Our society has a lot of defaults, and for many of us, we only opt out of the default in a narrow set of circumstances. Whether it is our mode of travel, how we pay for goods, or the type of health insurance plan we are enrolled in, the default option makes a big difference in our lives. Actors within our political and economic systems know this, and the choice of default can matter a lot to individual actors, political groups, and companies. Consequentially, what default is selected, and what story we tell about the default, is a constant point of argument and debate in our country.
In their book Nudge, Cass Sunstein and Richard Thaler discuss the importance of nudges and the ways that responsible choice architects should think about them. Choice architects may face pressure to select a default option that in one way or another benefits them personally or benefits the group or ideology they identify with. A state government may favor a default Medicaid option that is confusing and hard for individuals to use, meaning that fewer people will access services, and the state won’t have to pay as much for medical services for low income individuals. A corporate HR representative might feel pressured from a boss to have the default retirement savings rate for employees set at 2%, knowing that the company will spend less through retirement savings matching if the rate is lower.
But these types of defaults are not in the best interest of individuals. A health plan that is easy to use and facilitates access to necessary medical care is clearly in the best interest of the individual, but it may cost more for the government agency or corporation sponsoring the plan. A retirement plan that helps save above the rate of inflation is also clearly in the best interest of the individual, but might be more costly to a company’s bottom line.
As a guide for setting defaults, following with previous advice of ensuring that deliberate nudges employed by governments or corporations can survive open transparency, Sunstein and Thaler write, “The same conclusion holds for legal default rules. If government alters such rules – to encourage organ donation or reduce discrimination – it should not be secretive about what it is doing.”
The defaults we chose, and the reasons we select defaults should be open and transparent. If a choice architect cannot defend a default choice, then they should set an alternative default that can be defended in the open. Defaults that clearly benefit the choice architect or their interests at the expense of the individual making (or failing to make) a choice should be excluded. It is important to note that this means that choice architects have to actively make a decision with the default. Setting the default for a retirement savings plan if an individual never makes a selection to 0 is not in the best interest of the individual. An argument could be made that the choice architect attempted to remove themselves from the choice setting as much as possible by not providing a default, but that is still a choice, and will leave some people worse off than if the choice architect had selected a more defensible choice. Choosing not to set a default can be as indefensible as selecting a self-serving default.
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