Tag: transparency

Negative Error Cultures - Joe Abittan

Negative Error Cultures

Posted on by jabittan
No matter how smart, observant, and rational we are, we will never have perfect information for all of the choices we make in our lives. There will always be decisions that we have to make based on a limited set of information, and when that happens, there will be a risk that we won’t make the right decision. In reality, there is risk in almost any decision we make, because there are very few choices where we have perfect information and fully understand all the potential consequences of our decisions and actions. This means the chance for errors is huge, and we will make many mistakes throughout our lives. How our cultures respond to these errors is important in determining how we move forward from them.

 

In Risk Savvy, Gerd Gigerenzer writes the following about negative error cultures:

 

“On the one end of the spectrum are negative error cultures. People living in such a culture fear to make errors of any kind, good or bad, and, if an error does occur, they do everything to hide it. Such a culture has little chance to learn from errors and discover new opportunities.”

 

None of us want to live in a world with errors, but the reality is that we spend a lot of our time engulfed by them. We don’t want to make mistakes on the job and potentially lose a raise, promotion, or employment altogether. Many people belong to religious social communities or live in families characterized by negative error cultures where any social misstep feels like the end of the world and poses expulsion from the community/family. Additionally, our world of politics is typically a negative error culture, where one political slip-up is often enough to irrevocably damage an individual’s political career.

 

Gigerenzer encourages us move away from negative error cultures because they stifle learning, reduce creativity, and fail to acknowledge the reality that our world is inherently a world of risk. We cannot avoid all risk because we cannot be all-knowing, and that means we will make mistakes. We can try to minimize the mistakes we make and their consequences, but we can only do so by acknowledging mistakes, owning up to them, learning, adapting, and improving future decision making.

 

Negative error cultures don’t expose mistakes and do not learn from them. They prevent individuals and organizations from finding the root cause of an error, and don’t allow for changes and adaptation. What is worse, efforts to hid errors can lead to more errors. Describing hospitals with negative error cultures, Gigerenzer writes, “zero tolerance for talking about errors produces more errors and less patient safety.” Being afraid to ever make a mistake makes us less willing to innovate, to learn, and to improve the world around us. It isolates us, and keeps us from improving and reducing risk for ourselves and others in the future. In the end, negative error cultures drive more of the thing they fear, reinforcing a vicious cycle of errors, secrecy, and more errors.
Open Default Nudges

Open Defaults

Posted on by jabittan
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.
Acknowledging Nudges

Acknowledging Nudges

Posted on by jabittan
In the book Nudge, Cass Sunstein and Richard Thaler argue that it is impossible to avoid and eliminate nudges. Whenever people have a choice to be made, someone else has a hand in shaping how that choice is presented and structured. Even if a choice architect were to strive to maximize choice and decision-making autonomy in the chooser, subtle factors will influence the chooser and nudge them in particular directions. Striving to eliminate nudges is likely to lead to worse potential outcomes and choices than acknowledging nudges and trying to employ them in ways that help people make good choices.

 

But how does a choice architect judge when a nudge is appropriate versus when a nudge goes too far? Again, Sunstein and Thaler recommend that first a choice architect acknowledge their nudge, and then ask themselves whether they could discuss the way they use nudges in public. The authors reference an idea from John Rawls called the publicity principle. If a choice architect feels comfortable with publicly acknowledging nudges and their choice to employ a given nudge, then their nudge is probably going in an appropriate direction. If however, the discovery of their nudges would lead people to shame them or if they would be embarrassed about their actions, then they have overstepped the bounds of an acceptable nudge.

 

Sunstein and Thaler write, “The government should respect the people whom it governs, and if it adopts policies that it could not defend in public, it fails to manifest that respect. Instead, it treats its citizens as tools for its own manipulation.”

 

Nudges are effective tools because we can understand how human psychology works and we can predict situations in which people are likely to make biased judgements or judgements based on cognitive errors. Appropriate nudges seek to improve decision-making by helping people overcome these biases and errors. Manipulative nudges are those which seek to exploit such biases. Governments are expected to be transparent, and more laws exist for transparency in the public rather than the private sector, meaning that government officials must be more considerate about their explicit nudges. If oversight bodies, reporters, or the general public were to learn of a practice that made an agency or official look good while failing to actually benefit the public, then it would be clear that an abuse of power took place. Choice architects who wish to serve the public rather than manipulate it should always consider acknowledging nudges, and whether they can safely do so publicly.
Hindsight Bias and Accountability - Joe Abittan

Hindsight Bias and Accountability

Posted on by jabittan
“Increased accountability is a mixed blessing,” writes Daniel Kahneman in his book Thinking Fast and Slow. This is an idea I came across in the past from books like Political Realism by Jonathan Rauch and The New Localism by Bruce Katz and  Jeremy Nowak. Our go-to answer to any challenges and problems tends to be increased transparency and greater oversight. However, in some complex fields simply opening processes and decision-making procedures to more scrutiny and review can create new problems that might be even worse. This is a particular challenge when we consider the way hindsight bias influences the thoughts and opinions of those reviewing bodies.

