Summer READINGS LECTURES d’été · the university’s famous School of Economics. Sunstein and Thaler collaborated. In 2008 they published Nudge: Improving Decisions About Health,

POLICY OPTIONSJULY-AUGUST 2015

35OPTIONS POLITIQUESJUILLET-AOÛT 2015

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SIMPLER

DEALING WITH LOSERS

RÉINVENTER LE QUÉBEC

BRAVE NEW CANADA

ENLIGHTENMENT 2.0

CARBON BUBBLE

MONKEYS, MYTHS AND MOLECULES

EARLY INTERVENTION

THE CROWN AND PARLIAMENT

BRUT

INCOME INEQUALITY

Summer READINGSLECTURES d’été

Digital Collage: Auni MilneDragonflies, Books and Clouds: Shutterstock

OPTIONS POLITIQUESJUILLET-AOÛT 2015

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LECTURES d’été


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Q&A

A man is on a first date. “If you could have any job

in the world,” his date asks, “what would it be?”

Most men would quickly think up something with

some romantic appeal, like “an ornithologist in Bali,” but

Harvard law professor Cass Sunstein is a little unusual. With

a look that he described in 2013 as “dreamy, faraway, what-

could-possibly-be-better?” he told his date he would like to be

the administrator of the Office of Information and Regulatory

Affairs (OIRA), a branch of the White House responsible for

coordinating reviews of new federal regulations to ensure they

are cost-effective and no more burdensome than necessary.

“Miraculously, I got a second date,” Sunstein wrote

(he ultimately married Samantha Power, who is now the

US ambassador to the United Nations). And when Barack

Obama became president, he got his dream job.

Sunstein’s years at the OIRA — an office he calls “the

cockpit of the regulatory state” — became the basis for

his 2013 book, Simpler: The Future of Government. For

anyone interested in public policy, Simpler is essential

reading. Not only is Sunstein a leading public intellectual,

he has practical experience in public administration. And

he can write. There are very few of his kind.

Sunstein’s early career was at the University of Chicago,

where he delved into constitutional law, civil liberties,

and other traditional concerns of law professors. Later he

became fascinated with recent research in psychology and its

implications for law. In 1995, Richard Thaler, an economist,

joined the faculty. Thaler was as interested in psychology as

Sunstein was, and was just as unimpressed by the “Homo

economicus” model that dominated the thinking of the

economic giants — many of them Nobel laureates — at

the university’s famous School of Economics. Sunstein

and Thaler collaborated. In 2008 they published Nudge:

Improving Decisions About Health, Wealth, and Happiness.

Nudge was a surprise global bestseller, and politicians the

world over took notice. David Cameron embraced the book

with the passion of a convert and created a “nudge unit” when

he became prime minister of the United Kingdom. Sunstein

and Thaler’s thinking was slower to spread in Canada, but

various governments have started to take a look. Ontario

recently announced it will create its own nudge unit.

Sunstein continues to publish a torrent of books and

papers. He even dabbles in journalism; his articles can be as

quirky as they are insightful. In a recent essay, he looked at

the origins of the original “Star Wars” movie and what it says

about how laws and constitutions are really created.

Q&AWITH CASS SUNSTEIN


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with Cass sunstein

I n June, Sunstein answered some questions for Policy Options via email.

Policy Options: Your education and early career — Har-vard, clerking for a Supreme Court justice, working in the Justice Department, appointed an assistant professor — are what we might expect of a future esteemed law professor at an elite university. But at some point you veered off into psychology, and today you are best known for your extensive writing on the nexus between psychology and public policy. What got you interested in psychology? Why did it become so central to your thinking and work?Cass Sunstein: I was at the University of Chicago for many years, when the rational actor model was ascendant. For years, I thought the model was powerful but wrong. It took psychology, and behavioural economics, to give some clar-ity about when and why it is wrong. When I read Thaler, and Kahneman and Tversky, it was like a sunburst, or a thunderclap. (Also many of the underlying findings are funny and fun.)

