Green nudges: An interview with Obama regulatory czar Cass Sunstein
From deceptive advertising to misguided public policy to sheer boneheadedness, Americans have no shortage of forces pushing them to make unwise choices. How else to explain Ding-Dongs? Or ruining a perfectly good planet?
Legal scholar and avowed environmentalist Cass Sunstein, however, holds out hope that we, both individually and collectively, are not condemned to irrationality. In Nudge: Improving Decisions About Health, Wealth, and Happiness (released in paperback last month), Sunstein and co-author Richard Thaler explain how enlightened “choice architecture” can close the gap between hedonism and wisdom though “libertarian paternalism”: a kind of minimalist interventionism designed to remedy some of the America’s greatest collective action problems.
“Nudges” impose no mandates. Instead, with canny combinations of framing, informing, and cheerleading, they can inspire free decisions to eat more broccoli, enroll in retirement accounts, and perhaps even rip apart fewer mountaintops. Though he was a mild-mannered law professor at Harvard at the time this interview took place, Sunstein recently became director of the White House Office of Information and Regulatory Affairs. With Sunstein in the role of President Obama’s “regulation czar,” Americans should prepare to get nudged.
What is a “nudge”? And what in the world is libertarian paternalism?
A nudge is a small change in the social context that makes behavior very different without forcing anyone to do anything. The concept behind libertarian paternalism is that it’s possible to maintain freedom of choice — that’s libertarian — while also moving people in directions that make their own lives a bit better — that’s paternalism. We think it’s possible to combine two reviled concepts. Once we put the two together we might start to have a philosophy that a lot of different people can sign on to.
Paternalism implies that there’s some notion of what “good” is. How does anyone determine what’s “good”? How do we determine what’s good for the environment?
For most nudges, we’re thinking of people’s good by reference to their own judgments and evaluations. We’re not thinking that the government should make up its own decision about what’s good for people. The environment can fit within that framework to a substantial extent, but it has a wrinkle, which is that often when we buy certain goods or use certain energy or drive certain cars.…we inflict harm on others, so our own judgments about our own welfare aren’t complete. We want nudges that do help people who are being nudged but also help people who are harmed by those who are not taking adequate account of the risks they are imposing on other people.
How can we expose those harms and the people committing them?
The nudge approach would be, for energy use in homes and automobiles, to make very clear to people what the costs of their activities are to they themselves. When we’re driving cars, most of us don’t have a concrete sense of what it’s costing per year in gasoline to use a car with bad fuel efficiency. A nudge-like solution is to let bad actors, as we might call them, actually see the economic costs to themselves of what they’re doing.
Is there a moral component to environmental nudges? Or this it all about market signals?
I think on a lot of problems, including environmental problems, we can make progress without getting stuck on issues that divide people. The price system can be used in a way that fits with people’s moral obligations. If you’re inflicting harms on other people but the costs of your actions (become) higher, then you’re probably going to inflict lower harms on other people. One of the great tasks of the next decade is to ensure that when people are creating risks though their daily activities, that they bear the cost.
I believe also that one big motivator of behavior is economic and another big motivator is moral, and for certain environmental activities we should appeal to people’s conscience. A lot of people are buying hybrids not because they save money, which they might, but because it’s the right thing to do. I just bought a hybrid myself. The reason I bought it was moral.
There are a lot of anti-nudges out there — subsidies and tax breaks for all sorts of bad behavior. Don’t we have to address those first?
We have a lot of bad nudges. People are seduced to smoke cigarettes, to buy certain high-polluting vehicles, to think about short-term goods without thinking about the long-term effects of their decisions for themselves or their descendents. So long as we have freedom of speech and a market economy, there are going to be bad nudges that we can’t do anything about, but we can meet the bad nudges with good ones.
People don’t want to be using more energy than other people…because they think they’re losing money every month and they’re not being good citizens. A lot of Americans are alarmed to find out that their energy is above the norm, if they see it. Companies all over the U.S. have been putting on their electricity bills a kind of rating of how people compare first with their neighbors and second with their efficient neighbors.
Of all the environmental efforts that have been based on mandatory, command-and-control programs, which ones have backfired the worst?
I don’t agree with the Bush administration’s assault on new source review, but I do think that the administration has been correct to complain that if you impose big burdens on new sources of pollution, you extend the life of old sources. The focus on the new sources of pollution doesn’t do anything about the old sources of pollution.
Nudges still put a lot of faith in people’s ability to make the right choices. What’s wrong with a command-and-control system when we’re dealing with global catastrophe?
I favor for climate change some sort of carbon tax or some kind of emissions trading. I would distinguish the emissions trading approach from command-and-control, because it’s just much more flexible. The advantage is that you can accomplish the same goal much more cheaply, and that means you can get more ambitious about your goal because it’s less difficult for the economy.
So the notion of a “big nudge” isn’t an oxymoron?
I don’t think it’s an oxymoron. A big nudge would be a greenhouse gas inventory, which we favor, in which every big contributor to the climate change problem gets listed in a public document. That’s a big nudge, because then you’re kind of a national villain. We think that publicity about who’s contributing to the problem would go a significant way towards reducing greenhouse gas emissions all by itself. At least it would be a pretty inexpensive experiment.
What is the role for nonprofits and activists in the system of economic nudging?
I think nonprofits have a fantastic influence. Sometimes they have an intuitive appreciation of the importance of nudges. They draw out a lot of information, and information can be a terrific nudge. If you’re a company, you probably care about two things: the bottom line and your deepest moral principles, and sometimes (environmental groups) have appealed to both. Companies consist after all of human beings, who have consciences, and we’ve seen a lot of companies in the last ten years companies willing to sacrifice at least some of the bottom line. Another thing nonprofits can do is appeal to citizens about the stakes that can activate the political process.
Why does the iPhone sell millions of units but the Ambient Orb, a similarly cool technology (a stylish globe that displays household energy usage), is virtually unknown?
The iPhone is going to make life a lot more fun and a lot more easy. The Ambient Orb maybe will save you a little money, but it’s not going to make your life a lot more fun and a lot more easy. On the other hand, maybe we can think of (other) things like the Ambient Orb that will make life significantly less expensive and easier and see what happens.
Organic or conventional?
I tend to think the enthusiasm for organic is overrated, but that doesn’t mean that, all things considered, organic isn’t best.
Paper or plastic?
I want to do some more empirical work on that.