase; higher pollution causes more illness and subsequent medical costs; and of course the tolls. Taking the tolls off costs the taxpayers about the same as the tolls ALONE. A more obvious example is the installation of disinfected water supplies with tax money, compared to providing possibly contaminated water to save tax money, but EVERY consumer having to buy a commercial water purifier (or, like the poor who cannot afford it, just GET SICK).

    As far as government forms are concerned, most forms try to put every possible combination of circumstances in the instructions, rather than keeping the non-default branches of the “decision tree” hidden until needed, possibly on separate forms. The conversational programs and web sites that help people fill out tax returns illustrate this principle; taxpayers who answer “no” to foreign accounts, for example, are spared the tedium of filling out the entire set of forms for handling them.

    So, simple government is not necessarily the best (absolute monarchy is the obvious example; no elections, no congress or parliament, no procedural rules, no checks or balances, just do what the king says or else). Simple taxation is not necessarily the best ($1000 per year per person would be coffee money for the rich but starvation for the poor). And simple “justice” is not necessarily the best either (Judge Roy Bean’s courtroom, instant hanging, then find out he was innocent, too bad).

    Always compare the cost of a proposed change in laws, in money, lives, happiness, social morale, to the ALTERNATIVES, not merely to the absence of the proposal.

    • charleo1

      I like that you break the issue down. Toll bridges, a good idea? Privately
      built, publicly used, toll bridges, a good idea, or no? One State was
      considering selling it’s toll roads for cash to a private party. Good Idea?
      Two things. It’s complicated. And since I haul some extremely valuable
      cargo, (me,) It’s important. If I’m using the bridge, and it falls, and I’m
      paralyzed for life. Can I sue a private owner, so my family is not bankrupted?
      Well, you have to ask. How about a State? Turns out, it’s not all that clear. First, how is the corporation that owns the bridge that failed, and paralyzed me, structured? Yes, it makes a difference. The State where it happened makes a difference. If that State inspects private roads, bridges, etc. Some actually don’t. Those, usually require the owner to hire his own engineering co. and send the State a report. So if you’re planning a family trip, you have some more research to do. Or, you could just cross your fingers, and look down at the cold muddy water, a hundred, maybe, a hundred fifty feet down, then up at the rusty girders, and rivets, and pray. The bridge over the
      Mississippi at Memphis, comes to mind. whew! Because some of these States have had a numbskull Governor like Rick Perry. and numbskull legislatures, like they have grown in the South for many years. And, I
      don’t believe they think about infrastructure like you, and I.