Libertarian Quasi-Paternalism

In many settings, people’s choices vary based on seemingly arbitrary features of the choice environment. Policies that manipulate these features to improve decision-makers’ well-being are paternalistic – unless one takes the unrealistic view that these features are relevant from the perspective of the choosers’ preferences. In such settings, I propose that policy design can be less paternalistic if the only people assumed to be making mistakes are those whose choices are observed to vary based on the arbitrary feature of the choice environment. I discuss several characteristics of such “quasi-paternalistic” policy design and conclude by applying the principle of quasi-paternalism to the policy choice of nudges versus mandates

People Prefer System 2 Nudges (Kind Of)

In the United States, the United Kingdom, Australia, and many other nations, those involved in law and policy have been exploring initiatives that preserve freedom of choice, or “nudges,” informed by behavioral science and promoting important public policy goals, such as improved health and safety. But there is a large and insufficiently explored difference between System 1 nudges, which target or benefit from automatic processing, and System 2 nudges, which target or benefit from deliberative processing. Graphic warnings and default rules are System 1 nudges; statistical information and factual disclosures are System 2 nudges. On philosophical grounds, it might seem tempting to prefer System 2 nudges, on the assumption that they show greater respect for individual dignity and promote individual agency. A nationally representative survey in the United States finds evidence that, in important contexts, most people do prefer System 2 nudges. At the same time, that preference is not fixed and firm. If people are asked to assume that the System 1 nudge is significantly more effective, then many of them will shift to preferring the System 1 nudge. In a range of contexts, Republicans, Democrats, and independents show surprisingly similar responses. The survey findings and an accompanying normative analysis offer lessons for those involved in law and policy who are choosing between System 1 nudges and System 2 nudges

Regulation Through Boilerplate: An Apologia

You have to salute Peggy Radin. She has said what others who agree with her have for so long been hesitant to utter out loud: the fine print is not a contract. There is no agreement to it, no real consent, not even “blanket assent.” It is nothing but paperwork and should have the legal fortune of junk mail. Those lengthy, unreadable pages with terms and conditions that come prepacked with consumer products or that demand to be clicked (“We Accept”) on computer screens — does anyone really think that they contain arrangements that people knowingly agreed to? How is it, then, that such unreadable and unread documents have become so powerful and effective in regulating the rights and obligations of contracting parties? Entire areas of law — contract default rules, sales law, privacy law, and copyright fair use (to name a few) — have been “deleted” by meticulously drafted documents that replace the pro-consumer provisions of these laws with pro-business arrangements. And if the fine print is so offensive to our legal universe of fair and balanced default rules, why is it so radical to propose that it should be invalid? Is the practice of fine print so deeply rooted in our commerce — so much of our economy relies on the fine print as the ultimate regulation of trade — that it is too big to curtail? Let’s end the pretense, says Radin, and restore a sensible conception of “agreement” to our commercial life. Because boilerplates do not represent informed consent, because they are divorced from our intuitive understanding of agreement, and because they divest people of their democratically enacted entitlements, they degrade the institution of contract that is justified by its respect for individual autonomy and private control. Therefore, boilerplates should be powerless to govern people’s rights. They “should be declared invalid in toto, and recipients should instead be governed by the background legal default rules” (p. 213). And to make sure that firms stop shoving such offensive paperwork in front of people, a new tort of “intentional deprivation of basic legal rights” should operate as a deterrent (p. 211)