PO: It seems psychology is increasingly influential, even fashionable. Behavioural economics and finance are challenging old paradigms, psychology is all over the best-seller lists, and seemingly everyone has read (or at least bought) Daniel Kahneman’s Thinking Fast and Slow. Many politicians have discussed your work, or even created “nudge units” to apply the ideas de-

veloped in Nudge, the global bestseller you co-wrote with Richard Thaler. So is it time to declare victory? In your view, do most high-level policy-makers, execu-tives and academics understand, accept and apply the basic insights of modern psychology?CS: It’s certainly right to say that certain findings in psy-chology and behavioural economics are increasingly well known. For policy purposes, victory comes not when some ideas prevail over others, but when effective poli-cies are implemented, improving human lives (in part by making them healthier and longer). In some ways, we’re getting there. High-level officials are usually focused on problems, not theories, but increasingly, there is aware-ness that some of the best solutions are informed by relevant behavioural science. In the private and public sector, high-level types tend not to think about prospect theory and the representativeness heuristic, but they know, more than ever, that default rules really matter, and that complexity can be a big problem. A lot of people might not be able to define the term “loss aversion,” but they are aware that people dislike losses more than they like equivalent gains.

PO: As you’ve defined it, a “nudge” is a pretty simple concept and yet it has often been misrepresented. So what is your quickest and easiest summary of what a nudge is and is not? Why do you think people still misunderstand that, or at least have trouble applying it accurately?

Q&A


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Summer READINGS

favourite academic articles have essentially no relevance to policy-making. I was much surprised to see how impor-tant the public comment process is to regulatory policy. There is a lot of dispersed information out there, and government benefits a lot if it has a way to obtain it. I was also surprised to see the immense importance of face-to-face meetings in government, and the value of such meet-ings, where you really can aggregate information, and often find a good, agreeable path forward amidst initially intense disagreement.

PO: When you were nominated to head the OIRA, there was criticism. Notably, the critics tended to be found pretty far out on both ends of the political spectrum. Bernie Sanders, the only avowed socialist in the US Senate, voted against your appointment; Glenn Beck called you “the most dangerous man in America.” Criti-cism of White House appointees is standard fare, of course, but mirror-image criticism from distant points on either end of the political spectrum is more than a little unusual. What did you make of it? And have you ever been tempted to have a T-shirt emblazoned with “the most dangerous man in America”? CS: I was lucky enough to be working as a senior adviser in the Office of Management and Budget at the time, and most of my focus was on the very serious problems we were facing (resolving the situation of General Motors and Chrysler, cre-ating a new system of open government, thinking through health reform legislation, producing a financial reform bill).

CS: A nudge is an intervention that steers people in a cer-tain direction but that fully respects freedom of choice, and that imposes no costs on people who seek to go their own way. A GPS is an iconic example; so is a reminder or warning; so is a default rule. Good nudges, as Thaler and I understand them, are designed to promote people’s welfare as judged by themselves. I do think that most people under-stand the idea pretty well.

PO: As an academic, you studied regulation closely and worked with regulators. But still, you were an ac-ademic — until you became the top regulator. Those are very different worlds. Were there surprises for you personally? What about generally? Do academics and regulators/administrators/policy-makers understand each other and the challenges they face?CS: Most academics don’t understand policy-makers very well, and most policy-makers don’t understand academ-ics very well. I did a lot of listening! Academics are inter-ested in novel, interesting findings. Policy-makers want to solve problems, and a brilliant, novel finding might be too abstract to be helpful, and might be unhelpful even if it is quite concrete. Here are some questions that inter-est policy-makers: What can we do to promote economic growth, to reduce poverty, to prevent sexual violence? The best articles in one’s favourite academic journal might not have a lot to say about those questions. Those articles may lay foundations for a great deal, but they are usually a very separate enterprise from policy-making. Many of my

with Cass sunstein


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If you are fortunate enough to serve the American people, you should do the best you can, and not focus on back-ground noise. But certainly I did learn a lot about the confir-mation process, which can be a roller coaster.

PO: In Simpler, you argue that “simple” is “the future of government,” but “simpler government” should not be confused with “less government.” So what do you mean by “simple”?CS: Simple means easy, and navigable. My two-year-old daughter can use an iPad. Government should be more like an iPad, in the sense that people should not be baffled by it. When citizens have to interact with their government — to get services or licences, for example — everything should be as easy as possible. Regulations should not be confusing.

PO: Consumer information seems like a candidate for “simple government” — just give people informa-tion and let them make decisions. But the reality is far more complicated and it takes a lot of work to achieve simplicity. Why?CS: Oh, it can be done! It’s not as hard as all that. It’s not hard at all. (Is that answer simple enough?)

