Obama's pick to head regulatory oversight agency draws criticism, sends Dave on tangent
Last week Obama announced that he’d be appointing Harvard Law professor (and prolific public intellectual) Cass Sunstein as head of the Office of Information and Regulatory Affairs.
You could be forgiven for reacting to that news with a large yawn. But it’s important!
First of all, OIRA is a big deal — the conduit through which the entire suite of federal regulations passes. It can be used, as it was under Reagan and Bush, to stifle such regulations, or — as will hopefully be the case under Obama — to make them smarter and more effective. Ezra Klein has a great rundown on OIRA here, explaining its history and significance.
Some progressives are worried by the appointment because Sunstein is an outspoken proponent of cost-benefit analysis (CBA), which has been the death of many a progressive reg. Over on The New Republic, NYU Law professor Michael Livermore makes the case that Sunstein is a good choice because CBA needs to be reformed rather than scrapped. (It’s a case he and his colleague Richard Revesz have made on Grist more than once.)
Others are not so sanguine. See, for instance, "Professor Sunstein’s Fuzzy Math," by Thomas McGarity in the Georgetown Law Journal. It’s a long but enlightening discussion of the kind of "expertism" (I made that word up) and fetishism of the quantitative that hampers CBA. See also Frank O’Donnell’s withering post on Wonk Room, which runs down some of Sunstein’s past efforts to block or weaken regulations, and Rena Steinzor’s equally critical take at the Center for Progressive Reform.
However! CBA is not what interests me about Sunstein. Rather, what I find interesting is the subject of his latest book Nudge, namely, regulations that take account of behavioral economics. Behavioral economics is the hot new school of economics that advocates taking into account how people actually behave. (Yes, that banal proposition is controversial in academic economics.) Sunstein argues that government regulators ought to take into account the insights of behavioral economics when crafting policy. (Also banal, but apparently revolutionary.) Rather than mandating a particular behavior, regulations would alter the decision context in small but meaningful ways to “nudge” people toward the healthier (or greener or more economical) choice. The result would be what Sunstein calls “libertarian paternalism.”
The example always offered regards 401K plans. Turns out when a company makes participation in 401Ks opt-out (check a box not to participate) rather than opt-in, you get a lot more people in the program.
Fair enough. But that’s the only example I ever hear — and I swear I’ve heard it a jillion times (see, e.g., here for the latest). Where are the other examples? Guess I should read the book.
One green example: it’d be nice to see utilities’ green power programs — whereby ratepayers agree to a modest rate increase to buy renewable power — be opt-out rather than opt-in.
Surely there are other examples, though, that have nothing to do with opt-outs. What other unobtrusive-but-effective green policy tweaks could be made to nudge people toward greener behavior?