 

Kahneman continues, “because adherence to standard operating procedures is difficult to second-guess, decision makers who expect to have their decisions scrutinized with hindsight are driven to bureaucratic solutions and – to an extreme – reluctance to take risks.”

 

Excess scrutiny and oversight can lead to rigid and mechanical decision-making processes. This might not be a problem when we are engineering a bridge and need to make technical decisions based on known mathematical calculations (I’ve never engineered a bridge so I may be wrong here), but it can be a problem for doctors and policy makers. Doctors have to rely on their experience, their knowledge, and their intuitions to determine the best possible medical treatment. Checklists are fantastic ideas, but when things go wrong in an operating room, doctors and nurses have to make quick decisions balancing risk and uncertainty. If the oversight they will face is high, then there is a chance that doctors stick to a rigid set of steps, that might not really fit the current emergency. In his book, Kahneman writes about how this leads doctors to order unnecessary tests and procedures, more to cover themselves from liability than to truly help the patient, wasting time and money within the healthcare system.

 

For public decision-making, hindsight bias can be a disaster for public growth and development. The federal government makes loans and backs many projects. Like any venture capitalist firm or large bank making multiple investments, some projects will fail. It is impossible to know at the outset which of ten solar energy projects will be a massive success, and which company is going to go bust. But thanks to hindsight bias and the intense oversight that public agencies and legislatures are subject to, an investment in a solar project that goes bust is likely to haunt the agency head or legislators who backed the project, even if 9 of the other 10 projects were huge successes.

 

Oversight is important, but when oversight is subject to hindsight bias, the accountability shifts into high gear, blaming decision-makers for failing to have the superhuman ability to predict the future. This creates risk averse institutions that stagnate, waste resources, and are slow to act, potentially creating new problems and new vulnerabilities to hindsight bias in the future. Rauch, Katz, and Nowak in the posts I linked to above, all favor reducing transparency in the public setting for this reason, but Kahneman might not agree with them, arguing that closing the deliberations to transparency won’t hide the outcomes from the public, and won’t stop hindsight bias from being an issue.
Transparent Price Bundles

Transparent Price Bundles

Posted on by jabittan
One of the items that Dave Chase calls for in his Fair Trade for Health Care Plan in his book The Opioid Crisis Wake-Up Call is bundled prices. He wants pricing to be transparent and up-front so that patients know what services they are receiving, and he wants prices to be bundled for any procedures that we undergo.

 

As chase writes, “Imagine buying a car and getting a bill for the transmission six months later. You’d be livid, yet this sort of thing happens all the time in the healthcare industry.” If you have ever gone to an emergency room or had a surgery, you likely have experienced what Chase is talking about. You were probably billed for the procedure and the doctor who saw you, but then you might receive a separate facility bill some time later, or you might receive a separate bill from the anesthesiologist months after you thought you had finished paying everything from the procedure or emergency room visit that you had.

 

The amount of additional bills that keep rolling in from a single procedure can be frustrating and overwhelming. You likely get an explanation of benefits that to an ordinary person doesn’t explain much of anything, and then you get multiple bills from multiple entities with no clear explanation of why you are receiving another bill. The confusion can easily frustrated patients and prevent them from being able to contest what many see as unreasonable charges.

 

In Chase’s Fair Trade for Health Care, providers would have to be up front about any costs that patients are going to incur before a procedure or encounter. This would include bundling all prices together ahead of time to reduce surprise billing. A patient can try to anticipate charges, but if they can’t anticipate who will be billing them, they cannot truly have a sense of what a procedure will cost them. This is an unfair practice from healthcare providers and drives up costs for everyone.
Healthcare Price Transparency

Healthcare Price Transparancy

Posted on by jabittan
Have you ever tried to figure out what a healthcare procedure is going to cost you before you have the procedure? Almost no one can give you a straight answer, and it takes a long time to get a number at all because the doctor’s office has to check with your insurance to see what their agreement is, what you still have left with your deductible, and where you stand relative to your out of pocket maximum. The result is that consumers have very little insight into what they are actually going to pay or owe when they go to a check-up, when they need a new prescription drug, or when they have a knee operation at a local hospital.

