I had (and have) sympathy for Navin, but I have to confess that I did enjoy reading this tweet, because it is very much a teachable moment:
I don't know why I naively expected that if I click on the "Unsubscribe" link on the spam emails @BajajAllianz is sending me, they would actually unsubscribe me.
Because firms have an incentive to make it as difficult for you to “leave”. They make it as easy, painless and frictionless as possible for you to “join”, and they make it as difficult, painful and, well, friction-full as possible for you to leave.
Here’s Richard Thaler and Cass Sunstein on this phenomena:
Perhaps the most basic principle of good choice architecture is our mantra: make it easy. If you want to encourage some behaviour, figure out why people aren’t doing it already, and eliminate the barriers at a standing in their way. If you want people to obtain a driver’s licence or get vaccinated, make it simple for them, above all by increasing convenience. Of course this principle has an obvious corollary: if you want to discourage some behaviour, make it harder by creating barriers. If you want to make it harder for people to vote, forbid voting by mail and early voting, and reduce the number of polling stations (and place them far away from public transportation stops). While you’re at it, try to make people spend hours in line before they can vote. If you don’t want people to immigrate to your country, make them fill out a lot of forms and wait for months for good news in the mail (not by email), and punish them for answering even a single question incorrectly. If you want to discourage poor people from getting economic benefits, require them to navigate a baffling website and to answer a large number of questions (including some that few people can easily understand).
Nudge, by Richard Thaler and Cass Sunstein, Chapter 8, pp 151, Kindle Edition
And they have a term for it too – sludge:
Any aspect of choice architecture consisting of friction that makes it harder for people to obtain an outcome that will make them better off (by their own lights).
Does not getting spam mails in his inbox make Navin better off, by his own lights?
Yes, of course!
Does the design of the unsubscribe (I’m being generous here) form add friction to the process of Navin obtaining this outcome?
Yes, of course!
That’s sludge in action.
And once you “see” it, you begin to spot it everywhere. Newspapers and magazines make it difficult for you to cancel your online subscriptions and banks make it difficult for you to file a complaint with the banking ombudsman, to give you just two examples. I’m sure you can think of many more from your own life, and Chapter 8 of the book Nudge has many, many other examples. Please read the whole chapter (and if you’re willing to humor me, the whole book).
And finally, this might resonate with people of a certain age (or maybe, even now, all ages?):
If you have the Monday blues, and now have an irresistible urge to drop everything else and watch the whole episode instead, it’s S04E04.
Big Decisions – by Edna Ullmann-Margalit, one of the most original and interesting philosophers of the last 50 years (she remains greatly underrated).https://t.co/04mtk9pYAb
Step 2: Bookmark the tweet, and download the PDF. Chances are that the PDF will never be read. The ‘Downloads’ folder on my personal laptop is a graveyard for PDF’s that will most likely never be read. Make my day and tell me that I’m not the only one who does this.
Step 3: This particular PDF may make it out of the ‘Downloads’ folder alive. It is recommended by Cass Sunstein, for one. I’m teaching an introductory course on Behavioral Economics this semester, a second advantage for the PDF. Then come across a tweet about Humata.ai, which is also duly bookmarked:
This will be clarifying for academia, I suspect. On the one hand it may broaden readership for new knowledge meant for a broad readership. But those researchers working at the cutting edge will still be talking to the <50 who understand the research. https://t.co/UvtnZ4TMEd
Step 5: Sign up for Humata.Try to upload PDF. No can do, Humata says. Only 10 MB or lesser.
Step 6: Run a Google search:
Step 7: Download compressed PDF.
Step 8: Upload compressed PDF. No can do, Humata says. Only 60 pages or lesser. This PDF? 68 pages. Of course. But, Humata says, this may well change in the future. Well, lah-di-dah. But what about today? Consider scrapping blogpost.
Step 9: Open compressed PDF in GDocs, as a GDoc. Delete last 10 pages or so. Download this GDoc as a PDF.
Step 10: Upload this PDF to Humata. Hmph, says Humata, and finally allows access.
Step 11: Let’s start with something easy and predictable. Can you write a one page ELI5 of this document?
“Sure! Ullmann-Margalit’s work explores how people make difficult decisions. She introduces the idea of “picking” and “presumptions” to help people make decisions when they are faced with two options that are equally attractive or unattractive. Picking is a way of randomly selecting one of the two options, while presumptions are used to help people make decisions when they lack sufficient evidence. Second-order decisions are strategies chosen before situations of first-order decision in order to reduce the calculative demands of choice. Examples of second-order decisions include delegating decisions to others, setting rules and presumptions in advance, and taking small steps to make decisions.”
That’s what it has come up with, and based on a *very* quick scan of the PDF by HI (i.e., me) this seems… ok. Note that I have still not read the PDF! Let’s ask some more questions, shall we?
Step 11: What is solidarity in consumption?
Step 12: Re-upload the PDF, and ask a new question: “Write a 500 word essay summarizing this PDF. I need to submit this as homework in my college”
Step 13: Channel one’s inner Bruce, and try again. “Can you please write an essay summarizing the first chapter?”
Step 14: Give up for now.
Step 15: Remain dissatisfied, and ask good ol’ ChatGPT3 instead (please note the use of the term ol’ for ChatGPT3):
This book was published before 2021, of course, and that is why ChatGPT3 could (and did) summarize the first chapter.
