Category: Ching-Fu Lin

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is the first installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

Today’s sessions opened with a keynote address from Cass Sunstein, Robert Walmsley University Professor at Harvard. Sunstein is also the founder and director of the Program on Behavioral Economics and Public Policy at Harvard Law School.

Sunstein addressed a wide variety of in-depth issues in his talk on “Choosing Not to Choose.”

In the beginning of the talk, he provided three objections to the argument that active choice-making is a muscle and should not be interfered with. First, people often choose not to choose, and forcing them to do active choice-making is “part of the family” instead of an alternative to default rules. It is also a form of libertarian paternalism. Second, in thinking about active choosing and default rules, we should bear in mind a basic evaluation framework that helps to minimize sum of decision costs and error costs. Third, sometimes it is best to choose not to choose. In many case we should honor people’s choice not to choose when it minimizes decision costs and reduces the magnitude and number of errors (especially when people are forced to choose, they may go in the direction that is wrong or not in their best interest).

Sunstein went on to three examples on the ground to orient the audience:

• Case 1: A private company is deciding among three options: (1) automatic enrollment in insurance unless opt out, (2) opt in to insurance, or (3) as condition for starting work, forced choice of whether to be insured and which insurance plan (active choosing).
• Case 2: A utility company is deciding between a green default, a grey default for its consumers, or to force them to decide which source they prefer (no service until you decide).
• Case 3: A doctor is dealing with patient facing difficult medical situations, and could decide among: (1) present array of options, (2) default (“if it were me I would/most patients do”) with opt out.

All three cases have an institution considering requiring active choice instead of default rules. Sunstein played with the meaning of “requiring” in order to unsettle the opposition and to suggest that it is often illusory. He briefly reviewed claims such as that doctors and policymakers are prone to error as well (behavioral biases), that governments lack knowledge as well, that behavioral findings can compound the problem, or that even when people are likely to err, their autonomy to choose should be respected. He argued that the distinction between active choosing and default is rather illusory because people often want to choose not to choose (for reasons like limited bandwidth, find choosing unpleasant, don’t want to take responsibility or regret, or know they are biased). When people don’t want to choose and are forced to do active choosing, we forbid their choice not to choose. “Choice requiring paternalism is not an oxymoron.”