Saturday, February 06, 2016


Who controls the controllers? Who regulates the regulators? And, ever since "nudge" was discovered as a policy option, who nudges the nudgers?  These questions are seldom asked by social engineers. Of course not. Holman Jenkins, in today's WSJ, alludes to the people in charge of timing traffic signals. He writes, "Red-light cameras show us the flaw in the theory that government will 'nudge' us into doing the right thing." He cites "... the habit in many jurisdictions of setting yellow lights at or below the three-second minimum in order to ring up more tickets even at the cost of creating more accidents."  "Soft paternalism" is an idea that nudgers like but t-bone car crashes are not so soft.

Behavioral economics challenges the "rational man" assumption. But everyone knows (from early childhood on) that things are priced, for example, at $1.99 rather than $2.00 for the obvious reason that people are wired in ways that make the insignificant difference meaningful. And that goes to show that we are not 100% "rational". Yes, sellers may take us for fools but there are limits because they also want our return business.

But it does not work this way the public sector. Replacing regulators with nudgers does not "solve" the fundamental problem. "Softening" it does not solve the basic problem.