Nudge and the Law: A European Perspective PDF
Preview Nudge and the Law: A European Perspective
Modern Studies in European Law Nudge and the Law A European Perspective With a Foreword by Cass Sunstein Edited by Alberto Alemanno and Anne-Lise Sibony NUDGE AND THE LAW Behavioural sciences help refi ne our understanding of human decision-making. Their insights are immensely relevant for policy-making since public interven- tion works much better when it targets real people rather than imaginary beings assumed to be perfectly rational. Increasingly, governments around the world are keen to rely on those insights for reshaping public interventions in a wide range of policy areas such as energy, health, fi nancial services and data protection. When policy-making meets behavioural sciences, effective and low-cost regula- tions can emerge in the form of default rules, smart disclosure and simplifi cation requirements. While behaviourally-informed intervention has a huge potential for policy-making, it also attracts legitimacy and practicability concerns. Nudge and the Law takes a European perspective on those issues and explores the legal implications of the emergent phenomenon of behavioural regulation by focusing on the challenges and opportunities it may offer to EU policy-making and beyond. Modern Studies in European Law Recent titles in this series: EU Environmental Law, Governance and Decision-Making Maria Lee Shaping the Single European Market in the Field of Foreign Direct Investment Philip Strik Nationalism and Private Law in Europe Guido Comparato EU Asylum Procedures and the Right to an Effective Remedy Marcelle Reneman The EU Accession to the ECHR Edited by Vasiliki Kosta, Nikos Skoutaris and Vassilis P Tzevelekos The European Court of Justice and External Relations: Constitutional Challenges Edited by Marise Cremona and Anne Thies A Critique of Codifi cation Leone Niglia Protecting Vulnerable Groups: The European Human Rights Framework Edited by Francesca Ippolito and Sara Iglesias Sanchez EU International Relations Law Second Edition Panos Koutrakos Fundamental Rights in the EU: A Matter for Two Courts Edited by Sonia Morano-Foadi and Lucy Vickers What Form of Government for the European Union and the Eurozone? Federico Fabbrini, Ernst Hirsch Ballin and Han Somsen The UK and European Human Rights: A Strained Relationship? Edited by Katja S Ziegler, Elizabeth Wicks and Loveday Hodson The European Union in International Organisations and Global Governance: Recent Developments Edited by Christine Kaddous For the complete list of titles in this series, see ‘ Modern Studies in European Law ’ link at w ww.hartpub.co.uk/books/series.asp Nudge and the Law A European Perspective Edited by Alberto Alemanno and Anne-Lise Sibony OXFORD AND PORTLAND, OREGON 2015 Published in the United Kingdom by Hart Publishing Ltd 16C Worcester Place , Oxford , OX1 2JW Telephone: + 44 (0)1865 517530 Fax: + 44 (0)1865 510710 E-mail: [email protected] Website: h ttp://www.hartpub.co.uk Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland , OR 97213-3786 USA Tel: + 1 503 287 3093 or toll-free: (1) 800 944 6190 Fax: + 1 503 280 8832 E-mail: [email protected] Website: http://www.isbs.com © The editors and contributors severally 2015 The editors and contributors have asserted their right under the Copyright, Designs and Patents Act 1988, to be identifi ed as the authors of this work. Hart Publishing is an imprint of Bloomsbury Publishing plc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission of Hart Publishing, or as expressly permitted by law or under the terms agreed with the appropriate reprographic rights organisation. Enquiries concerning reproduction which may not be covered by the above should be addressed to Hart Publishing Ltd at the address above. British Library Cataloguing in Publication Data Data Available I SBN: 978-1-84946-732-2 I SBN (ePDF): 978-1-78225-949-7 Foreword The Ethics of Nudging CASS R SUNSTEIN I. THE CENTRAL ARGUMENT This book offers an exceptionally impressive, and wide-ranging, set of essays on behaviourally informed approaches to law and regulation in Europe, with particu- lar reference to nudges. In Europe as elsewhere, an important question is drawing increasing attention: what are the ethical limits on nudges? This question is in the background of many of the chapters, and sometimes it emerges in the fore- ground (chapter 4 by Van Aaken, chapter 13 by Feldman and Lobel, chapter 14 by Alemanno and Sibony). It is on this question that I would like to focus in this Foreword. In free societies, respectful of human dignity and dedicated to the idea of self-government, the issue is a pressing one. My central argument is that at least if they are taken in general or in the abstract, the leading ethical objections lack a great deal of force, and for two different rea- sons. F irst , both nudges and choice architecture are inevitable, and it is therefore pointless to wish them away. Second , many nudges, and many forms of choice architecture, are defensible and even required on ethical grounds, whether we care about