Saturday, April 13, 2019

Blanchflower and Oswald (2017) Review Graham’s _Happiness for All?_

David G. Blanchflower and Andrew Oswald, “Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham’s Happiness for All?” NBER Working Paper No. 24087, November 2017.

• The authors summarize and respond to a 2017 book by Carol Graham, Happiness for All? 

• Graham’s work centers on subjective well-being (SWB) measures, especially the Cantril ladder question, which, according to the World Happiness Report, "asks respondents to think of a ladder, with the best possible life for them being a 10, and the worst possible life being a 0. They are then asked to rate their own current lives on that 0 to 10 scale." 

• Some of Graham’s claims about happiness in the US: (1) SWB is getting more unequal, and income inequality lowers SWB; (2) people are increasingly unhopeful, especially white Americans and poorer Americans; and, (3) Americans, particularly poorer ones, suffer from high levels of pain and stress. 

• The age-adjusted suicide rate for black American men is one-third the rate for white American men.

• Blanchflower and Oswald point out that almost surely, SWB is not nearly as unequally distributed as is income. 

• It does appear that Americans are becoming less happy, and that reported pain is very high (34% in past 4 weeks) in the US; the international average is 20%. 

• Middle-age Americans are particularly troubled. SWB tends to fall almost monotonically from the late teens until somewhere around age 40-50, and then tends to increase (slowly) for some 40 years.

• Education is associated with higher SWB. 

• There has been significant convergence in SWB among racial groups in the US in the past 45 years.

• Though there is some evidence that women in the US have become less happy in the last 30 years relative to men, reported SWB is quite similar across genders.

Thursday, March 14, 2019

Schwartz and Cheek (2017) on Choice, Freedom, and Well-Being

Barry Schwartz and Nathan N. Cheek, “Choice, Freedom, and Well-Being: Considerations for Public Policy.” Behavioural Public Policy 1(1): 106-121, 2017.

• A (misleading?) syllogism: more freedom means higher well-being; more choice means more freedom; therefore… 

• Nudges constrict freedom of choice 

• Should we maintain free choice (possibly even force people to make choices, as opposed to setting a default, for instance), or promote better choices? 

The availability of options is increasing in much of the world. But more options can: (1) paralyze; (2) spur regret and dissatisfaction; and (3) undermine the (objective) quality of decisions. 

• Choices can (1) satisfy our preferences; (2) serve as utilitarian means to our ends; and, (3) express something about us. Pleasure (1) and utility (2) both can be undermined by large choice sets. 

Expanded choice sets provide new options for (3) self-definition. This seems desirable. But they also can increase the expressive stakes for trivial decisions, and those increased stakes need not be beneficial. [Who wants to be judged on what brand of soda they buy?]

• Further, large choice sets might divert increased attention to decisions about material goods, to the detriment of social connections. 

[Warning!: broad-brush cultural commentary to follow:] Western cultures tend to understand people as individuals, and believe that good societies give wide scope to individualism. Large choice sets, then, are requisite for self-realization. More collectivist societies (including working-class America?) might focus on the interdependencies among people, so that a person’s relations are more important than individuality. People in such societies might prefer reduced choice sets. 

• Older people seem more comfortable with fewer choices, while younger people prefer large choice sets in domains in which they are confident that they can make competent choices. 

• A perceived lack of competence more generally detracts from the desirability of large choice sets – and the competence shortfall might concern knowledge of one's own preferences. 

• Large choice sets can involve a cognitive burden, and might be worse for people already facing resource scarcity. 

 Perhaps the right policy intervention is to encourage people to think through when they are most interested in making careful choices.

Wednesday, February 20, 2019

Adler, Dolan, and Kavetsos (2018) on Choosing to be Happy

Matthew D. Adler, Paul Dolan, and Georgios Kavetsos, “Would You Choose to be Happy? Tradeoffs between Happiness and the Other Dimensions of Life in a Large Population Survey.” Journal of Economic Behavior & Organization 139: 60-73, July 2017 [pdf].

• Measures of subjective well-being (SWB) come in three different varieties: (1) life satisfaction; (2) happiness (positive/negative affect); and (3) meaningfulness. These varieties are termed, respectively, (1) evaluative; (2) affective; and (3) eudaimonic components of SWB. 

• Decision utility (perceived when making a choice) and experience utility (the quality of lived experience) may differ; SWB seems to be a measure of experience utility. People might purposely choose an option that they know will not maximize their SWB. People might choose options in which their health is good, for instance, even if their SWB is lower than what they could achieve with alternative options.