TMI? Why the Optimal Architecture of Disclosure Remains TBD

We are inundated with disclosures in our daily lives. In one of the more evocative passages in their stimulating new book, More Than You Wanted to Know, Omri Ben-Shahar and Carl E. Schneider imagine a day in the life of someone who actually reads all those disclosures (pp. 95–100). During a commercial on the morning news, the protagonist hits pause on the TiVo to catch the fine print that would otherwise fly by. Breakfast is a slog, requiring close reading of the toaster’s ominous label and the disheartening nutrition facts on the butter and jam. More of the same awaits at the office, where the pop-up announcing a critical software update is accompanied by a lengthy and perplexing end-user license agreement. And so on. The parable vividly illustrates the fanciful nature of the hope that many disclosures will be digested and used in the way their designers intend. Truly reading and trying to comprehend even a modicum of the disclosures we face “would mean a life-time educational project like the worst of high school—boring subjects and nasty tests going on your permanent record” (p. 70). Ben-Shahar and Schneider provide both a compelling account of how we arrived at the current state of ubiquitous ineffective disclosure and a sweeping critique of disclosure as a regulatory technique. Disclosure is seductive to lawmakers because it seems so plausible that more information is always better and essentially costless to furnish. But the authors survey the evidence and find that disclosure has failed time and again. Its failure is due at root to a misunderstanding of psychology. Disclosure rests on the false assumption that people actually want to make all of the significant decisions in their lives (not to mention the insignificant ones) and to make them with care. In fact most of us are decision averse. And when we do struggle through complex decisions, disclosures typically offer little useful simplification. These problems with disclosure are compounded by its rampant use. Each additional disclosure reduces the attention paid to those that have gone before, leading to overgrazing on the disclosure commons. As a regulatory technique, mandatory “disclosure is a fundamental failure that cannot be fundamentally fixed,” and “what fails should be abandoned” (p. 12). More Than You Wanted to Know is timely, arriving amid a surge in enthusiasm for light-touch regulatory tools like disclosure that attempt to move choices in the right direction. One influential approach—popularized by the best seller Nudge—dons the mantle of libertarianism, eschewing regulations that would limit freedom of choice in favor of simply redesigning the “choice architecture” through interventions like disclosure to achieve regulatory goals at little cost. The ascendancy of this approach has served to delegitimate choice-limiting policies. If we can achieve so much for so little through harmless tweaks to choice architecture like disclosure, then why ever resort to tools like product regulation that might prohibit someone’s preferred option? What sort of Neanderthal would continue with such outmoded forms of regulation? Ben-Shahar and Schneider provide a refreshing counterpoint to the shift toward “nudging.” Mandating disclosure to improve choice architecture in fact has a long history and a poor track record; the authors explain why. But while the book provides an important critique of the traditional approach to mandatory disclosure, it does not fully engage with the burgeoning behavioral literature on disclosure that advocates alternative approaches. To explain the limits of the book’s critique, I begin by reframing the core thesis of the book as an application of dual-process theory from cognitive psychology. Ben-Shahar and Schneider analyze a particular—and undoubtedly prevalent—rationale for disclosure regulation: providing information to improve deliberate decisionmaking. They convincingly show that this model of disclosure often gets the psychology wrong. Our effortful deliberate processes are not so easily improved and are often not even engaged as our more intuitive processes predominate. This is not, however, disclosure’s only modus operandi. I examine an alternative mode that aims simply to influence rather than instruct. This mode of disclosure harnesses our more intuitive processes to move beliefs or behavior in a specific direction. To this approach Ben-Shahar and Schneider’s main critique does not apply. But other critiques do, and I offer several. Finally, I turn to their normative bottom line. While debunking excessive faith in mandatory disclosure—what they term disclosurism—Ben- Shahar and Schneider develop an ism of their own—what we might call antidisclosurism—by arguing for total abandonment of, or at least a presumptive bar against, mandatory disclosure. But their approach risks making a mistake symmetric to that of the nudge advocates who adopt strong presumptions against any limitation of choice. We are better off avoiding all of these isms in our regulatory thinking. The right response to the important critiques of mandatory disclosure that Ben-Shahar and Schneider raise is not a presumption against disclosure but rather rigorous empirical assessment of which disclosures work and which do not, with an eye toward the pitfalls the authors document. About disclosure, there is still a great deal more to know

Reframing Faculty Pro Bono

Soon after receiving accreditation, one regional law school considered whether to adopt a mandatory pro bono policy.1 All members of the committee charged with studying the proposal supported it.2 But the committee also knew that not all faculty members would approve it.3 The committee members therefore avoided any suggestion that faculty, as opposed to just students, would need to do pro bono.4 They feared that imposing the requirement on faculty would derail the entire proposal.