 

In his book The Opioid Crisis Wake-Up Call, Dave Chase addresses the lack of transparency in healthcare pricing. Specifically looking at the ways that insurance companies hide claims data from employers, Chase writes, “They want to maintain the status quo. This means protecting pricing opacity at all costs. If you could see the prices you actually pay, you might begin to wonder why a hospital with a large market share but mediocre quality outcomes is paid exponentially more than a smaller, high quality provider in the same network.”

 

Healthcare price transparency reveals disparities in our healthcare system and shows that healthcare costs are often not connected with quality or health outcomes. Cost is somewhat arbitrary and usually negotiated without the person who will actually be receiving the service. If we could see the costs, then we would be more likely to shop around, either for different insurance or for different healthcare providers with more reasonably prices for services and treatments. I think our health spending is generally rather inelastic, but nevertheless, if we better understood pharmacy pricing, basic medical services, and major surgery costs, we could start to move toward options that offered higher value.

New Considerations for the Public vs Private Discussion

Posted on by jabittan
In the past I wrote about the importance of privacy in our politics from the point of view of Jonathan Rauch and his book Political Realism. We have almost no trust in government, and we frequently say things like, “sunshine is the best disinfectant,” but the reality is that politics is made much more complex when it is in the open. Difficult negotiations, compromises, and sacrifices are hard to do in open and public meetings, but can be a little easier when the cameras are turned off and political figures who disagree can have open and honest discussions without the fear of their own words and negotiations being used against them in the future.

 

In The New Localism, Bruce Katz and Jeremy Nowak acknowledge the difficulties faced by governments when open meeting laws force any discussion to be public. The laws come from a good place, but for local governments that need to move fast, make smart decisions, and negotiate with private and civic sectors to spur innovation and development, public meetings can lead to stagnation and gridlock. A solution proposed by Katz and Nowak is for local governments to authorize private corporations overseen by public bodies and boards to operate economic development areas and to take ownership of public asset management.

 

They describe how the city of Copenhagen has used this approach, “Copenhagen has found that by managing transactions through a publicly owned, privately driven corporation, operations run faster and more efficiently in comparison to how local government traditionally tackled public development projects.”

 

The private corporation running local development is publicly owned. It is still accountable to the local elected officials who are ultimately still accountable to the voters. But, the decisions are private, the finances are managed privately, and negotiations are not subject to public meeting laws. While the corporation has to demonstrate that it is acting in the public interest, free of corruption, it can engage with other public, private, and civic organizations in a more free and flexible manner to accomplish its goals. Leveraging the strengths of the private sector, publicly owned private corporations that put local assets to work can help drive change and innovation.

 

Directly calling back Jonathan Rauch’s ideas, these corporations create space for negotiations that would be publicly damning for an elected official. They also prevent elected officials from having undue influence in development and public asset management, preventing them from stonewalling a project that might be overwhelmingly popular in general, but unpopular with a narrow and vocal segment of their electorate. This prevents public officials from pursuing a good sounding but ineffective use of public resources to signal loyalty or virtue to constituents. Removing transparency and making the system appear less democratic, as Rauch suggests, might just make the whole system operate more smoothly and work better in terms of the outcomes our cities actually need.

The Non-Transparent Constitutional Convention

Posted on by jabittan
In his book, Political Realism, Jonathan Rauch argues that some of the changes we have made to the political system of the Untied States in the last several years have been self-defeating in regards to the functioning, efficiency, and effectiveness of our government. In particular, our ever expanding pursuit of transparency and the degree to which everything is recorded and open has made real debate with tough decisions more challenging. It is hard to have a debate with compromises where unpopular policies are discussed and worked through and more successful and effective legislation is created.

 

I was reminded of this idea from Rauch while reading Joseph Ellis’ book The Quartet. Our nation was originally founded under the Articles of Confederation, which did not pull our states together in a meaningful way to unify and promote our national interests. Replacing the Articles, however, was not a simple task and drafting a new Constitution was challenging. In many ways, the success of the new Constitution required our founding fathers to cut against many of the values they hoped the Constitution would establish for all citizens. Ellis describes it this way, “Ironically, to the extent that the delegates at Philadelphia succeeded, their success was dependent on violating all of our contemporary convictions about transparency and diversity, which is one reason why their success could never be duplicated in our time.”