• Adler, Dolan, and Kavetsos present pairs of options that trade-off SWB with some other characteristic, such as health. These options are presented in “choice” (which of two possible lives would you choose) and “judgement” (which of two possible lives is better) mode. The options are presented as either brief scenarios or (less brief) vignettes; the vignettes are intended to increase the salience of the trade-off presented between SWB and some other life dimension. The three different varieties of SWB are tested separately, and each arrayed against five life characteristics: income, health, family, career, and education. n≈13,000

• The US sample indicates a slightly higher average SWB than the UK sample, though the Americans are more anxious. (And higher anxiety lowers the likelihood of choosing the high SWB option.)

• About 60% of respondents choose the high SWB option. They also seem to be drawn somewhat more to the affective component of SWB. 

• Judgement questions lead to a slightly larger pro-SWB vote than do choice questions, as does presenting the options as vignettes. 

• People possessing higher SWB are more likely to choose the high SWB option. 

• People with children and more education and people who are male are less likely to be seduced by SWB. 

• People often choose good health over high SWB; they rarely choose career success over high SWB.

[John Stuart Mill comes to mind: "Whatever is desired otherwise than as a means to some end beyond itself, and ultimately to happiness, is desired as itself a part of happiness, and is not desired for itself until it has become so." -- from Chapter 4 of Utilitarianism; and the happiness that utilitarianism invokes is the happiness of all interested parties (Chapter 2 of Utilitarianism).] 

[For a related article, see here.]

Saturday, February 9, 2019

Sugden v. Sunstein on Nudging, Round 3: Sugden's Rejoinder

Robert Sugden, “‘Better Off, as Judged by Themselves’: A Reply to Cass Sunstein.” International Review of Economics 65(1): 9-13, March, 2018.

[Round 1 here; Round 2 here]

 Sunstein suggests that welfare is the goal, but that a person’s own preferences might not be the best metric of that goal. This interpretation allows pursuit of the nudger’s interests. 

 The key isn’t preferences before or after the nudge, but rather, when preferences are or aren’t context dependent. If they are context dependent, then those preferences can’t be used to judge what context should be adopted. For "as judged by themselves" (AJBT) to be useful, it must “adjudicate between the judgements that the chooser makes in different contexts.” 

 The acknowledged self-control cases are those in which AJBT seems to work. Are they rare? Sunstein’s survey itself involved a nudge that would lead people to admit to a self-control problem. (Though admittedly, people do take up options that are presented as helping overcome self-control problems.)

 Approving of nudges is not the same as wanting to be nudged, as the first is about a policy that applies generally. 

 AJBT really is part of the defense to objections from anti-paternalists, despite Sunstein’s claim. Why else would one refer to voluntarily installed GPS devices as involving a form of paternalism?

Sugden v. Sunstein on Nudging, Round 2: Sunstein's Turn

Cass R. Sunstein, “’Better Off, as Judged by Themselves’: A Comment on Evaluating Nudges.” International Review of Economics 65(1): 1-8, March 2018.

[Round 1 here; Round 3 here]

 In trying to improve wellbeing, individuals’ judgments of their own welfare are a central metric. This metric is complicated, however, if people have different judgments before and after a nudge, say. 

• Sugden argues that two potential interpretations of “as judged by themselves” (AJBT) are flawed, one by applying only to relatively rare self-control issues, and the second by allowing individual preferences to be sacrificed to the whims of nudgers. 

• Sugden's title asks if people really want to be nudged towards healthier living. The empirical answer is “yes.” 

• AJBT is not our method to rule out charges of paternalism, but rather, to limit the coercive element of paternalistic acts – like a GPS, we want to improve “navigability,” so people can better serve their own interests. Nudges are about means, not ends. 

 Reminders (such as text messages) serve people’s pre-nudge preferences -- likewise with information provision, as with calorie counts. Other nudges can change behaviors in a manner that the nudged individual endorses after-the-fact, but not before, such as a mechanism to dissuade texting while driving. 

• With self-control problems (akrasia), nudges might help to bolster Dr. Jekyll (planner) at Mr. Hyde’s (doer) expense. Sunstein asked folks online if they had a self-control problem: the majority said yes. And programs to ends addictions are quite popular. 

• Yes, preferences can be formed in the process of elicitation; for instance, people might stick with, and endorse, any of various default settings. Then nudgers are forming preferences, but AJBT limits what nudgers can do. 

• To summarize, some nudges serve ex ante preferences when they increase navigability; some help with (widespread!) self-control shortcomings; and some contribute to preference formation, but in a manner that still respects after-the-fact preferences.