PO: You argue that cost-benefit analysis is an essential tool for simpler government. But isn’t it another layer

of bureaucracy, another barrier to getting things done? How can it be, as you call it, an “engine of sim-plification”? The same is true of greater public con-sultation. You say it can contribute to simpler govern-ment, but isn’t it another slow, troublesome process that can gum up the works?CS: Some barriers to regulations are a good idea, and they are an engine of simplification, because they prevent new barriers and unnecessary complexity. Cost-benefit analy-sis is an excellent way of ferreting out regulations and requirements (new and old) that impose unjustified bur-dens. It isn’t always good to eliminate barriers to “getting things done,” because those things can be ill-considered and can impose a big toll on people.

PO: Most academics would be happy to publish as many papers as you have books. A complete list of your books, academic papers, lectures and journalism would resemble a small-town telephone book. How are you able to keep up that pace? Do you not sleep? CS: I get plenty of sleep! I don’t do a lot of things out-side of teaching and research, so I have plenty of time to write. (I don’t have many administrative duties at the university.) If you can write in airports or on planes (and I can), it’s a help. n

A nudge is an intervention that steers people in a certain direction but that fully respects freedom of choice, and that imposes no costs on people who seek to go their own way.


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Summer READINGS

Regulation that asksthe right questions CASS SUNSTEIN

The former Office of Information and Regulatory Affairs (OIRA) administrator argues that we need a regulatory system overhaul that is defined by clear goals and with an empirical basis for assessment.

Ce monde a besoin d’un système de réglementation restructuré en fonction d’objectifs clairs et d’évaluations fondées sur des données, affirme l’ancien administrateur du Office of Information and Regulatory Affairs (OIRA) des États-Unis.

Cass R. Sunstein is an American legal scholar, particularly in the fields of constitutional law, administrative law, environmental law, and law and behavioural economics, who was the administrator of the White House Office of Information and Regulatory Affairs in the Obama administration. From SIMPLER: The Future of Government (New York: Simon & Schuster). Copyright © 2013 by Cass Sunstein. Reprinted by permission of Simon & Schuster, Inc. All rights reserved.

The OIRA administrator is often described as the nation’s “regulatory Czar.” That is a wild overstate-ment. The president leads the executive branch,

and the United States has no Czars (really). But the term does give a clue to the influence and range of the office. OIRA is the cockpit of the regulatory state.

The office oversees federal regulations involving clean air and water, food safety, financial stability, national sec-urity, health care, energy, agriculture, workplace safety, sex and race discrimination, highway safety, immigration, education, crime, disability rights, and much more. As a general rule, no significant rule can be issued by any of the nation’s Cabinet departments — including the Department of Transportation, the Department of Treasury, the Depart-ment of State, and the Environmental Protection Agency — unless OIRA says so.

Of course, OIRA does not work on its own. On the con-trary, the OIRA administrator works for the president, and many others in the Executive Office of the President have

important roles. For example, the OIRA administrator works under the director of the Office of Management and Budget, a Cabinet member whose principal concern is usually the budget, but who may have something to say about rules. In addition, the chairs of the National Economic Council and the Domestic Policy Council (both with offices in the West Wing of the White House) might have a strong view about federal regulations. Their positions count.

On scientific issues, the head of the Office of Science and Technology Policy is central. On economic matters, the Council of Economic Advisers has a lot of technical expertise and is indispensable to federal rulemaking. The Office of the Vice President may have important information to add. The White House is managed by the president’s chief of staff, and under any president, the chief of staff is immensely import-ant, because he is in charge of ensuring fidelity to the presi-dent’s priorities. OIRA is part of a team, not a free agent, and the unambiguous leader of the team is the president.

Nonetheless, OIRA’s authority to slow down or even to halt regulations — to say no to members of the president’s Cabinet — gives the administrator a major role in shaping their content. Suppose, for example, that OIRA believes that there is a better way to save lives on the highway. Perhaps a new approach would be more lenient, more stringent, sim-pler, or just different. If that is what OIRA thinks, it has a real opportunity to work with the Department of Transportation to explore that possibility. And if OIRA thinks that a rule — involving, for example, clean water — should not go forward, it is possible that the rule will not see the light of day. (After I had been in the job for a few years, a Cabinet member showed

Cass sunstein


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government, are indispensable too. To resolve disputes about the likely effects of rules, economists are essential. Some of the most helpful insights come from cutting-edge social science, including behavioral economics, which attempts to study how people actually act, rather than how standard economic theory supposes that they act. We have started to incorporate the resulting findings, and we need to do far more.

