All Power to the Choice Architects

If we go by election results, and no better guide to our
national mood exists, the years of conservative hegemony in the United States
are over, at least for the foreseeable future.
Not only has the country elected a Democratic president and Congress,
but conservative ideas, which once had seemed so innovative, are increasingly
stale or non-existent. Meanwhile, the Republican Party seems both
directionless and leaderless.

Under such circumstances, a revival of liberalism is very
much on the "ideas agenda" for the United States. As that revival unfolds, it is important to
keep in mind that, while conservatism may not offer much of a challenge to
liberalism at the moment, other threats to it do exist. One of the most important comes from the
popularity of ideas associated with evolutionary psychology and behavioral
economics, both of which deny the key liberal idea that human beings are free
to live their lives in ways they collectively decide for themselves.

Liberalism is a political philosophy based on the premise
that autonomy and equality can best be achieved when each goal reinforces the
other. Liberals believe that people
ought to be in control of their lives.
But they are also convinced that no person can lead a life under her own
control if others cannot; if my ability to be safe or healthy is blocked
because poverty leads other people into crime or creates susceptibility to an
infectious disease, I have no real autonomy.

Autonomy and equality emerged as ideals in late eighteenth
century Europe in reaction to forces that
denied the legitimacy of both: religious orthodoxy and political
absolutism. Liberals were not opposed to
religion; indeed, one of England’ greatest liberal philosophers, John Locke,
was a devout Christian. Liberals instead
objected to the use of a powerful state apparatus to impose upon people only
one right way to live. If you are told
that God has planned your life and that disobedience can result in damnation or
death, you are neither free nor equal.

Because it separated church and state from the start, the United States
never developed an alliance between priest and prince. Even though this country has seen the rise of
various forms of conservative religion in recent years, those movements appear
to have peaked with the election of Barack Obama in 2008. Liberalism is safe from religious tyranny in
a way it never was two hundred years ago in Europe.

At the same time, the liberal goals of autonomy and equality
are threatened from another powerful intellectual force. This contemporary threat can best be called
scientism. In the long struggle against
religious and political oppression, liberal thinking and scientific discovery
were frequently linked; both required a commitment to reasoned discourse, open
methods of inquiry, conclusions based on empirical data, and skepticism toward
dogma. Understood in its broadest sense,
science and liberalism remain powerful allies in the contemporary world,
especially when conservative administrations shut their eyes to evidence of
global warming or approach questions of disease transmission through
ideological presuppositions.

But scientism is not the same as science. Scientism refers to the use of scientific
language or techniques in order to promote conclusions about human happiness or
welfare based on pure speculation. Two
forms of scientistic discourse have become especially popular in the United
States; as I have already mentioned, they are associated with evolutionary
psychology and behavioral economics.

Evolutionary psychology should not be confused with the
Darwinian theory of evolution. Darwin’s
explanation of how species evolve is as accepted a scientific theory as it is
possible to have; those calling themselves adherents to intelligent design who
spend so much time challenging the teaching of evolution in school are little
more than ideologues. It is one thing to
argue that species evolve and adapt over hugely long periods of time, however,
and another to claim that choices made by human beings in the here-and-now–whether
or not to worship, when and whom to marry, whether to break the law, where to
live–are the product of our biological or genetic make-up. Human choices are shaped by culture and
culture in turn is shaped by human choices.
To deny the importance of human culture, or to view culture as just
another form of genetic evolution, is to deny us our autonomy.

None of this would matter if adherents to evolutionary
psychology just wrote scientific articles for peer reviewed journals. But because the presumed findings of
evolutionary theory to everyday life are counterintuitive–who is not surprised
to learn that love is a purely biological adaptation?–this way of thinking
both influences best-selling writers such as Malcolm Gladwell and produces
books from academics that attract widespread readership, such as Daniel
Gilbert’s Stumbling Toward Happiness or
Helen Fisher’s Anatomy of Love. Gilbert’s book in particular captures the
evolutionary zeitgeist. "Each of us," he
writes, "is trapped in a place, a time, and a circumstance, and our attempts to
use our minds to transcend those boundaries are, more often than not,
ineffective." When it comes to thinking
on our own, there really is no such thing.

The irony of all this is that while conservative Christians
attack the Darwinian theory of evolution, sociobiology’s popularizers share
with the most right-wing religious believers an identical skepticism toward
human purpose. Both believe in
predestination. For the one we are
stained with sin. For the other we are
products of our genetic makeup. In
neither case can we change our destiny.
If conservative Christians and Darwinian popularizers would stop
accusing each other of bad faith, they might discover how much they have in
common.