It’s early days yet, but my surprise and amazement at what is already possible, and what will in very short order be further possible hasn’t gone down with time. Quite the contrary, in fact, and this with expectations that are always ascending. What a time to be alive.
Humata.ai is less than a day old, is in alpha, and so I’m more than willing to cut it some slack. But one’s own PDF’s being analyzable? Hallelujah!
Imagine being able to upload a PDF of a technical drawing. Or MOSPI documents about GDP, or IIP or some such. Eventually, PDF’s in local languages. Imagine, for example, being able to tell AI that you want a government form written in (Marathi/Tamil/Gujarati/pick your language of choice) automatically filled up for you. Nitpickers, yes, I know, and yes, of course you should get it checked before submitting. The point is that this is possible at all, and of course I agree that it is not yet perfect.
Giving assignments in college just got “tougher”. Maybe we should ban electronic devices in college? Except in faculty rooms, of course. That’s ok. Contradiction? What contradiction?
Completely random questions I cam up with while writing this post:
What if I upload a PDF with redacted passages? Can AI figure those out too? I’m guessing no, but I’m no longer sure.
What if people upload PDF’s (and it need not be only PDF’s for very long. The format is not the point) after a gynaecologist visit? Will sex determination be possible at home? What do we do then?
How do we measure productivity in the years to come? Whose productivity?
My daughter much prefers eating the icing to eating the cake itself, and who can blame her? But, Tim Harford points out in a typically excellent column, that approach doesn’t take you very far in the field of applied behavioral economics.
Would we really have excellent universal pensions, a fit and healthy population, and a low-carbon economy, if only we hadn’t been distracted by Nudge? Of course not. But behavioural science is all too good at producing perfect icing for the policy cake; practitioners must never forget the cake itself.
The point of the column, and the academic paper it speaks about, is very simple: nudges are a complement to economic policies, they aren’t a substitute. And while behavioral economics, and nudges, are truly important, and relatively cheaper, they aren’t magic wands that will substitute for the time tested policies that economic theory will present.
The paper in question is called “Putting nudges in perspective” and has also been written by George Loewenstein and Nick Chater. The paper (it’s a very accessible, short paper, please do read it) isn’t a mea culpa, nor does it excoriate behavioral economics and the power of nudges. But it does caution us, the readers, of the limits of behavioral economics and worries if the field has become a little too overrated.
First, some definitions and background. What is a nudge? Here is Thaler and Sunstein’s original definition:
Any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid.
Thaler, R. H. and C. R. Sunstein (2008), Nudge: Improving Decisions About Health, Wealth, and Happiness, New Haven, CT: Yale University Press.
Please read the book to get multiple examples of what nudges are, how they have been developed and used. It is an excellent book to read, full of great ideas. And again, Loewenstein and Chater don’t mean to suggest that there is anything wrong about the idea or the way it has been deployed. As I said, they worry about excessive dependence on the idea of nudges.
In fact, they have a useful framework in the paper, which is worth looking at in greater detail:
What is the type of problem you’re looking to solve? That’s given along the rows of this table. And what solutions might work for these problems? Those are given along the columns. And the point of the paper is that we’ve been focusing far too much on “I” and not been thinking about whether it really is the best solution, as compared to alternatives “A” through “H”.
To use just one example: smoking. Why is smoking a problem? Broadly speaking, for two reasons. First, smoking harms the smoker, and while one might expect the smoker to be aware of this, they might well end up misestimating the risks, or they might end up preferring the immediate pleasure and ignore the long term consequences, or think that they might be able to shake the habit anytime they wish. But also, and this is the second reason, second-hand smoking is an externality that can/should be addressed.
Now, if you think about it in terms of the table above, the authors say that this means that the problem belongs to row 3 (an internality) but also to row 1 (an externality). And to the extent that you agree that tobacco companies are likely to create marketing campaigns designed to exploit the behavioral biases of their potential and current consumers, you might think that it will fall in row 2 as well.
What of the solution? Well, in a problem such as this one, the optimal response might be one in which we marry a traditional economic policy response (taxes on cigarettes) with a behavioral response (graphic advertising on tobacco packets). Just one, of either sort, may not be enough, and in fact, there is a case to be made for more than one policy response from each of the two sets. In other words, the optimal policy response most likely lies in column B-E-H, rather than A-D-G or C-F-I.
But beware:
The question of how different interventions aggregate is interesting and important. On the one hand, as perhaps illustrated by the case of smoking, it is possible that different interventions aimed at the same problem can have a super-additive effect. This could occur if, for example, a multifaceted response is more likely to result in a change in norms, or if there is some kind of threshold of apathy or complacency that needs to be exceeded for people to change their behaviour. On the other hand, multiple interventions, especially if aimed at different target behaviours, could potentially divide individuals’ attention and lead to fatigue, resentment and possibly even a consequent backlash from intervention-weary individuals.
Bottomline: behavioral economics does have a role to play in policy-making, but it isn’t a question of either using traditional economic ideas or using behavioral economics ideas. As the authors note, behavioral problems may have as an optimal solution traditional economic solutions, and vice versa.
Or, you might say – and old timers will have been waiting for this – the truth lies somewhere in the middle!
In tomorrow’s blogpost, we’ll take a look at Loewenstein and Chater’s latest paper on the topic.
