Using Psychology To Save You From Yourself
Jun 09, 2009 - Alix Spiegel - NPR

Human beings don't always behave rationally. Now, policymakers are using research about human decision-making to design policies to protect humans from their own poor judgment — including everything from unwanted pregnancies to failing to save for retirement.

In the city of Greensboro, N.C., there's a program designed for teenage mothers. To prevent these teens from having another child, the city offers each of them $1 a day for every day they are not pregnant. It turns out that the psychological power of that small daily payment is huge. A single dollar a day is enough to push the rate of teen pregnancy down, saving all the incredible costs — human and financial — that go with teen parenting.

Cass Sunstein, President Obama's pick to head the Office of Information and Regulatory Affairs, is a vocal supporter of the program, because it's an economic policy that shapes itself around human psychology. Sunstein is just one of a number of high-level appointees now working in the Obama administration who favors this kind of approach.

All are devotees of behavioral economics — a school of economic thought greatly influenced by psychological research — which argues that the human animal is hard-wired to make errors when it comes to decision-making, and therefore people need a little "nudge" to make decisions that are in their own best interests.

And that is exactly what Obama administration officials plan to do: By taking account of human psychology, they hope to save you from yourself.

Health Care Overhaul in All Its Theory
June 3, 2009 - John Edgell, CQ Guest Columnist

The Obama White House, after all, has had considerable success before in motivating the masses through behavioral psychology, of convincing millions of initially skeptical Americans during the 2008 presidential campaign to collectively embrace the still largely undefined concept of “change.” President Obama, a former community organizer, knows how to deploy the ”Nudge Factor,” where “change comes from the bottom up” and “we are the change we have been waiting for.” Indeed, he is a behavioral psychologist’s dream.

What perhaps matters more is an understanding of how behavioral sciences will drive the dynamics of health care overhaul, and there’s no better place to start than the blog of Peter R. Orszag, now White House OMB director.

It was in the blog that Orszag, then director of the Congressional Budget Office, seized the importance that behavioral economics has on the health care delivery system: “A growing body of research on behavioral economics suggests that, in addition to financial incentives, norms and default options can exert a strong influence on individuals’ choices. Such findings could inform efforts to improve efficiency in the health sector.”