Behavioral economics has also been storming the best-seller
lists of late and many of its leading practitioners turn to evolutionary
psychology to support their findings.
But the scientistic nature of behavioral economics is also illustrated
by its reliance on experiments frequently conducted under contrived
circumstances using unrepresentative subjects, which are then generalized with
abandon toward the human race as a whole.
Despite the fact that its findings are wildly speculative, however,
behavioral economics considers itself in possession of a revolutionary new way
of understanding human behavior. Its
conclusions are so important, its practitioners insist, that they offer us bold
new approaches to public policy. Because
the administration of Barack Obama includes a number of policymakers influenced
by this way of thinking, behavioral economics may well emerge in the near
future as a major force in shaping decisions over how health care, pensions,
and other important social goods are distributed.

To understand the importance of behavioral economics, it is
first necessary to say a world about the revolution in economic understanding
it seeks to displace. For well over a
century, economists have come to accept what is generally called the "neoclassical
paradigm." According to this approach,
human beings are fundamentally rational creatures who seek to maximize their
utility, generally by making choices that offer them the greatest rewards with
the least amount of pain. We can, the
theory continues, view the price people are willing to pay for something as
revealing what their preferences are; if they will pay more for a car, they
must really want it, but if they shift to mass transit when cars become too
expensive, they have a new preference.
The point is that their behavior is predictable and can be modeled using
sophisticated mathematical techniques.

The neoclassical paradigm is anything but problem-free. Its vision of human choice reduces all
behavior to matters of calculation, producing a vision of human rationality lacking
complexity and mystery. Politically, the
neoclassical model, especially in its most extreme form, is associated with
forms of libertarianism that prefer market-based policies and are skeptical
toward any kind of liberal reforms that rely on government. In its most conservative versions, neoclassical
economics elevates human rationality but downgrades social rationality: we are
free to plan our lives, but the moment we try to use our collective intelligence
to plan or guide our society toward ends chosen by ourselves, we are doomed to
fail.

Behavioral economists reject the neoclassical assumption
that we act out of rational self-interest.
The only thing predictable about us, they conclude from the experiments
they conduct, is that we are fundamentally irrational. We cannot judge the intrinsic value of the
things to which we are attracted. We are
miserable failures at understanding the risks posed by hurricanes or
illness. We are myopic, choosing for
pleasure things in the short run against our long-term interests. We think that medicines or wines that cost
more must work or taste better. Given
choices, we inevitably make the wrong ones.
If we are therefore left free to decide the best course of life for
ourselves, our choices may easily prove disastrous ones.

To compensate for our inherent flaws, behavioral economists
argue that we must be prevented from acting on our instincts. Their preferred way of doing so is through
what economist Richard Thaler and legal theorist (and head of the White House
Office of Information and Regulatory Affairs) Cass Sunstein call "libertarian
paternalism." As both scholars explained
in their best-selling book Nudge,
people should neither be left completely free to do what they want nor should
they be coerced by government. Instead
their choices should be constrained by organizing them according to design
principles that will produce the optimum outcome for themselves and their
society. Thaler and Sunstein call such
design a form of "choice architecture."
During the Russian Revolution, the Bolsheviks shouted, "All Power to the
Soviets." Under the rules of libertarian
paternalism, all power goes to the choice architects. The goal of the behavioral economists is to
give people choices over how much to save for their retirement or to recycle
their trash, but to design the choices in ways that will overcome the irrationality
and ignorance that shape individual decisions.

"Libertarian paternalism," Thaler and Sunstein write, "is
neither left nor right, neither Democratic nor Republican." They say this because they are convinced that
their approach combines the best of both the free market, long identified with
conservatives and libertarians, and government, upon which liberals and
Democrats tend to rely. But it many ways
it does the exact opposite: behavioral economics offers neither the commitment
to reason associated with the free market nor the transparency and
accountability that states demand.

Although the neoclassical paradigm reduces us all to
utilitarian calculators, it does contain one major advantage: it subscribes to
the conviction, long identified with the liberal tradition, that individuals
are possessed with reason, that they have both the confidence and the capacity
to figure out many of life’s key questions for themselves and to plan their lives
accordingly. If we argue instead, as
behavioral economists go out of their way to do, that we act like rats in mazes
unable to find a sensible path through life’s complexities, we are best off
avoiding bold ambition and new insight.
The underlying vision of human purpose contained in behavioral economics
is an impoverished one, far more depressing than the utilitarian calculator
associated with the neoclassical paradigm.
Instead of recognizing how complex human behavior really is, behavioral
economists replace the scientistic idea that we always act rationally with the
equally scientistic one that we always act irrationally.

