Wednesday, September 16, 2015

Barack Obama issues executive order regarding the use of behavioral science in government

Extraordinary news for anyone interested in behavioral science. President Obama yesterday issued an executive order saying "A growing body of evidence demonstrates that behavioral science insights ... can be used to design government policies to better serve the American people". It recommends that "the Federal Government should design its policies and programs to reflect our best understanding of how people engage with, participate in, use, and respond to those policies and programs." 
The order is accompanied by the release of the first annual report of the recently formed White House Social and Behavioral Science Team. The report describes the team's interventions in areas such as retirement savings, college enrollment, health insurance, microloans and government efficiency. It is similar to the recent UK Behavioural Insights Team 2013-15 Update Report which is also worth reading for policy nerds.
Liam has written on the blog before about the growing influence of behavioural science (behavioral economics + psychology) on public policy. This importance of this shift should be viewed in the broader context of the fact that neoclassical economics has historically been the only discipline which has really affected policy-making. My view is that Thaler and Sunstein's book Nudge has been very influential in steering this trend. Nudge was released in mid-2008, a time when a lot of people regarded mainstream economics as discredited by its complete failure to anticipate the Great Recession. The book summarized decades of work in behavioral economics and psychology and suggested practical ways in which this research could inform policy, and its ideas were more-or-less immediately embraced by the UK Conservative party. Two years later, Conservative prime minister David Cameron created The Behavioural Insights Team to implement the book's ideas within government. The BIT has since published over a dozen reports describing how it has applied ideas from behavioral science to a diverse number of policy areas, and the book's ideas have influenced organizations like the House of Lords, the United Nations, the World Bank, the OECD, the FCA and many others. 
Obama's executive order should be seen as very positive development by anyone who wants to see more realistic models of human decision-making used in policy-making.
Full executive order quoted below. September 15th, 2015, remember the date!

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A growing body of evidence demonstrates that behavioral science insights -- research findings from fields such as behavioral economics and psychology about how people make decisions and act on them -- can be used to design government policies to better serve the American people.
Where Federal policies have been designed to reflect behavioral science insights, they have substantially improved outcomes for the individuals, families, communities, and businesses those policies serve. For example, automatic enrollment and automatic escalation in retirement savings plans have made it easier to save for the future, and have helped Americans accumulate billions of dollars in additional retirement savings. Similarly, streamlining the application process for Federal financial aid has made college more financially accessible for millions of students.
To more fully realize the benefits of behavioral insights and deliver better results at a lower cost for the American people, the Federal Government should design its policies and programs to reflect our best understanding of how people engage with, participate in, use, and respond to those policies and programs. By improving the effectiveness and efficiency of Government, behavioral science insights can support a range of national priorities, including helping workers to find better jobs; enabling Americans to lead longer, healthier lives; improving access to educational opportunities and support for success in school; and accelerating the transition to a low-carbon economy.
NOW, THEREFORE, by the authority vested in me as President by the Constitution and the laws of the United States, I hereby direct the following:
Section 1. Behavioral Science Insights Policy Directive.
(a) Executive departments and agencies (agencies) are encouraged to:
(i) identify policies, programs, and operations where applying behavioral science insights may yield substantial improvements in public welfare, program outcomes, and program cost effectiveness;
(ii) develop strategies for applying behavioral science insights to programs and, where possible, rigorously test and evaluate the impact of these insights;
(iii) recruit behavioral science experts to join the Federal Government as necessary to achieve the goals of this directive; and
(iv) strengthen agency relationships with the research community to better use empirical findings from the behavioral sciences.
(b) In implementing the policy directives in section (a), agencies shall:
(i) identify opportunities to help qualifying individuals, families, communities, and businesses access public programs and benefits by, as appropriate, streamlining processes that may otherwise limit or delay participation -- for example, removing administrative hurdles, shortening wait times, and simplifying forms;
(ii) improve how information is presented to consumers, borrowers, program beneficiaries, and other individuals, whether as directly conveyed by the agency, or in setting standards for the presentation of information, by considering how the content, format, timing, and medium by which information is conveyed affects comprehension and action by individuals, as appropriate;
(iii) identify programs that offer choices and carefully consider how the presentation and structure of those choices, including the order, number, and arrangement of options, can most effectively promote public welfare, as appropriate, giving particular consideration to the selection and setting of default options; and
(iv) review elements of their policies and programs that are designed to encourage or make it easier for Americans to take specific actions, such as saving for retirement or completing education programs. In doing so, agencies shall consider how the timing, frequency, presentation, and labeling of benefits, taxes, subsidies, and other incentives can more effectively and efficiently promote those actions, as appropriate. Particular attention should be paid to opportunities to use nonfinancial incentives.
(c) For policies with a regulatory component, agencies are encouraged to combine this behavioral science insights policy directive with their ongoing review of existing significant regulations to identify and reduce regulatory burdens, as appropriate and consistent with Executive Order 13563 of January 18, 2011 (Improving Regulation and Regulatory Review), and Executive Order 13610 of May 10, 2012 (Identifying and Reducing Regulatory Burdens).
Sec. 2. Implementation of the Behavioral Science Insights Policy Directive. (a) The Social and Behavioral Sciences Team (SBST), under the National Science and Technology Council (NSTC) and chaired by the Assistant to the President for Science and Technology, shall provide agencies with advice and policy guidance to help them execute the policy objectives outlined in section 1 of this order, as appropriate.
(b) The NSTC shall release a yearly report summarizing agency implementation of section 1 of this order each year until 2019. Member agencies of the SBST are expected to contribute to this report.
(c) To help execute the policy directive set forth in section 1 of this order, the Chair of the SBST shall, within 45 days of the date of this order and thereafter as necessary, issue guidance to assist agencies in implementing this order.
Sec. 3. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to a department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) Independent agencies are strongly encouraged to comply with the requirements of this order.
(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

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