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Choosing Not to ChooseReview - Choosing Not to Choose
Understanding the Value of Choice
by Cass R. Sunstein
Oxford University Press, 2015
Review by Peter Stone
Nov 3rd 2015 (Volume 19, Issue 45)

If you think Barack Obama is a Nazi because he insists you acquire health insurance, then you're not going to like Cass Sunstein's Choosing Not to Choose: Understanding the Value of Choice. (Of course, if you think Obama is a Nazi, then you probably don't know how to read, and so this warning is likely to be wasted upon you.) If you do not think Obama is a Nazi, then you could learn a lot from Sunstein's book. Choosing Not to Choose provides an excellent example of how to bring social science to bear upon policy-related problems.

That Sunstein should write a book like Choosing Not to Choose should surprise absolutely no one. Sunstein has long been concerned with the relationship between social science and policy since his days at the University of Chicago Law School. This concern led Sunstein into the Obama administration; he served as Administrator of the White House Office of Information and Regulatory Affairs from 2009 to 2012. (He currently teaches at Harvard Law School.) It was at the University of Chicago that Sunstein first began challenging the economic approach to law embraced by such figures as Gary Becker and Richard Posner--not by rejecting the approach outright, but by updating it to reflect ongoing developments in the social sciences. Choosing Not to Choose continues this project.

In Choosing Not to Choose, Sunstein examines default rules--how they work, when they make sense, and how they might be tailored for policy purposes. A default rule determines what outcome will take place when an individual faces a choice situation and fails to select an option. On the Becker-Posner approach to law, default rules are irrelevant. At the heart of this approach to law is the assumption that people are perfectly rational. When choosing between various options, a rational agent rank orders the options and selects the one ranked highest. The default option is simply one among others to such an agent--to be chosen if best, to be discarded if not.

Unfortunately for Becker and Posner, people simply don't work like that, as Sunstein ably documents. If people have the opportunity not to choose, they often take it. There are perfectly understandable reasons for this. For one thing, choice takes effort. In order to make a choice, a person must focus attention on the choice situation and then formulate preferences over the options. (Such preferences, contra much economic orthodoxy, do not appear out of nowhere.) This takes time, energy, and resources, all of which are in short supply, and so default options often become "sticky" for this reason (pp. 36-38). In addition, defaults can convey information; if a default pension plan, for example, was created by a professional financial analyst, then employees might infer that it best protects their retirement years (p. 40). (This assumes, of course, that the default creator is trustworthy; otherwise, the default might prove positively repellent. See p. 42). Finally, defaults often stick because of loss aversion. In practice, people fear losses more than they desire gains. But what counts as a "gain" or a "loss" in a choice situation depends critically upon default. People may therefore settle for the default rather than risk winding up with something worse (pp. 44, 45). And there may be still other reasons why people might embrace the default in defiance of the standard rational choice scenario--a desire, for example, to avoid the responsibility of choosing (p. 48).

Defaults matter, then. But do they always exist? In a trivial sense, perhaps. After all, "stand around and do nothing" is pretty much always on the table. Even if inaction is illegal, one can still opt for inaction and suffer the consequences. But in practice some defaults are so awful that choice is effectively forced. In such situations, "People are required to make an active choice in the sense that if they do not, they will lose, or will not obtain, something they really want or need" (p. 90). Such situations are closer to the standard rational choice scenario than situations with a "live" default option. (There is a spectrum between these two extremes, of course.)

Defaults can thus, under the right circumstances, have a large impact upon choice. This impact can, contra orthodox economic theory, exceed that of standard incentives (rewards and penalties). Sunstein cites one study indicating that the existence of a default retirement plan can generate more savings than plan subsidies (p. 16, n. 23). This creates considerable scope for choice architects--those who "design the social context within which choices are made"--to influence human behavior (p. 5). Choice architecture has many components--it includes, for example, the framing of the various options on the table--but crucially it includes the presence or absence of a default option. Where such an option exists, a default rule is in operation. Sunstein distinguishes default rules from both active choosing, in which no default exists and so a choice is forced, and simplified active choosing, in which a default exists but the chooser must indicate a desire not to choose. (Under default rules, silence is taken as consent to the default; see pp. 148-149.) And of course the choice architect could always remove options from the table, via mandates and bans, or make some options more or less attractive, via rewards and penalties.