At the very same time, the theory of government associated
with behavioral economics is more problematic than the one associated with the
regulatory state that developed during the New Deal. Liberals have always understood that
government can be a force for good.
Since government has coercive powers, liberals have also long accepted
that a person cannot be free to do anything he wants at any time. I might have a strong preference to own
slaves, but a liberal society will not allow me to, for such a freedom for me
would deny freedom to so many others.
Less dramatically but still importantly, I might desire to opt out of
the social security program and pay for my own old age assistance, but a
liberal will recognize that, if I am permitted to take such an action, the
principle that no one should face old age without public assistance would be
abrogated with consequences too severe for a liberal society to accept. All of this is what distinguishes liberalism
from libertarians; the latter believe that all actions by government rely on
coercion and therefore diminish our freedom.

Reliance on government, like any social practice, is never
perfect; we all know that regulations can become cumbersome, taxes high, and
bureaucracies inefficient. Yet
government acts in the name of all and is subject to rules of transparency that
makes its business, the public’s business, open to all. When government regulates, the rules are
published, appeals are possible, and changes can be sought. Liberals believe in what has been called
"positive freedom," or reliance on the power of government to help people lead
fuller lives. At the same time,
government must be viewed as the servant rather than the master of public
purpose, and this can only be accomplished through what nineteenth century
liberals called "publicity" and what we today call "transparency."

If the "libertarian" side of behavioral economics leans
toward the market, the "paternalism" side leans toward government. Yet unlike New Deal liberalism, which devoted
considerable attention to the form and function of government intervention,
behavioral economists such as Thaler and Sunstein lack an account of where,
how, and by whom key decisions will be made.
Choices, in their view, have an architecture but the policymaking
institutions that frame those choices do not.
In contrast to the well-worked-out science of public administration that
emerged from the New Deal, government in their scheme of things becomes a big
black box whose internal workings are as mysterious as the irrational minds all
human beings are cursed with possessing.

The fact of the matter is that policy proposals based on the
assumptions of behavioral economics have become a growth industry all their own
in Washington. The concrete measures designed by the Obama administration
to respond to the financial meltdown it inherited from the Bush years, for
example, possessed a distinct behavioral twist: the payroll tax cuts in the
stimulus plan were spread out in small chunks rather than delivered in one big
dose, because when we get a large sum, behavioral economists tell us, we are
more tempted to save it rather than spend it, a propensity that would prove
counterproductive when the economy needs money in circulation rather than in
our pockets. Along similar lines, the
financial regulatory plan introduced by the administration in June 2009, widely
regarded as far too cautious and solicitous of the very banks that caused the
panic in the first place, may have avoided stronger calls for regulation based
on the suspicion behavioral economics has toward firm governmental action.

Given such a start, we can expect to see proposals for
public policies based on the assumptions of behavioral economics both in
Congress and throughout the executive branch.
Raising taxes on gasoline will help us conserve energy by nudging us in
the direction of mass transit.
Computerizing health care records will enable patients to better
question the recommendations of their physicians. Mobilizing peer pressure can help teenagers
lose weight or smokers to give up their habit.
Finding the right incentives can lead mortgage providers and home owners
to avoid defaults that would harm both of them.
Even Michelle Obama’s highly publicized vegetable garden can be
interpreted as a hint to vast numbers of Americans that there are alternatives
to prepared foods. The idea of trying to
change our behavior without raising our taxes is so great that few policy wonks
can resist it.

Economists attracted to this way of thinking insist that,
because behavioral economists put more information in the hands of ordinary
people, it furthers the goal of transparency.
"If instead of the 30 pages of unintelligible crap that comes with a
mortgage you can upload it with one click to a website that will explain it and
help you shop for alternatives," Richard Thaler explained to Time‘s Michael Grunwald, "you make it as
easy as shopping for a hotel." Either
Thaler has not shopped for a hotel lately–the web’s hotel offerings are
bewildering in their complexity–or he is being disingenuous. In fact, approaches based on behavioral
economics, true to their conviction that people are fundamentally irrational,
are impossible to square with the idea of citizens exercising effective control
over those who govern them.

Given how policy is made in Washington,
there is every reason to believe that nudging will prove to be opaque to those
being nudged. Manipulating tax
incentives is always good business for accountants and cumbersome for everyone
else; given everything we know about how politics in the United States works,
knowledgeable upper-middle class Americans will take advantage of incentives
while poorer and time-strapped ones will not.
No one can safely predict that the incentives policymakers introduce
will turn out to work as they are expected to do; to be sure, more people will
invest in old age pensions if they have to take the active step of opting out
of them, but in more complex areas of human behavior, the same peer pressure
aimed to help young people eat better could also help them become better
consumers of dangerous drugs. Most
harmful of all, policies along these lines are likely to reinforce invidious
distinctions between people; "good" citizens will be defined as those who
respond the way the theory predicts they should, while those who stubbornly
resist will be viewed as harmful to the health care or retirement system that
is being redesigned.