The plea for empirical foundations may seem obvious, a little like a plea for sense rather than nonsense, or for a day of sunshine rather than brutal cold. If so, think for a moment about Moneyball, the best-selling book (and Os-car-nominated film) about Billy Beane, who worked with his statistics-obsessed assistant, Paul DePodesta, to bring the Oakland Athletics into the top tier of baseball teams. In a short time, Beane and DePodesta transformed baseball itself, by substituting empirical data for long-standing dogmas, intuitions, and anecdote-driven judgments.

Consider this exchange:“The guy’s an athlete, Bill,” the old scout says. “There’s

a lot of upside there.”“He can’t hit,” says Billy.“He’s not that bad a hitter,” says the old scout.“Yeah, what happens when he doesn’t know a fastball

is coming?” says Billy.“He’s a tools guy,” says the old scout...“But can he hit?” asks Billy.“He can hit,” says the old scout, unconvincingly.Paul reads the player’s college batting statistics. They

contain a conspicuous lack of extra base hits and walks.“My only question,” says Billy, “if he’s that good a hit-

ter why doesn’t he hit better?”…Over and over the old scouts will say, “The guy has

a great body,” or “This guy may be the best body in the draft.” And every time they do, Billy will say, “We’re not selling jeans here,” and deposit yet another highly touted player, beloved by the scouts, onto his shit list.

Too much of the time, those thinking about regulation have been a lot like old baseball scouts in the era before Billy Beane. Scouts said that someone is “a tools guy” or that he “has a great body.” Those seeking or resisting regulation say, “The public is very worried,” or “Polls show that the major-ity of people strongly favor protection against air pollution,” or “The industry has strong views,” or “The environmental groups will go nuts,” or “A powerful senator is very upset,” or “If an accident occurs, there will be hell to pay.” In gov-ernment, I heard one or more of these claims every week.

None of these points addresses the right question, which is what policies and regulations will actually achieve. As we shall see, we keep developing better tools for an-swering that question. All over the world, regulatory systems need their own Billy Beanes and Paul DePodestas, carefully assessing what rules will do before the fact and testing them after the fact, and occasionally depositing some highly tout-ed rules, beloved by regulators, onto the shit list.

We’re not selling jeans here. n

up at my office and told my chief of staff, “I work for Cass Sun-stein.” Of course that wasn’t true — but still.)

OIRA also has a big role in shaping the president’s agen-da. With the support of the president and other high-level officials, it can help move the government in different direc-tions. It can refuse to approve complex or expensive rules. It can certainly nudge. It can protect small businesses, perhaps by encouraging agencies to exempt them from expensive rules. It can promote new rules to protect human rights and food safety, to prevent sexual violence, or to produce big in-creases in the fuel economy of cars. It can support efforts to protect against terrorist attacks. It can ask agencies to deregu-late — to eliminate outmoded and costly regulatory require-ments. It can promote efforts to prevent distracted driving, to prohibit discrimination on the basis of sexual orientation, or to use electronic health records (potentially saving both money and lives). In multiple ways, it can help save lives.

As it happens, I have known President Obama for many years, ever since 1991, when he started to teach at the Uni-versity of Chicago Law School (my professional home for over a quarter of a century). A year or so before that, a friend of mine on the Chicago faculty said that we should consider hiring a sensational Harvard Law Review editor with whom he had been working. I remember the conversation well, in part because of the young editor’s unusual name. Chicago ended up hiring Barack Obama, who became a colleague and a friend. Blessed by that bit of good fortune, I was privileged to get my dream job.

H ere is a possible approach to regulatory issues, one that can be tempting to some government officials: Ask which groups favor or oppose a proposed rule, who

would be satisfied and who distressed, and whether a particu-lar approach could be chosen that would please some without displeasing others. These questions are not exactly irrelevant; public officials need to answer them. But they are far from the most important matters. On the rare occasions when mem-bers of my staff pointed out the views of interest groups, I responded (I hope with humor, but also with a point), “That’s sewer talk. Get your mind out of the gutter.”

As OIRA administrator, I sought to focus instead on these questions: What do we actually know about the likely effects of proposed rules? What would be their human consequences? What are the costs and benefits? How can government avoid reliance on guesses and hunches? What do we know about what existing rules are actually doing for — or to — the Amer-ican people? How can we make things simpler?

Science is often indispensable to answering these ques-tions, and scientific experts, inside and outside the federal

Summer READINGS LECTURES d’été · the university’s famous School of Economics. Sunstein and Thaler collaborated. In 2008 they published Nudge: Improving Decisions About Health,

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