Noel Semple, “Good Enough for Government Work? Life‑Evaluation and Public Policy.” Journal of Happiness Studies 22: 1119–1140, 2021.- We collect happiness data via "life-evaluation" measures such as the Cantril ladder. But a leading strain of public policy thinking is "welfare-consequentialist," where individual utility or welfare is at the center of judging the desirability of different social states.
- Happiness is not the same as welfare. But can we use life-satisfaction data anyway in evaluating welfare?
- The approach examined by Semple – life-evaluationist welfare-consequentialism (LEWC) – argues that the government should seek to maximize aggregate subjective well-being – and life satisfaction is sufficiently measurable to be implementable. In some circumstances. happiness data are informative of the success of public policy (even when there is no consensus on what actually constitutes welfare). That is, maximizing welfare can often be implemented by maximizing happiness, as measured by subjective wellbeing.
- Practicality is an important argument for the LEWC approach: we have broad, long-term data on subjective wellbeing. Further, where happiness is an imperfect proxy for welfare, it still tends to indicate the sorts of things that make people better off.
- Happiness research has revealed that mental health problems detract markedly from subjective wellbeing; further, people do not adapt over time to some negative mental health conditions. [Look at the advantage of happiness over willingness-to-pay: "The average person who has not experienced clinical depression simply cannot say, in a reliable way, how much they would be willing to pay to avoid it. By contrast, notwithstanding the problems identified above, those who are clinically depressed, and those who are not, are able to give reasonably consistent evaluations of their own lives [p. 1133]."]
- Targeting mental health with policies that make treatment more available also helps to target those who are worse off, those whose subjective wellbeing is at the bottom of the distribution. And better mental health for parents holds positive second-order impacts for the happiness of their children.
- Approaches to human welfare are all over the map, including preference satisfaction and hedonism and... But LEWC is grounded in data, it looks at the evidence on what produces happiness. We do not need to agree on what constitutes human welfare to implement LEWC.
- The LEWC approach, then, offers a form of robustness; it can advance welfare without presuming what constitutes welfare.
- Much public policy is too small or abstract for its effects to be measured by happiness; further, people do adapt over time to many changes in their life circumstances. So, it is sensible to sometimes supplement SWB with preference fulfillment in serving as a proxy for welfare. Preferences for longevity can be used, for instance, to overcome some of the "moment in time" issues connected to happiness measures.
Richard A. Easterlin and Kelsey J. O'Connor, “The Easterlin Paradox.” In: Zimmermann, K.F. (ed.) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. [Working paper version here.]- From the Abstract: “The Easterlin Paradox states that at a point in time happiness varies directly with income, both among and within nations, but over time the long-term growth rates of happiness and income are not significantly related.”
- That is, the Easterlin Paradox concerns a disconnect between cross-section and time series data linking happiness and (real) income.
- The life satisfaction (happiness) data used in Easterlin and O'Connor come from the World Values Survey (WVS) and the Gallup World Poll (GWP). This analysis takes place at the national level (so income is real income per capita within a country).
- The WVS question: “All things considered, how satisfied are you with your life as a whole these days?” 1 (dissatisfied) to 10 (satisfied); 67 countries, on average over 27 years, for this study, with about 5 observations per country.
- The relevant GWP item: Cantril ladder, 0 to 10, worst possible life (0) to best possible life (10); 123 countries, 12 to 15 years of annual data.
- A major point of emphasis for Easterlin and O'Connor is that the key for testing is to ensure that you have long time-series data, so that you are not just capturing a boom or a bust (during which the usual cross-section positive connection between happiness and income will prevail).
- Easterlin and O’Connor find that in their data, the Paradox essentially holds when the East European transition countries are not included. (The conditions of transition and the time-span of the data from transition countries are such that even more than ten years of data might essentially be capturing a long boom.)
- With the transition countries included, or if shorter (10 years or less) time spans are employed, happiness and income do show a positive relationship. Even in these circumstances, however, the effect of changes in income on changes in happiness is small.
- The authors argue that an income reference point (typically, social comparison) is what drives the Paradox. As everyone's income rises, your reference point (other folks' income) shifts up, so your higher income does not bring more happiness. In a recession, alternatively, the relevant reference point is your own previous income, so people on average become less happy. (That is, the Paradox might hold even in the short-run during an expansion, but a recession will cause both happiness and income to fall.)
- China, Japan, India – all have experienced tremendous income boosts without increases in happiness.
- The authors argue that the “threshold” claim (that increased income does increase happiness until you are fairly well-off, at which point more income doesn't lead to more happiness) also is wrong: the Paradox applies to rich and poor individuals, not just the rich.
- Public policies can still raise happiness! Promotion of employment and a social safety net are good for happiness.
Hua-Jing Han and Matthias Wibral, “Organ Donation and Reciprocity.” Journal of Economic Psychology 81, December 2020.- Do people who display more positive reciprocity donate organs more readily?