As if these were not problems enough, public policies based on the assumptions
of behavioral economists may well play havoc with the American Constitution. According to that document, Congress ought to
be the source of legislation. Yet if
choice architecture is to be designed to overcome human mistakes, ways must be
found to prevent human beings from influencing its design, for if the process
were open to pressure from ordinary people or lobbyists, the mistakes that
characterize their decision-making would be built directly into the
system. As the most democratic branch of
government, Congress is most exposed to people’s irrationality. If government is to be used to control our
myopia, Congress cannot be in charge.

Nor can courts, which are given to insuring that rights are respected and
procedures followed, play much of a role if choice architecture is to be
designed to achieve its purposes. A good
court decision clarifies for the contending parties the nature of any disputes
between them. But the choice
architecture envisioned by behavioral economists works better under conditions
of ambiguity than under conditions of clarity.
Its aim is not to present us with options so that we will deliberate
among them and choose the best one.
Choice architecture works best when, in the terms used by Thaler and
Sunstein, our thinking is automatic, unconscious, fast, and effortless rather
than deliberative and deductive. Based
upon principles of legal reasoning, courts require a reflective cognitive style
quite at odds with the automatic system behavioral economists associate with
our limited capacity for reason. The
ability of courts to correct the abuses made by policymakers would therefore
have to be limited under a well functioning system of choice architecture.

This leaves the third branch of government, the executive, as the proper home
for choice architecture. Within that
branch, moreover, it would surely not be the president himself who would be
spending time designed the best choice frameworks; the choice of choice
architecture will be delegated out to administrators within the executive
branch who would have considerable discretion in designing the systems they
think will work best. For eight years
liberals tried to prevent the accumulation of power within a "unitary
executive" that conservatives in the Bush administration viewed as the best way
to keep decisions secret from the people influenced by them. Putting into effect a workable choice
architecture would require a similar concentration of power among unelected
officials in the executive branch.

In their book Nudge, Thaler and
Sunstein never spell out details such as these.
This lack of attention to how public policy is actually made, it seems
fair to say, is not due to the fact that they forgot to include it. The specifics of who the choice architects
are and what functions they perform are not spelled out, because if they were,
they could not operate as choice architects.
Choice architecture works best when people think they are acting as
libertarians even as their behavior is guided by paternalists. If they had more knowledge about who was guiding
them, people would be more resistant to being guided. What Thaler and Sunstein call "libertarian
paternalism" can also be characterized as "hidden paternalism." People should on the one hand have more
choices and on the other less information about how their choices were
determined for them.

For all these reasons, neither goal for which liberalism stands–autonomy and
liberty–would be promoted by greater reliance on behavioral economics. People’s capacity to lead lives of their own
choosing would be undermined, because decisions they believed to be their own
would actually be the products of behind-the-scenes manipulation. And those who create the architecture
responsible for that manipulation, because unelected and uncountable, would
have considerably more power than those being manipulated. If it works, libertarian paternalism offers
us a third path between the market and the state. If it fails, it leaves us simultaneously as
slaves to our impulses and at the mercy of others.

Liberalism can do better than this.
Having successfully won their campaigns for autonomy and equality by
defeating the forces of religious orthodoxy in the past, liberals ought to be
able to defend and advance their ideas in an age of scientism today. Politics and governance are serious
matters. When it comes to providing
health care or improving the environment or dealing with the effects of
devastating recessions and natural disasters, we need to develop public
policies based upon a careful understanding of human nature and human purpose. The last thing we should do is to allow
ourselves to be attracted by the latest academic fashions, especially when
there is little actual empirical support behind them.

Like the Progressives of the early twentieth century, scientism today claims to
know what is best for us in spite of what we think might be best for
ourselves. The elitism in Progressivism,
however, was never well-hidden: reformers in that era were proud to minister to
people’s souls; uplift was their purpose and improvement their means. The scientistic speculation associated with
both evolutionary psychology and behavioral economics, by contrast, in reducing
who we are to one thing only, lowers our vision and distorts our purpose; it
does not define our choices for us, it dumbs our choices down. Liberals in the age of absolutism showed
courage and foresight in fighting the combined forces of church and state. Liberals in the age of Obama need to jettison
the faddishness of unproven ideas and the manipulative policies based upon
them.