The Trouble With Disclosure: It Doesn’t Work


Jesse Eisinger at ProPublica: “Louis Brandeis was wrong. The lawyer and Supreme Court justice famously declared that sunlight is the best disinfectant, and we have unquestioningly embraced that advice ever since.
All this sunlight is blinding. As new scholarship is demonstrating, the value of all this information is unproved. Paradoxically, disclosure can be useless — and sometimes actually harmful or counterproductive.
“We are doing disclosure as a regulatory move all over the board,” says Adam J. Levitin, a law professor at Georgetown, “The funny thing is, we are doing this despite very little evidence of its efficacy.”…
Of course, some disclosure works. Professor Levitin cites two examples. The first is an olfactory disclosure. Methane doesn’t have any scent, but a foul smell is added to alert people to a gas leak. The second is ATM. fees. A study in Australia showed that once fees were disclosed, people avoided the high-fee machines and took out more when they had to go to them.
But to Omri Ben-Shahar, co-author of a recent book, ” More Than You Wanted To Know: The Failure of Mandated Disclosure,” these are cherry-picked examples in a world awash in useless disclosures. Of course, information is valuable. But disclosure as a regulatory mechanism doesn’t work nearly well enough, he argues.
First, it really works only when things are simple. As soon as transactions become complex, disclosure starts to stumble. Buying a car, for instance, turns out to be several transactions: the purchase itself, the financing, maybe the trade-in of old car and various insurance and warranty decisions. These are all subject to various disclosure rules, but making the choices clear and useful has proved nigh impossible.
In complex transactions, we then must rely on intermediaries to give us advice. Because they are often conflicted, they, too, become subject to disclosure obligations. Ah, even more boilerplate to puzzle over!
And then there’s the harm. Over the years, banks that sold complex securities often stuck impossible-to-understand clauses deep in prospectuses that “disclosed” what was really going on. When the securities blew up, as they often did, banks then fended off lawsuits by arguing they had done everything the law required and were therefore not liable.
“That’s the harm of disclosure,” Professor Ben-Shahar said. “It provides a safe harbor for practices that smell bad. It sanitizes every bad practice.”
The anti-disclosure movement is taking on the ” Nudge” school, embraced by the Obama administration and promoted most prominently by Cass R. Sunstein, a scholar at Harvard, and Richard H. Thaler, an economist at the University of Chicago. These nudgers believe that small policies will prod people to do what’s in their best interests.
The real-world evidence in favor of nudging is thin. …
The ever-alluring notion is that we are just one or two changes away from having meaningful disclosure. If we could only have annual Securities and Exchange Commission filings in plain English, we could finally understand what’s going on at corporations. A University of San Diego Law School professor, Frank Partnoy, and I called for better bank disclosure in an article in The Atlantic a few years ago.
Professor Ben-Shahar mocks it. ” ‘Plain English!’ ‘Make it simple.’ That is the deus ex machina, the god that will solve everything,” he said.
Complex things are, sadly, complex. A mortgage is not an easy transaction to understand. People are not good at predicting their future behavior and so don’t know what options are best for them. “The project of simplification is facing a very poor empirical track record and very powerful theoretical problem,” he said.
What to do instead? Hard and fast rules. If lawmakers want to end a bad practice, ban it. Having them admit it is not enough. (More)”

Small Pieces Loosely Joined: How smarter use of technology and data can deliver real reform of local government


Policy Exchange (UK): “Local authorities could save up to £10billion by 2020 through smarter and more collaborative use of technology and data.
Small Pieces Loosely Joined highlights how every year councils lose more than £1 billion by failing to identify where fraud has taken place. The paper also sheds light on how a lack of data sharing and collaboration between many local authorities, as well as the use of bespoke IT systems, keeps the cost of providing public services unsustainably high.
The report sets out three ways in which local authorities could not only save billions of pounds, but also provide better, more coordinated public services:

  1. Using data to predict and prevent fraud. Each year councils lose in excess of £1.3 billion through Council Tax fraud, benefit fraud and housing tenancy fraud (such as illegal subletting). By collecting and analysing data from numerous different sources, it is possible to predict where future violations are most likely to occur and direct investigative teams to respond to them first.
  2. Sharing data between neighbouring councils. Sharing data would reveal where it might be beneficial for two or more neighbouring LAs to merge one or more services. For example, if one council spends £5m each year on combating a particular issue, such as investigating food safety violations, fly-tipping or pest control, it may be more cost-effective to hire the services of a neighbouring council that has a far greater incidence of that same issue.
  3. Phasing out costly bespoke IT systems. Rather than each LA independently designing or commissioning its own apps and online services (such as paying for council tax or reporting noisy neighbours), an ‘app store’ should be created where individuals, businesses or other organisations can bid to provide them. The services created could then be used by dozens – or even hundreds – of LAs, creating economies of scale that bring down prices for all.