- Do people who display more negative reciprocity donate organs less readily?
- Should people who had previously registered as organ donors receive priority should they need an organ? (Such a policy was adopted in Israel, and apparently increased donor registrations.)
- Does a bad experience at the Department of Motor Vehicles (DMV) undermine organ donor registration (which, in the US, often takes place at the DMV)?
- The authors make use of some helpful German data, drawn from a survey that asked questions related to both organ donation and to reciprocity. Three questions are used to measure negative reciprocity (e.g., "If somebody offends me, I will offend him/her back."), and three questions measure positive reciprocity (e.g., "If someone does me a favor, I am prepared to return it").
- Two dependent variables: willingness to donate (46% yes) and possession of an organ donor card (12% yes); N=683.
- Both positive and negative reciprocity affect willingness to donate (in the expected directions); however, only negative reciprocity influences donor card acquisition.
Timothy Besley, “Reciprocity and the State.” LSE Public Policy Review
2(1): 1-10, 2021. - "Reciprocal obligation lies at the heart of state-citizen relations [p. 1]." We can see this as the state tries to grapple with handling COVID.
- How can a society build reciprocity, which is (often) a sort of informal norm or institution?
- Government sovereignty makes it hard for for the state to commit to its future conduct – it could always reverse course, even if the citizenry is relying on earlier promises (such as pension payments).
- Incidentally, the social contract theorists (Hobbes, Locke, Rousseau) all invoke reciprocity between the governed and the governors.
- Two elements that can build confidence in governments are (1) constraints on executive power and (2) open competition for leaders (elections).
- "Reciprocity kicks in when states deliver collective goods for citizens and, in exchange, when citizens offer their support, whether by paying taxes, volunteering for military duty, or obeying the law. However, their willingness to do so in the long-term is contingent on state behaviour [p. 5]."
- Taxes and social insurance are two areas where we can apply more concretely general considerations about reciprocity.
- The extent to which citizens believe that it is OK to cheat on their taxes varies quite a bit from country to country. People who trust their government, and believe that taxes are used for the social good, have higher tax morale.
- To bolster reciprocity, we might want to discourage tax avoidance (which is legal) along with tax evasion (which is illegal) – both can undermine tax morale.
- Social insurance, by sharing risks, brings broad public benefits. Universality helps to promote "quasi-voluntary compliance" that more targeted programs might put at risk.
Philip W.S. Newall, Lukasz Walasek, Arman Hassanniakalager, et al., “Statistical Risk Warnings in Gambling.” Behavioural Public Policy 7(2), 219-239, 2023 [pdf available here].- Warning messages in the gambling arena, when they are provided, tend to be generic and do not facilitate comparison across various betting options.
- Theoretical loss = (house edge) times (total amount bet), or, the expected price of a bet or bets; for instance, in European roulette, the house edge is 2.7%, so the theoretical loss of betting $100 is $2.70.
- Theoretical loss is a long-run concept and not salient for bettors, while their recent gambling experience is quite salient. But given that most of the social harm from gambling is tied to bettor losses, theoretical loss is a decent metric for the social risks of alternative wagers.
- Expected prices (or theoretical loss) of gambling tends to be hidden from gamblers – but it would be possible to provide (sometimes approximate) theoretical loss information, or other related metrics such as house edge. (For games where player behavior affects the odds, the risk could even be personalized based on player characteristics.) Presumably gamblers (all else equal) would be dissuaded from forms of gambling with high theoretical losses.
- Should gambling warnings also note volatility and the slow convergence to theoretical loss levels?
- Gamblers cannot identify vast differences in expected price on seemingly identical games.
- Some jurisdictions mandate “return to player”-style info; but players often do not understand it. And sometimes the info is hard to find and to see.
- Should the automatic reinvestment of small wins into a player's available gambling account be banned?
- In sports betting, longshots and “exact score” or other prop bets tend to have higher house edges – and these are heavily advertised.
Patrik Michaelsen, Lars-Olof Johansson, and Martin Hedesström, “Experiencing Default Nudges: Autonomy, Manipulation, and Choice-Satisfaction as Judged by People Themselves.” Behavioural Public Policy,
First View, 1–22, 19 March 2021. - This article examines how people feel about default nudges, especially with respect to their perception of their autonomy and their satisfaction with their ultimate choice. "We present three experiments (total N = 2083) where participants are subjected to opt-out default nudges and compared with participants subjected to opt-in or a no-default active-choice format [pages 3 and 4]."
- Study 1: MTurk folks consider whether to have “green” (and slightly more expensive) appliances in their (imaginary) new flats. There are three conditions: green (environmentally friendly) default (opt out); non-green default (opt-in); and active choice.
- The effect of the default is big, with about twice as many green appliances chosen with opt-out relative to opt-in; active choice leads to more green appliances than opt-in, too, but not as much more as opt-out.
