Monday, February 13, 2012

Obama's "compromise" and Behavioral Economics

If I correctly understand it—readers are welcome to correct me if I don't—Obama's "compromise" on the issue of requiring Catholic (and other) institutions to provide employees with health care that covers contraception, is that, instead of requiring them to provide health insurance that covers contraception, they are requiring them to provide health insurance with insurance companies which are required to cover contraception at no additional cost. That's a change in labeling, not substance, hence my scare quotes around "compromise."

It occurs to me that this particular deception may be inspired by the work of Cass Sunstein, now part of the administration, and Richard Thaler. In Nudges, Sunstein and Thaler discuss ways of tricking people into doing things by taking advantage of patterns of predictable irrationality, patterns themselves based on the work of Daniel Kahneman, which I discussed in an earlier post. The reality of what Obama is demanding has not changed, but the appearance has.

Leaving me curious as to whether this is one of Cass Sunstein's contributions to current policy, and if so whether he would describe it as an example of libertarian paternalism, tricking people into doing what (in his view) is in their own interest. 

I hope not.


dWj said...

There is some discussion as to whether, birth control being cheaper than childbirth, insurance companies might be perfectly happy to provide it for free (to those to whom it provides payments in the event of childbirth). While I don't regard Obama's "compromise" as a compromise at all, I would regard it as a compromise, though perhaps a small one, if it simply left out the "for free" part, even if that ended up having the same effect. I'm not quite sure whether I should, though.

Greg said...

i HIGHLY doubt that Sunstein had anything to do with this. rather its some political/PR advisor or just straight up whoever was supposed to have been in charge of the department which oversees this.

this may come as a shock, so you better take a seat...politicians are EXPERTS at linguistic manipulations and machiavellian manoeuvres. politicians after all are professional liars, just like actors. politicians certainly do not need some academic to tell them how to do their job.

if anything this move was rather too non-machiavellian for a politician especially for a politician as disciplined and clever as Obama.

Allan Walstad said...

I agree with Greg.

John T. Kennedy said...

It's also a win for Obama because it redefines an individual right of conscience as a collective right reserved for certain groups. Note that the right of conscience as Obama defines it does not apply to the owner or operator of an insurance company, be he Catholic or not.

J0haquim N0ah said...

Since there is no opt-out, it doesn't fit the clearly stated definition of libertarian paternalism.


David Friedman said...

I was thinking, not that the requirement was libertarian paternalism, but that the relabeling might be seen as that. What people are being tricked into, on that account, is viewing the requirement that organizations pay for contraceptive coverage as a legitimate government action rather than a violation of freedom of religion.

So there is an opt-out--people can refuse to accept it and vote against Obama as a result. But, by manipulating their irrationality, they are being tricked into not doing so.

Peter said...

Calling "voting against Obama in the coming election" an opt-out of a current law is itself an exercise in linguistic manipulation. You could call civil disobedience an opt-out also, but I don't think that is really what the word means in this context.

Gil said...

David, voting against Obama isn't an opt-out at all.

It may be an expression that you'd like to opt out, but since your vote is incredibly unlikely to be decisive, it doesn't actually accomplish exercising an option on the issue.

But, you already knew that.

If "libertarian" paternalism has devolved into giving you the opportunity to express dissatisfaction, but none to decline, then there's really nothing libertarian about it.

Greg said...

who was it that said that it does not matter who wins the election, the government still gets in?!

David Friedman said...

"Libertarian paternalism" is an approach to getting people to make what you think is the right decision--as such, it can apply to any decision someone makes. My point, apparently insufficiently clear, was that one could view the relabeling of the proposal as an exercise of libertarian paternalism directed not at the decision whether to buy insurance that covered contraception but rather the decision of how to react to the Administration's proposal with regard to insurance.

That relabeling could be viewed as a form of choice architecture--putting the question in a form that exploited the individual's irrationality to get him to make the decision the choice architect thought he ought to make.

J0haquim N0ah said...

You say

Leaving me curious as to whether this is one of Cass Sunstein's contributions to current policy,
and if so whether he would describe it as an example of libertarian paternalism,
tricking people into doing what (in his view) is in their own interest.

There are only two criteria a policy must have to satisfy libertarian paternalism-
1.reasonably welfare maximizing
2.low cost to avoid

The person who came up with libertarian paternalism is highly unlikely
to confuse this current policy with it.

I suggest you read Nudge, if you haven't already. I think you would like it.
I get that you understand it's possible to trick people by taking advantage of
their biases. No need to tarnish Cass Sunstein (without better evidence).

David Friedman said...

"I suggest you read Nudge, if you haven't already."

I have read Nudges, commented on it on this blog,

and corresponded with Cass about it.

Anonymous said...

I'm a big fan of the what they call "Libertarian Paternalism" but I prefer the term "Libertarian Oligarchy"

RKN said...

There's more than one way to prevent a pregnancy. Why doesn't Obama require rubbers be free, or at the very least require insurance companies to cover the cost. Better yet, create a new federal agency around it, call it D.E.P., Department of Prophylactics, and appoint a czar.

The Ghost said...

Is everyone aware that the "compromise" (which was just a promise to consider changing the actual published rule) does nothing for institutions who self insure. That happens to be alot of groups that operate in the states that also require insurance covered birth control but allow an exception for self insurers.