 

Efforts to refine government and open up governance all start from a positive point of view, the belief that sunshine will act as a disinfectant, ridding politics of corruption and illegitimate deal making. The reality however, is that transparency and other reforms to make politics more open and clear can act as sand in the gears of our political machinery. Some debates require closed doors and safe spaces for compromises to be worked out. Getting legislators to organize together requires massive efforts of coordination and often requires conversations that take place outside of the spotlight as legislators and the people they represent have conflicting views and interests. It is worth reflecting on our ever growing pursuit of open democracy and remembering that our nation required what appeared to be non-democratic and non-transparent rules to get its start in the first place.

Participation in Government

Posted on by jabittan
In America we are obsessed with being more democratic than any other nation. As the world’s oldest democracy, we have made changes to open government ever further and to be more democratic so as to show the world how great we are with our ever expanding participation in government. We love our democracy, and we constantly fight to make our democracy more representative, less driven by special interests and big money, and more accessible by the average citizen. These are all excellent goals for our country, but they contribute to what Richard Pildes has called Romanticizing Democracy. 

 

In his book Political Realism, Jonathan Rauch reviews the ideas of romanticizing democracy and thinks about political participation from a realistic and pragmatic point of view. What Rauch finds and what is important to remember is that more participation in government and more direct democracy does not necessarily translate into better outcomes. He writes, “The general assumption that politics will be more satisfying and government will work better if more people participate more directly is poorly supported and probably wrong.”

 

Rauch is not arguing that fewer people should vote in elections or be knowledgeable about issues, programs, and what is taking place in government, but that our country does not need to continually reshape systems and institutions to be ever more democratic simply because they could be more open. When we push government to rely on more direct democracy, then our systems require more input from a citizenry that is poorly informed of any given issue. Continually opening government or forcing government to rely on input from public constituents makes it more likely that issues will become polarized, leading to charged discussions driven by shadow actors. Rauch writes, “Where direct engagement with politics is concerned, the polarized and financially interested have an inherent advantage.”

 

Not everything in our system should be operated by and determined by the opinions of experts, technocrats, and academics, but at the same time not everything needs to be decided by direct referendum from the public. Some features of government should be opened to the public, but other aspects are poorly understood by the public and do not need to be completely open. On his podcast The Ezra Klein Show and on his media company’s show The Weeds, Ezra Klein has often remarked that congress (which we have made more democratic and transparent) has dismally low approval ratings while the Supreme Court (which is less democratic and less transparent than almost any other part of government) has very high approval ratings. More transparency and direct participation does not always mean better outcomes and a more satisfying democracy.

Negotiations

Posted on by jabittan
In his book Political Realism Jonathan Rauch describes the importance of negotiations in politics. The act of negotiating is the act of coalition building, finding support for an idea, position, or program among legislators with varied interests. Negotiation needs to be creative, with all options on the board. Within a negotiation, difficult subjects and ideas are discussed to try to understand the benefits, the costs, the target populations, and issues of equality or inequality. The process is messy and like human speech, often disorganized and free flowing.

 

In the United States Federal Government, negotiations within the legislature are supposed to take place out in the open. Committee meetings and hearings are supposed to be public. Negotiations and advisory sessions are televised and open to journalists and interested citizens via the internet. The goal behind an open government is simple, let the people see and know what our leaders are up to. We want to be able to view the negotiations so that we can ensure big businesses are not running the show and to make sure our elected officials are not trading money and votes for projects and bills that we don’t like. Most of all, we want to make sure our legislators are acting ethically and not in their own self-interest.

 

This system sounds nice when we wear our moral philosopher hat, but when we put on our real world pragmatist hat we can see that our open government requirements are in a way breaking the legislative process. If we force negotiations to be public and always visible, then legislators are constrained in what can be said and considered in a negotiation. I mentioned earlier that negotiations are messy and creative, and this process involves talking through half formed ideas and as a group considering extreme ideas that an individual may not want to raise on their own. Doing this can be damaging for an individual if filmed and rebroadcast out of context, but in the moment it can help build creativity and allow decision-makers to better understand the full range of possible impacts.

 

Rauch writes the following regarding our constraints of negotiations, “If negotiations among leaders are a key to effective governance, particularly in polarized times, then we need a less moralistic, more realistic sense of the conditions under which negotiations effectively take place.” Sometimes the nation needs to move forward with legislation that is incredibly unpopular within a few legislative districts. Bills can be toxic for a given senator or member of congress, and if they cannot negotiate in the dark, then on legislation they know must move forward despite its unpopularity back home, the legislator must take a stand against the bill. In this way, a small minority becomes more powerful, and important legislation is stalled. Sunshine is great in theory, but in actual governance, sunshine can become sand in the gears.