Category Archives: Regulation

Inconsistent Paternalism

All but one US state requires drivers to wear seat belts, and every airline flight must be delayed so all passengers can hear a safety lecture, but BASE jumping is widely allowed and terribly dangerous:

Veterans of BASE jumping — an acronym that stands for parachute free falls from buildings, antennae, spans or earth — call their sport the most dangerous in the world, with only 1,200 experienced jumpers and at least 115 fatalities. … BASE jumping is illegal in parts of the world and across the East Coast … Right now, a BASE jumper dies somewhere in the world about once every three weeks.

This Washington Post article mentions the danger but is not particularly disapproving, a vastly different tone I’m sure than if they were reporting on other nations without seat belt laws.  Why the vastly different treatment?

My best explanation is social status: we are much more paternalistic toward the low in status.  We allow rich people to invest in most anything they like, but limit poor people to investments approved by regulators, and we are far more concerned about alcohol and illegal drug use by the poor than the rich, even though both groups use them at similar rates.  An inner city activity with a similar mortality rate to BASE jumping would be illegal so fast it would make your head spin.

Added: To see what best explains paternalism, we should create a dataset of behaviors, where we code the degree of paternalism regarding those behaviors, and other possible explanatory features of those behaviors, so we can systematically check for patterns.  Any grad student interested in trying this?

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Regulation Ratchet

A recent email asked me to admit that the current credit crunch shows we need more government regulation; the author thought it "easy to see" regulators could have foreseen and avoided the problem. This made me realize that we often hear claims that bad economic news, such as the dotcom crash, rising oil prices, or rising medical prices, suggests we need more regulation.  But we rarely hear claims that bad news suggests we need less regulation, or that good news suggests we need less regulation. 

Now perhaps it makes sense to change policy more in bad times than good, though even this is not clear; after all, we can better afford to experiment with change in good times. But it seems biased to call for more regulation given a certain cue, without calling for less regulation given some other cue.  If we all agreed we have too little regulation, then we should just add more regardless of whether news is good or bad.

This bias would seem to produce a regulation ratchet: increased regulation after bad times, but little change after good times.  Of course this by itself doesn’t say if we have too much or not enough regulation; it just says the time trend is wrong.

Perhaps this regulation ratchet arises from a hindsight bias, i.e., an illusion that regulators could have foreseen current crises, combined with a tendency to more often think "something must be done" in bad times, combined with the Politician’s Syllogism, (which I previously called Caplan’s fallacy):

Something must be done.
This is something.
Therefore, this must be done.

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Why Teen Paternalism?

Though in centuries past 15-19 year olds were treated as adults, today we often paternalistically restrict their behavior because of "immature" brains.   An OpEd in Monday’s New York Times says 35-54 year olds actually behave worse:

A spate of news reports have breathlessly announced that science can explain why adults have such trouble dealing with teenagers: adolescents possess "immature," "undeveloped" brains that drive them to risky, obnoxious, parent-vexing behaviors. … But the handful of experts and officials making these claims are themselves guilty of reckless overstatement. More responsible brain researchers … caution that scientists are just beginning to identify how systems in the brain work. …

Our most reliable measures show Americans ages 35 to 54 are suffering ballooning crises: … 46,925 fatal accidents and suicides in 2004, leaving today’s middle-agers 30 percent more at risk for such deaths than people aged 15 to 19 … 21 million binge drinkers (those downing five or more drinks on one occasion in the previous month), double the number among teenagers and college students combined …

Overdose rates for heroin, cocaine, pharmaceuticals and drugs mixed with alcohol far higher than among teenagers. … More than half of all new H.I.V./AIDS diagnoses in 2005 were given to middle-aged Americans, … It’s true that 30 years ago, the riskiest age group for violent death was 15 to 24. But those same boomers continue to suffer high rates of addiction and other ills throughout middle age, while later generations of teenagers are better behaved. Today, the age group most at risk for violent death is 40 to 49, including illegal-drug death rates five times higher than for teenagers.