- Participant ratings of their autonomy, satisfaction, and perceived threat to their choice freedom do not differ based on the condition. In particular, the opt-out default, which produces greener choices, does not lead to participant dissatisfaction.
- Study 2 replicates study 1, but with a twist: now, half of the participants ae told about the default or active choice, and how default nudges are expected to influence choices. How does making the nudge transparent affect its influence on choices and satisfaction?
- It turns out that lots of participants don’t really understand the explanation of how the default nudge is supposed to work.
- The large impact on choosing green appliances from the opt-out default is replicated – and nudge transparency does not change that.
- The participants give high ratings across-the-board for autonomy, but opt-out folks report slightly higher experienced autonomy and satisfaction than do their opt-in brethren.
- Study 3 aims to raise the stakes (slightly). Participants receive a 20 cent bonus, on top of the 50 cents they are paid to take part. But they are given an opportunity to donate their bonus to a charity. The opt-out condition is where the bonus is defaulted to the charitable contribution.
- Defaults continue to have consequences: opt-out folks are more likely to donate than are opt-in; active choice is in the middle; the three conditions have no effect on feelings of autonomy.
- With disclosure (and understanding), opt-in and active choice donations go up. (Again, the number of participants who do not understand the disclosure is fairly staggering.)
- Opt-out folks view the set-up as more threatening to freedom of choice, and full transparency raises everyone's view of such a threat – but despite that threat, people aren't really worked up over it.
Helen Colby, Meng Li, and Gretchen Chapman, “Dodging Dietary Defaults: Choosing Away from Healthy Nudges.” Organizational Behavior and
Human Decision Processes 161: 50-60, 2020.- Imagine a burger restaurant that makes carrots the default “side” – as opposed to French fries, say. Are people more likely to choose the carrots than if fries were the default? [Yes].
- Note that, unlike some environments with default nudges such as organ donations or pension registration, dining is an ongoing choice; so…
- …would people be less likely to return to a restaurant in which carrots are the default side dish?
- Two real-life(ish) and three hypothetical studies are conducted. In Study 1, university mugs are packaged with either M&Ms or a (healthier) fruit-and-nut bar as defaults. Shoppers know that they can easily override the default by asking the cashier for the alternative filling.
- The defaults turn out to be almost perfectly sticky (unlike those well-designed M&Ms). But, more mugs are sold when M&Ms are the default. People don't override the healthy default, even though they know they could, but the healthy default seems to put them off the mug purchase altogether.
- If the store elected to employ a healthy default to promote customer health, is it doing the right thing?
- Study 2 is also a real-life one, involving signing up for meal kit deliveries. What (three) meals will serve as the default for the kit? The experiment compares a default kit of three healthy meals (from one company) with an alternative default of three unhealthy meals (from a different company); once again, it is easy for meal kit purchasers to override the defaults.
- Again, the defaults are sticky, and in particular, the healthy default works in terms of nudging the choice of healthy meals. But, when choosing which company to patronize, there is a significant “dodge” effect: people became more likely to choose the company with the unhealthy default meals. So maybe it is not such a good idea for meal kit companies to set up healthy meals as the default?
- Study 3 is an internet-mediated "lab" experiment about which (hypothetical) restaurants people are likely to patronize. A subject is asked to order food from two competing burger restaurants. One burger restaurant uses turkey burgers as the default (this is the relatively healthy version, though not for the turkey), and the other burger place has been hamburgers as the default. (A similar comparison is run between two pizza places, and two sandwich shops).
- Once again, (hypothetical) patrons tend to stick with the default, whether it is heathy or unhealthy. But they also are asked which of the restaurants they would return to, and in the case of burger joints, for the most part they would return to the unhealthy default version. People stay away from burger joints with a healthy default – turkey instead of beef burger – even though when at the "healthy" place, they generally go with the default. (It turns out that people are not so reluctant to return to pizza or sandwich shops that offer healthy defaults.)
- Study 4 looks at what happens if potential customers see an ad that lets them know in advance that turkey is the default burger meat. People become more enamored of the alternative restaurant that offers a beef default, and also suspect that ordering will be more of a hassle with the healthy default.
- Study 5 looks at healthy versus unhealthy defaults in a familiar setting, a McDonalds. There is a line, and a subject observes that the five people ahead of him or her in the line each stick with the default burger, where it is healthy or unhealthy. Does this social confirmation influence subsequent orders?
- Once again, people tend to stick with default – but less so when the default is a turkey burger, when a third of folks request an override. Nonetheless, people indicate that they would dodge the healthy default restaurant in the future – but the dodgers were primarily folks who did not bother to override the healthy default!
- So, defaults can be quite sticky. Set up a health default, and you can expect that it will increase the percentage of customers who choose the healthy option. But there is a partial offset: some customers will dodge the restaurant with the healthy default, reducing the effectiveness of the healthy nudge by some 25%.
