Management Matters Management MattersManagement Matters
Practical advice for federal leaders on managing people, processes and projects.

Nudging Concerns

ARCHIVES
President Obama's nomination of law professor Cass Sunstein as the administration's regulatory chief this week could be the start of a running debate about the design of government programs.

Sunstein is co-author of the 2008 book Nudge: Improving Decisions About Health, Wealth and Happiness, which argues that programs can be crafted to encourage people to make better choices. Administration officials already employed that thinking as part of the economic stimulus package, signed into law in February.

In 2008, the Bush administration provided tax rebates as lump-sum checks of as much as $1,500. The administration hoped that people would spend that money to stimulate the economy, but subsequent analyses have found that people tended to save, rather than spend. So instead of issuing one-time checks, the Obama administration spread its Making Work Pay tax credits of up to $800 -- included in the February stimulus package -- throughout the year as a modest increase in people's take-home pay. Economist Richard Thaler, who teamed with Sunstein to write Nudge, says people are more likely to spend the money if they receive it in smaller installments doled out periodically, because then they view it as income rather than wealth. In other words, designing the program differently nudges people to spend rather than save, according to Thaler, who advised the Obama presidential campaign.

The regulatory system that Sunstein will oversee if he is confirmed affects the decisions people and businesses make across the spectrum of human activity. Regulations for the display of information on credit card bills, for example, can influence how much people pay each month on their outstanding balances. Health care regulations can change their decisions about how they deal with illnesses. Rules for energy usage could substantially alter the use of electricity in homes and workplaces.

"Unfortunately, we often choose poorly," Sunstein and Thaler explain on the Web site, www.nudges.org, on which they have a blog to discuss their theories. They contend that the design of both government and private sector programs often tempts people to make the wrong decisions. For example, lining check-out aisles in grocery stores with candy nudges people to eat junk food rather than healthier alternatives. Programs requiring employees to opt in to 401(k)s make it less likely that they will participate, while automatic enrollment would make it harder for them not to do so.

When Management Matters discussed Nudge last summer, many readers had a negative reaction, arguing that it smacked of Big Brother and heavy-handed government. Individuals should be free to make their own choices, rather than have Uncle Sam steer them in one direction or another, critics said.

With Sunstein's nomination, that debate is likely to become more central among federal managers.

Brian Friel covered management and human resources at Government Executive for six years and is now a National Journal staff correspondent.

 

Brian Friel is founder of One Nation Analytics, an independent research, analytics and consulting firm for the federal market.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.