In short, choice architecture is a challenging enterprise, and given the number of variables in play, it is hard to lay down hard-and-fast rules for the choice architect to follow. Sunstein does not offer any such rules, but he does offer some general principles of choice architecture that can be adapted to the details of any particular choice context. Default rules, for example, "should generally be preferred to active choosing when (1) the context is confusing, technical, and unfamiliar, (2) people would prefer not to choose, (3) learning is not important, and (4) the population is not heterogeneous along any relevant dimension" (p. 18; see also p. 207). Active choosing, by contrast, "should generally be preferred to impersonal default rules when (1) choice architects are biased or lack important information, (2) the context is familiar or nontechnical, (3) people would actually prefer to choose (and hence choice is a benefit rather than a cost), (4) learning matters, and (5) there is relevant heterogeneity" (pp. 18-19; see also pp. 207-208). All of this, of course, presupposes a well-motivated choice architect--something that cannot be taken for granted. But Sunstein does consider the problem of preventing abuse--of "overcoming bad choice architects" (pp. 97-101). He insists, for example, that choice architecture take place out in the open; "the default rule should be made public and ought not to be hidden in any way" (p. 51).

Sunstein concludes the book by considering an intriguing addition to the choice architect's arsenal--personalized default rules. While default rules are normally "one size fits all," with every agent facing the same default option--Sunstein calls them "impersonal default rules" for this reason--personalized default rules are customized for each agent. Such rules could be generated using the same kind of data that Pandora uses to generate a personal music "station" for each listener (p. 109). Perhaps default purchases could be made on your behalf based upon your purchasing history. Of course, sometimes shopping is fun, and even when it is not it sometimes rewards the shopper--by helping her develop her tastes, for example. And so personalized default rules make the most sense when they are themselves the product of voluntary choice--when people in effect become their own "choice architects." Even then, society would probably not like some choices to be made by default, even if people would like to do so. One would never, for example, want to see "a political system with personalized voting defaults, so that people are automatically defaulted into voting for the candidate or party suggested by their previous votes (subject of course to opt-out)" (p. 163).

Sunstein's argument is certainly not above criticism. His normative standard, for example, is rather vague. Sunstein eschews reliance upon any detailed moral theory; he prefers to pursue an "incompletely theorized agreement," which people from many different moral positions can endorse (p. 73). The specific approach he endorses is what he calls the "informed-chooser approach"--"Select the default rule that reflects what most people would choose if they were adequately informed" (emphasis in original; p. 73). Such an approach is similar to hypothetical social contract theory, but it embraces the use of social science to fill in the details of hypothetical informed choice, rather than relying purely on armchair speculation. But elsewhere, he argues that "Choice architects should select the approach that maximizes net benefits, understood to include the full range of ingredients in social welfare. (Of course distributional considerations might matter as well.)" (p. 82). Can this be squared with the informed-chooser approach? Sunstein argues that it can, because "The informed-chooser approach follows from the focus on maximizing net benefits. If choice architects should select the default that informed choosers would like, it is because that approach produces the highest net benefits" (p. 83). But if the informed-chooser approach is desirable only because it maximizes net benefits (whatever that means), then the approach does not seem to do any work. In the end, Sunstein largely relies upon everyday intuitions of what good public policy should accomplish, without really articulating the agreement (incompletely theorized or otherwise) that he seeks.

Despite objections like these, it is difficult to hate Sunstein's book without a deep visceral suspicion of government, and the idea that it might do any good in the world. Sadly, there are many such people in the United States today, most of whom seem surprisingly willing to cash their Social Security checks. (In this regard, they follow their heroine, libertarian idol and arch-hypocrite Ayn Rand.) It is difficult to see how any productive conversation about public policy could be had with such people. But for everyone else, Choosing Not to Choose has much to say.

 

© 2015 Peter Stone

 

Dr. Peter Stone, Ussher Assistant Professor of Political Science, Trinity College, Dublin, Ireland


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