Transformation on the Hill: Cass Sunstein


July 22, 2010. I had the opportunity to attend a session “Implications of Behavioral Research for Social Welfare Research and Policy.” It’s one of those weird cosmic events that I started a new “position” seemingly unrelated to my past life and yet one of my first opportunities was a direct link from my work at Bank of America and this new life of Social Welfare. How weird is that? For any of my BAC colleagues out there who work(ed) with me at MIT and the Center for Future Banking, this session demonstrates how the behavioral research from financial services can be directly applied to social welfare programs. Things like “stickiness” associated with loyalty programs could also be associated with social welfare programs. I think you guys should hop on this!

Anyway, for those not in the field of banking, financial services, or economics, there was still some interesting information presented at this session. In particular from guest speaker Cass Sunstein, the OIRA Administrator in the Office of Management and Budget.

Before becoming Administrator, Cass R. Sunstein was the Felix Frankfurter Professor of Law at Harvard Law School. Mr. Sunstein graduated in 1975 from Harvard College and in 1978 from Harvard Law School magna cum laude. After graduation, he clerked for Justice Benjamin Kaplan of the Massachusetts Supreme Judicial Court and Justice Thurgood Marshall of the U.S. Supreme Court, and then he worked as an attorney-advisor in the Office of the Legal Counsel of the U.S. Department of Justice. He was a faculty member at the University of Chicago Law School from 1981 to 2008.

Mr. Sunstein has testified before congressional committees on many subjects, and he has been involved as an advisor in constitution-making and law reform activities in a number of nations. A specialist in administrative law, regulatory policy, and behavioral economics, Mr. Sunstein is author of many articles and a number of books, including After the Rights Revolution (1990), Risk and Reason (2002), Laws of Fear: Beyond the Precautionary Principle (2005), Worst-Case Scenarios (2007), and Nudge: Improving Decisions about Health, Wealth, and Happiness (with Richard H. Thaler, 2008).

Sunstein highlighted a few of the government changes being lead by the current administration. Here’s a taste-tease overview of the changes:

  1. Defaults. “System” defaults should be set in the benefit of the consumer. For example the Affordable Care Act — the default is opt in for Health Care and must take action to opt out (a reversal)
  2. Simplification. Federal systems and processes should be simplified so that the target audience has a reasonable chance to fulfill their need through the system/process. For example, Federal Student Aid — highly complex now in simplification (tax data automatically populates FHFSA. SSI using a debit card.
  3. An attention to how people process information. For example, summary disclosures that are easier to read and comprehend. An expectation that materials are clear, succinct, and conspicuous. Effectively disclosed. For example, OSHA.GOVE — now within weeks of any death, everyone sees it.
  4. Social Norms. Material incentives matter but people are also influenced by social norms. The government has an obligation to understand those norms and to make decisions based on those as well as the data. For example there is a presidential injunction baring texting by federal employees while driving. Additionally, social influence can be contagious and using social influence for the “good” is a necessary incentive (for example, dealing with obesity)
  5. Cost/Benefit. The current administration’s decision making will not be based on “dogma, intuition, and anecdotes” but rather in an evidentiary fashion through humanized cost-benefit analysis. All presentations should include an assessment of benefits, uncertainties, and alternatives. Monetary equivalents do not tell us everything we need to know. We have to be aware of the ethics (fairness/equity, impact to future generations, and distributions).
  6. Open government. Knowledge must be dispersed. “sunlight improves practises, transparency is a powerful disinfectant. Examples: RECALLS.GOV, DATA.GOV,  the IT Dashboard.

So what?

  • In your strategic planning process you should not underestimate the implications of these changes. There are big things happening in DC and this type of change is pervasive. I know the government moves slowly but I can tell you this stuff is moving faster than you’d expect.
  • Also related to strategic planning, this is illustrative of how process can be as strategic as product.

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