Strangely, the experts never mention even more damning new "discoveries" about the middle-aged brain, like the 2004 study of scans by Harvard researchers revealing declines in key memory and learning genes that become significant by age 40.

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Noise in the Courtroom!

The acquitted often walk out court with a huge smile on their face, convinced that any stain on their character has been erased.

But more guilty people get tried and acquitted than the average of the population. So barring a dramatic Perry-Mason-like revelation, the trial is evidence of guilt – noisy evidence, but evidence none the less. It isn’t legal or scientific evidence, but it is evidence that a Bayesian should use.

But while employers can often access criminal records of convictions, they are generally barred from finding out about acquittals (especially if the accused take steps to have their arrest expunged); and the potential employee is often allowed to lie if asked directly. This noisy measure is deemed officially unavailable.

Should it be available? And in what way is this noisy measure different from those used in education and in medicine?

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More On Future Self Paternalism

Robin recently wrote a post asking whether it makes any sense for your current self to take actions that "paternalistically" constrain your future self.  Below are some points in response, most of which were already mentioned in one form or another in the comments to Robin’s post.

1. Current you has no choice but to act in some sense paternalistically towards future you simply by virtue of the fact that current you came first.  It is inevitable that current you will make choices that set the stage for future you, which requires current you to make decisions based on what’s good for future you.

2. The standard that must be met for future self paternalism to be rational may not be that current you has to be systematically more rational than future you; the standard may only be that current you has to be more rational than future you at his weakest moment.  And that’s not a very hard standard to meet.

Continue reading "More On Future Self Paternalism" »

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Future Self Paternalism

Via Tyler Cowen, we hear Robert Fogel did not trust his future selves:

When I graduated from college, I had two job offers.  One was from my father, to join him in the meat-packing business.  That would have been quite lucrative. The other was as an activist for a left-wing youth organization.  I chose the latter and worked as an activist from 1948 to 1956.  At the time I was making that decision, my father told me: "If you really believe in that cause, come work with me.  You will make a much higher wage and you could give your extra income to hire several people instead of just yourself."  I thought, well, that makes some sense.  But I was convinced that this was a way to get me to change my views or at least lessen my commitment to an ideological cause that I found very important.  Yes, the first year, I might give all of my extra money to the movement, but every year I would probably give less, and finally reach the point when I was giving nothing at all.  I feared I would be co-opted. I thought this was my father’s way of indoctrinating me.

When I spent a few weeks at Oxford last summer, Toby Ord similarly said he wanted to commit his future selves to donating at least ten percent of income to third world charity; he did not trust his future selves to make that choice for themselves. 

These paternalism examples are striking, because paternalism is usually justified as a response to a combination of ignorance and irrationality, but Robert and Toby should expect their futures selves to be just as smart and rational, and even better informed than they.  How can they reasonably expect their future selves to be so much more biased that force is appropriate to constrain them?

Added: Tody Ord elaborates in the comments.

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Bias on Self-Control Bias

Since Eliezer is concerned about our ability to resist modern temptations, let me summarize recent economic analysis:  Paternalism does not help people who are aware of their self-control problems, and are able to make future commitments.   To argue for paternalism regarding self-control, one has to assume we are biased to underestimate our self-control problems.  From a 2004 paper in Quarterly Journal of Economics:

We analyze the profit-maximizing contract design of firms if consumers have time-inconsistent preferences and are partially naive about it. We consider … goods with immediate costs and delayed benefits (investment goods) such as health club attendance, and goods with immediate benefits and delayed costs (leisure goods) such as credit card-financed consumption. … The predictions of the theory match the empirical contract design in the credit card, gambling, health club, life insurance, mail order, mobile phone, and vacation time-sharing industries. … time inconsistency has adverse effects on consumer welfare only if consumers are naive.

From a 2002 paper by O’Donoghue and Rabin, who have many related papers:

We investigate the role that self-control problems – modeled as time-inconsistent, present-biased preferences – and a person’s awareness of those problems might play in leading people to develop and maintain harmful addictions. Present-biased preferences create a tendency to over-consume addictive products, and awareness of future selfcontrol problems can mitigate or exacerbate this over-consumption, depending on the environment. … For realistic environments self-control problems are a plausible source of severely harmful addictions only in conjunction with some unawareness of future self-control problems.

