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Nudges or Shoves in the Secondary Use of Health Data: What is the More Desirable Approach? (Part I)

By Marcelo Corrales Compagnucci, Janos Meszaros & Timo Minssen

Empirical studies in behavioral economics have demonstrated how people are biased and often make poor decisions against their best interests. This has led policy makers to promote choice-preserving approaches, a.k.a. nudges. However, there has also been an increasingly vocal group of legal scholars who are interest in asking whether mandates and bans can be more effective than nudges. As pointed out by Cass R. Sunstein and others, the rationale behind this question is very simple: If we know that people make mistakes, why should we insist on adopting approaches that preserve freedom of choice?

The main postulate of Nudge Theory is that choice architectures could improve decision-making and welfare without coercing people’s freedom. Cass Sunstein and Richard Thaler were among the front runners who advocated for more empirical behavioral studies in policy making. The latter won the Noble Prize of Economics in 2017. According to Thaler, a nudge is “any small feature in the environment that attracts our attention and influences our behavior.”

Nudges can be found everywhere in our daily lives. Prime examples of nudges and choice architectures can be found at the cafeterias of university campuses. Think of the manager of the cafeteria who has the freedom to arrange the food in certain places. The manager – or choice architect – could arrange healthier foods in a place that is more visible for the students. This would increase the likelihood that the students take the healthier option. Placing the salad at an eye level is a nudge.

In light of behavioral findings, there has also been a growing interest in asking whether mandates and bans may be more justifiable in some scenarios. Ryan Bubb and Richard Pildes are amongst some of the skeptics who criticize the behavioral approach. Their Harvard Law Review paper argued that choice architectures make ineffective policy and that nudge tools such as default rules only preserve “an illusion of choice that few people exercise rather than give consumers meaningful choice.” Moreover, the behavioral approach in their views “artificially excludes” potentially more effective regulatory tools – such as direct mandates – from its policy analysis options. In the aforementioned cafeteria example, banning junk food would count as a mandate.

As a way of illustration, think of the power of the 401(k) automatic enrollment approach to retirement saving in the U.S. This kind of policy allows employers to automatically enroll by default an eligible employee in the company’s saving plan. But the employee can opt out. According to behavioral empirical studies, this opt-out system has increased participation in 401(k) plans. However, according to Bubb and Pildes, the policy “has actually been a stunning failure.” While increasing retirement savings participation, the overall amount saved for retirement has declined because companies set the automatic contribution too low. Some companies set the default to a minimum of three percent, and many employees would have contributed much more under the traditional opt-in plan.

A cursory look in the health care sector suggests that behavioral interventions are increasing. They are often set as opt-in and opt-out default rules. A very good example to illustrate these default rules are case studies related to postmortem organ donation. There are mainly two approaches adopted around the world: opt-in and opt-out systems. Opt-in systems require the explicit consent of the deceased, whereas in opt-out systems consent is automatically assumed. In other words, the deceased is a donor by default. This has led to completely different outcomes. Opt-out default systems make the percentage of organ donation much higher than opt-in systems. For example, as pointed out by Leitzel and Corrales et al., countries such as Spain, Austria, France, Hungary, Poland, and Portugal have all implemented opt-out systems and the number of organ donation increased to 99%. By comparison, in countries that have adopted the opt-in system, such as Denmark and the Netherlands, organ donation is very low.

According to the behavioral law and economics literature, default rules – such as opt-in and opt-out systems – are among the most powerful nudging techniques, because people tend to stick to the default choice made readily available to them. The crucial question is whether governments should implement default rules for the collection of secondary health data or whether mandates would be a more desirable and effective alternative for the design of legislation and regulation.

According to Schlegel et al. the secondary use of health data applies personal health information for uses outside of direct health care delivery. It has been identified as a powerful tool to improve the quality of health care systems and reduce public cost expenditure. In our follow-up blog post, we will analyze and compare two diametrically opposed regulatory approaches. Most notably, we will look at the “National Data Opt-out” (ND opt-out) system in England, and the new Federal Data Protection Act (FDPA) in Germany. Whilst the U.K. government adopted the behavioral mode of inquiry, Germany seems to have taken a direct mandate approach.

Should governments implement nudging techniques to promote freedom of choice in the secondary use of health data? Or would this lead to an “illusion of choice?” Would direct mandates be a more effective and desirable approach? These are questions we get back to in part two of our contribution.

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Marcelo Corrales

Marcelo Corrales is Attorney-at-Law specializing in intellectual property, information technology and corporate law. His research interests are the legal issues involved in disruptive innovation technologies and biomedicine.

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