welfare, autonomy, dignity, self-government, fair distribution, or some other value. Nonetheless, it is true that all government action, including nudges, should face a burden of justifi cation (and sometimes a heavy burden). If the govern- ment requires disclosure of information, or establishes particular default rules, it must explain and defend itself. The fact that people retain freedom of choice, and are ultimately permitted to go their own way, does not give public offi cials a kind of license to do whatever they want. If we value democratic self-government, we will be inclined to support nudges and choice architecture that can claim a democratic pedigree and that promote democratic goals. Any democracy has a form of choice architecture that helps defi ne and constitute its own aspirations to self-government. Of course no one should approve of nudges or choice architecture in the abstract or as such. Some nudges, and some forms of choice architecture, do indeed run into convincing ethical objections. Suppose, for example, that a nation establishes a default rule stating that unless voters explicitly indicate otherwise, they will be vi Foreword presumed to support the incumbent leader in the election. Or suppose that a nation establishes a default rule to the effect that unless citizens indicate otherwise, their estates will revert to the nation ’ s most powerful political party upon their death. There is ample reason to question a default rule of this kind even if citizens are authorised to opt out. A central question is whether nudges and choice architecture promote welfare or autonomy and dignity. Another question is whether they are consistent with democratic norms. Some nudges have illicit ends, and they are objectionable for that reason. II. CONCEPTS AND DEFINITIONS A. In General Nudges are interventions that steer people in particular directions but that also allow them to go their own way.1 A reminder is a nudge; so is a warning. A GPS nudges; a default rule nudges. To qualify as a nudge, an intervention must not impose signifi cant material incentives. 2 A subsidy is not a nudge; a tax is not a nudge; a fi ne or a jail sentence is not a nudge. To count as such, a nudge must fully preserve freedom of choice. If an intervention imposes signifi cant mate- rial costs on choosers, it might of course be justifi ed, but it is not a nudge. Some nudges work because they inform people; other nudges work because they make certain choice easier; still other nudges work because of the power of inertia and procrastination. Attention is a scarce resource. When applications (for loans, for educational opportunities, for refi nancing mortgages, for training, for fi nancial benefi ts of any kind) are complex and diffi cult, people may not apply; a great deal of money might be lost as a result. 3 This point has implications for regulatory design. It sug- gests that the private sector may help or hurt people by focusing their attention in certain ways. The same is true for the public sector, whether or not it seeks to do so. A regulation might be written or applied in a way that makes certain features of a situation especially salient. For the future, we could imagine nudges that are designed to improve anti-pov- erty programmes; environmental programmes; energy programmes; 4 retirement and social security programmes; anti-obesity programmes; educational pro- grammes; health care programmes; and programmes to increase organ donation.5 1 See R Thaler and CR Sunstein , N udge ( New Haven , CT , Yale University Press , 2008 ) . 2 On some of the complexities here, see CR Sunstein , Why Nudge? ( New Haven , CT , Yale University Press , 2014 ) . 3 See B Keys et al, ‘ Failure to Refi nance ’ ( 2014 ), available at www.nber.org/papers/w20401 . 4 ibid. 5 For an interesting empirical result, see J Kessler and A Roth, ‘ Don ’ t Take “ No ” For An Answer: An Experiment With Actual Organ Donor Registrations ’ (2014), available at www.nber.org/papers/ w20378 (fi nding that required active choosing has a smaller effect, in terms of getting people to sign up for organ donation, than prompted choice). Foreword vii We could also imagine forms of choice architecture that are designed to combat race and sex discrimination, to help disabled people, and to promote economic growth. A great deal of future work needs to be devoted to choice architecture in these and related domains. There is no question that certain nudges, and certain kinds of choice archi- tecture, can raise serious ethical problems. Consider, for example, a government that used nudges to promote discrimination on the basis of race, sex, or religion. Any fascist government might well (and almost certainly does) nudge. Terrorists nudge. Even truthful information (eg about crime rates) might fan the fl ames of violence and prejudice. (If people learn that crime is widespread, they might be more likely to engage in crime, because it is the social norm). Groups or nations that are committed to violence often enlist nudges in their cause. Even if nudges do not have illicit ends, it is possible to wonder whether those who enlist them are treating people with respect. Consider in this light a tale from the novelist David Foster Wallace: There are these two young fi sh swimming along and they happen to meet an older fi sh swimming the other way, who nods at them and says ‘ Morning, boys. How ’ s the water?’ And the two young fi sh swim on for a bit, and then eventually one of them looks over at the other and goes ‘ What the hell is water? ’6 This is a tale about choice architecture. Such architecture is inevitable, whether or not we see it. It is the equivalent of water. Weather is itself a form of choice architecture, because it infl uences what people decide. Human beings cannot live without some kind of weather. Nature nudges. The common law is a regulatory system, and it will nudge, even if it allows people to have a great deal of fl exibility. Nor can the state and the legal system avoid nudging. Any government, even one that is or purports to be fi rmly committed to laissez-faire, has to establish a set of prohibitions and permissions, including a set of default entitlements, establishing who has what before bargaining begins. Recall that the rules of contract (as well as property and tort) provide a form of choice architecture for social ordering. It is true that choice architecture can maintain freedom of choice; it is also true that choice architects can at least aspire to neutrality. But choice architecture itself is inevitable, which means that it is pointless to object to it on ethical groups. B. Nudging System 1 In behavioural science, it has become standard to distinguish between two families of cognitive operations: System 1, which is fast, automatic, and intuitive, and Sys- tem 2, which is slow, calculative, and deliberative. 7 System 2 can and does err, but System 1 is distinctly associated with identifi able behavioural biases. To be sure, 6 Available at moreintelligentlife.com/story/david-foster-wallace-in-his-own-words. 7 See D Kahneman , T hinking, Fast and Slow ( New York , NY , Farrar, Strauss and Giroux , 2011 ) . viii Foreword there is, in some circles, intense controversy about the appropriate evaluation of the automatic system and about the extent to which it should be associated with error. Perhaps our intuitions usually work well in the situations in which we ordi- narily fi nd ourselves. But there is no question that our intuitions often misfi re, and that a good nudge could provide a great deal of help. Some nudges, imposed by law and regulatory agencies, attempt to strengthen the hand of System 2 by improving the role of deliberation and people ’ s consid- ered judgements — as, for example, through disclosure of relevant information, debiasing, and the use of precommitment strategies. Other nudges are designed to appeal to, or to activate, System 1 — as in the cases of graphic warnings. Some nudges do not appeal to System 1, but work because of its operation — as, for example, where default rules have large effects because of the power of inertia. A nudge might be justifi ed on the ground that it helps counteract a behavioural bias, and (as we shall see) some people object to such efforts, especially if they seem to target or to exploit System 1. But (and this is an important point) a behav- ioural bias is n ot a necessary justifi cation for a nudge, and nudges need not target or exploit System 1 in any way, as emphasised by several authors in this volume (Alemanno and Sibony in chapter 14). Disclosure of information can be helpful even in the absence of any bias. A default rule simplifi es life and might therefore be desirable whether or not a behavioural bias is involved. A GPS is useful even for people who do not suffer from any such bias. As the GPS example suggests, many nudges have the goal of increasing navigability — of making it easier for people to get to their preferred destination. Such nudges stem from an understanding that life can be simple or hard to navi- gate, and a goal of helpful choice architecture is desirable as a way of promoting simple navigation. To date, there has been far too little attention to the close rela- tionship between navigability and (good) nudges. Insofar as the goal is to promote navigability, the ethical objections are greatly weakened and might well dissipate. In this regard, Alemanno and Sibony in their concluding chapter offer some help- ful refl ections on how to assess the autonomy objection to nudges. They argue, plausibly in my view, that many behavioural interventions are neutral with respect to autonomy because they affect behaviour in instances where, in all likelihood, no deliberation would have taken place. C. ‘ As Judged by Themselves ’ When third parties are not at risk, and when the welfare of choosers is all that is involved, the objective of nudging is to ‘ infl uence choices in a way that will make choosers better off, a s judged by themselves ’ .8 In many cases, that standard is straightforward to apply. If a GPS steers people toward a destination that is not 8 Thaler and Sunstein (n 1) 5.
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