So, are we in fact biased to underestimate our self-control problems?   If so, why isn’t it easier to just tell us we have self-control problems?   Why wouldn’t we believe such advice?

Surely some of us do underestimate our self-control problems, but curiously I can’t seem to find any papers in this (large) economics literature that consider people who overestimate their self-control problems.  This ethics paper by Tyler Cowen, however, does consider it and convince me that such situations are common.   Are we biased to assume others are biased toward too little self-control?

Added 14Nov2014: A 2011 QJE theory paper finds:

When learning [about your own self-control abilities] fails at the limit, I find that it occurs in a particular direction, namely that individuals underestimate their self-control.

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Blue or Green on Regulation?

In recent posts, I have predicted that, if not otherwise prevented from doing so, some people will behave stupidly and suffer the consequences:  "If people have a right to be stupid, the market will respond by supplying all the stupidity that can be sold."  People misinterpret this as indicating that I take a policy stance in favor of regulation.  It indicates no such thing.  It is meant purely as guess about empirical consequences – a testable prediction on a question of simple fact.

Perhaps I would be less misinterpreted if I also told "the other side of the story" – inveighed at length about the reasons why bureaucrats are not perfect rationalists guarding our net best interests.  But ideally, I shouldn’t have to go to such lengths.  Ideally, I could make a prediction about a strictly factual question without this being interpreted as a policy stance, or as a stance on logically distinct factual questions.

Continue reading "Blue or Green on Regulation?" »

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Disagreement Case Study: Robin Hanson and David Balan

The basic challenge posed by Robin is this.  To support the imposition of a paternalistic government policy on Peter, one must believe that: (i) the government is sincerely motivated by Peter’s welfare; and (ii) the government knows what’s best Peter better than Peter himself does, even taking into account the fact that in the absence of paternalistic policy Peter need not rely only on his own knowledge, but is free to seek the uncoercive advice of anyone willing to give it to him, including the government itself.

To my mind, point (ii) is the easy part.  There really are people who left to their own devices will ingest poisinous miracle cures and the like, and who really would be better off if they didn’t do so, and for whom actually existing paternalistic policies are the only hope of being saved.  Of course there are some cases where the government really just doesn’t know better and gets it wrong.  Robin and I would agree that these are the cases where policy should be restrained, and if it’s not restrained it’s more likely to be an abuse of power issue than an ignorance issue.  So in my view the real action is in point (i), the extent to which the government will shun restraint and abuse or misuse the coervice power that paternalistic policies give it.

Continue reading "Disagreement Case Study: Robin Hanson and David Balan" »

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Disagreement Case Study – Balan and I

David Balan and I exchanged a few posts here over the last few weeks on paternalism, and we had a one hour debate a week ago (audio here).   David and I are similarly expert by conventional measures, so this is more disagreeing with an equal than disagreeing with a superior.  And being active contributors of Overcoming Bias, we are both well aware of many signs of bias.   David is employed by a U.S. agency much of whose policies are justified via paternalism, while I am employed in part because of an academic publication that leaned against paternalism.  So we have similar potential for self-interest biases. 

David seems to disapprove of most policies in most societies today and through history that have been justified on paternalistic grounds.  These include parents choosing kids’ careers and spouses, bans on alternative religions, political groups and sexual orientations, rules about who can practice what professions, and limits on the freedoms of women, ethnic minorities, and lower classes.  So if he could only choose in general between paternalism or not, I think David would choose not.   

But David considers the rulers of our society, our democratic majority and the opinion elites they follow, to be much better paternalists than the rulers of all those other societies.   By "our society" David means the United States and nations with similar paternalism policies.  The main evidence David cites for the superiority of our ruling class is that we are the most prosperous society in human history.

Continue reading "Disagreement Case Study – Balan and I" »

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