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.
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).
Default rules can be found in your health insurance plan, your savings plan, your credit card and cell phone agreements, and your mortgage. As we have also seen, the default rule tends to stick. Where people end up may well depend on where they start. Because System 1 often says, “yea, whatever,” and because System 2 has other things to do, the default has a big effect. (A noteworthy exception, on which more below: Upon marriage, the default rule is that people keep their surname. But the vast majority of women switch.)
An excellent way to make things automatic is to establish default rules that serve people’s interest even if they do nothing at all. In many contexts, important goals can be achieved through sensible default rules that preserve freedom of choice and that help to avoid the rigidity, cost, and unintended bad consequences of mandates and bans.
How much privacy do any of us have online? The answer may well be a function of the default rule. Suppose that a public or private institution—the Social Security Administration, your employer, your preferred search engine, Facebook, Twitter, your favorite website—says that your personal information will not be shared with anyone unless you click on a button on allow it. Now suppose instead that the same institution says that your personal information will be share with the entire world unless you click on a button to forbid it. Will the results be the same?
Far from it. If people are asked whether they want to opt in to information sharing, a lot of them will either ignore the question (“Yea, whatever”) or respond with some version of “No, you’ve got to be kidding.” In either case, the result is the same, and their information will not be shared. If people are asked whether they want to opt out of information sharing, a lot of them will again say, “Yeah, whatever,” especially if they have to think a little bit and read something complicated in order to switch. In that case, their information will be shared.
Consider the current settings on Chrome, the Google browser. If you want to use the web anonymously, you can, by clicking on “New Incognito Window.” But there is no option for selecting “Incognito” as your default setting. You have to click on it every time you open your browser. I predict, with a lot of confidence, that if people could opt into Incognito, making it their default setting, they would do exactly that. I also predict that if the default setting were Incognito, a lot of people would not opt out. Clearly Google believes that it is important to manipulate the default so as to permit, but discourage, the use of Incognito. Google may be right; maybe going to Incognito is not in people’s interest. The only point is that Google is acting as a choice architect, and its decisions have an impact.
During my painful confirmation process, I was accused of being in favor of stealing human organs. The accusation was (and remains) false (I am pleased to report). But return to a question to which I have briefly alluded: What is an easy way to increase the number of kidneys available for people who need them? The answer is automatic enrollment in a national organ donation program. Nations that “resume consent,” in the sense that they require people to opt out of a presumption that they are willing to donate their organs after death, end up with far higher donation rates than nations that ask people to opt in.
If you enjoyed this excerpt, you can purchase the full book here.
Simpler by Cass R. Sunstein. Copyright © 2013 by Cass Sunstein. Reprinted by permission of Simon & Schuster, Inc.