Sunday, February 3, 2019

Sugden v. Sunstein on Nudging, Round 1

Robert Sugden, “Do People Really Want to be Nudged towards Healthy Lifestyles?International Review of Economics 64(2): 113-123, June, 2017.

[Round 2 here; Round 3 here; an earlier, related Sugden contribution here]

• The notion that nudges should be designed to push folks in favorable directions, where what constitutes favorable should be “as judged by themselves,” is ambiguous and potentially misleading. Thaler and Sunstein employ the phrase to reassure us that they don’t want to impose their goals, they only want to help people avoid errors.

• Thaler and Sunstein, and others, speak as if people have rational, latent, true preferences, but these are wrapped in faulty psychological garments, including attention deficits and self-control shortcomings. But we have no independent method of identifying when people make errors from the point of view of their posited latent preferences.

• Thaler and Sunstein just pronounce that much obesity arises from a mistake, without evidence. Why should we think that obese people are making a mistake, “as judged by themselves”?

• Or maybe latent preferences are those that the individual endorses (in the cold state, say) – people suffer from akrasia. But Sunstein and Thaler discuss mistakes in many contexts not involving self-control shortcomings, such as those involving rare decisions. But why should people view their own decisions in these rare, low-feedback situations, as mistakes?

• Consider a questionnaire for obese people, asking them why they eat cake instead of fruit, against the advice of health experts. Most of the responses, presumably, would not center on repeated losses of self-control, nor would most involve self-reported errors. Admitted self-control shortcomings are not as common as many behavioral scientists think.

Saturday, February 2, 2019

Loewenstein and Chater (2017) Put Nudges in Perspective, and Thaler Responds

George Loewenstein and Nick Chater, “Putting Nudges in Perspective.” Behavioural Public Policy 1(1): 26-53, 2017

• Nudging is popular, but perhaps its unintended consequences are worrisome; perhaps, for instance, nudges have crowded out better policies.

 The standard nudge involves a response to a problem that itself is a result of a behavioral issue, a rationality shortfall. But there is no reason that the best type of policy response – whether traditional, behavioral, or a hybrid – should match the condition that gives rise to the problem. Some rationality shortfalls might best be handled with taxes or regulations, not nudges…

  …though behavioral ideas can help package those taxes or regulations in ways that can maximize their impact.

• One important area of concern involves how to counter the nudging undertaken by profit-maximizing firms, often aimed at taking advantage of consumer rationality shortfalls.

 Many social problems can’t be explained by behavioral issues that should be roughly constant over time and in different areas. These problems perhaps require a structural response, not a nudge. The recent increase in obesity cannot really be due to an increase in present bias; nor will it be fixed by better placement of healthy products in stores.

 Don’t let nudges distract you from seeking more comprehensive solutions. Loewenstein and Chater go on to examine three policy areas from their "perspective."

 Smoking: externalities, internalities, and depredations by sellers all motivate policy responses. Those responses include high taxes, advertising and marketing controls, product placement controls, graphic warnings, public smoking bans – and the combination is effective.

 Obesity: internalities, budgetary externalities, and the behavior of those profit-motivated sellers provoke policy responses. The main response is of the “traditional economics” variety, information provision, and it is not very helpful for what is after all a structural problem, not a big change in behavioral biases or time discounting. Perhaps bans on non-linear pricing are called for?

 Retirement Savings: Internalities, and the behavior of firms like payday loan companies, exacerbate the extreme savings shortfalls that exist. Successful interventions have been behavioral, especially defaults and automatic escalation of savings. Tax breaks are not very helpful, but much more needs to be done.

 Consider big issues, such as inequality, climate change,and employment overhauls: all of these problems need traditional economic responses,and perhaps some hard paternalism – but there still are plenty of contributions that behavioral science can make.

Professor Thaler responds with “Much Ado About Nudging,” on the Behavioural Public Policy Blog, June 2, 2017

 No one really believes that nudges are a panacea. In Nudge, we just want to inform policy with behavioral insights. 

 Likewise, everyone agrees that present bias is not the sole cause of obesity. 

 Don’t undersell the cumulative impact of many small behavioral interventions, including when applied to big problems like climate change. “My own approach to thinking about such problems is to conduct what I call a ‘choice architecture audit’, the goal of which is to find the most critical decisions various actors have to make, as well as the potential levers (behavioral and economic) that policy makers can use to improve outcomes.” 

 There is much to be said for nudging (soft paternalism) over hard paternalism when it comes to dealing with internalities. Either type of policy will push some subset of people in an inappropriate direction: how hard do we want that push to be? 

 We know bureaucrats are biased and often mistaken: do we want them to be hard or soft paternalists?