Since 2008, councils have shouldered the largest spending cuts of any part of the public sector – despite providing 80% of local public services – and face a funding shortfall of £12.4 billion by 2020. Some are doing admirably well under this extreme financial pressure, developing innovative schemes using data to ensure that they scale back spending but continue to provide vital public services. For example, Leeds, Yorkshire and Humber are developing a shared platform for digital services needed by all three councils. Similarly, a collaboration of public sector organisations in and around Hampshire and the Isle of Wight is developing ways of sharing data and helping neighbouring councils to share content and data through the Hampshire Hub.
FULL Report

Text service to save young lives in East Africa


Springwise: “In the developing world, the most effective healthcare solutions are often the most simple. A few years ago we featured FrontlineSMS:Medic, a service allowing medical workers in poor rural villages to communicate patient information with hospitals using free, two-way texts. Now, a Kenyan service called Totohealth is also aiming to use SMS as a lifesaving tool.
Totohealth is a social enterprise, directed at new parents and expecting mothers, that is aiming to use SMS messaging to greatly reduce the child and mother mortality rate, and minimise developmental defects in infants. The company works with hospitals and maternity centres to give vital information to patients, twice a week. These personalised texts are designed to dispel myths, offer advice and ensure that appointments and vaccinations are met. The texts can be translated into a variety of languages. The messages and their replies are then kept in a patient database which the health service can use.
The service is free for users, and is funded by the small fees paid by hospitals and NGOs to get their messages out. Pilots began last year in Nairobi and since then Totohealth has worked with over 6,000 mothers and fathers across nine hospitals, sending more than 133,000 texts in the process. Executive Director Felix Kimaru plans to expand to those areas of Kenya with the highest rate of mortality in children under five, before growing into Somalia and elsewhere in East Africa.
According to Kimaru, “preventive health in 3rd world countries is still far from being realized”, with many people believing that the health of citizens is in the hands of government and NGOs. Along with a swathe of other ‘mHealth’ platforms, Kimaru is aiming to change that, by empowering new parents with the information needed to take their own health in their hands….”

Holding Data Hostage: The Perfect Internet Crime?


Tom Simonite at MIT Technology Review: “Every so often someone invents a new way of making money on the Internet that earns wild profits, attracts countless imitators, and reshapes what it means to be online. Unfortunately, such a shift took place last year in the world of online crime, with the establishment of sophisticated malicious software known as ransomware as a popular and reliable business model for criminals.

After infecting a computer, perhaps via an e-mail attachment or a malicious website, ransomware automatically encrypts files, which may include precious photos, videos, and business documents, and issues an electronic ransom note. Getting those files back means paying a fee to the criminals who control the malware—and hoping they will keep their side of the bargain by decrypting them.

The money that can be made with ransomware has encouraged technical innovations. The latest ransomware requests payment via the hard-to-trace cryptocurrency Bitcoin and uses the anonymizing Tor network. Millions of home and business computers were infected by ransomware in 2014. Computer crime experts say the problem will only get worse, and some believe mobile devices will be the next target….

The recent rise of ransomware prompted the FBI to issue a report last month in which it warned that the crime poses a threat not only to home computer users but also to “businesses, financial institutions, government agencies, academic institutions, and other organizations.”

Some security researchers predict that 2015 will see significant efforts by criminals to get ransomware working on smartphones and tablets as well. These devices often contain highly prized personal files such as photos and videos….(More)”

What Is the Purpose of Society?


Mark Bittman in the New York Times:“….Think about it this way: There are two kinds of operating systems, hard and soft. A clock is a hard system. We know what it’s for, we know when it isn’t working, and we know that 10 clock experts would agree on how to fix it — and could do so.
Soft systems, like agriculture and economics, are more complex. We don’t all agree on goals, and we don’t agree on whether things are working or in need of repair. For example, is contemporary American agriculture a system for nourishing people and providing a livelihood for farmers? Or is it one for denuding the nation’s topsoil while poisoning land, water, workers and consumers and enriching corporations? Our collective actions would indicate that our principles favor the latter; that has to change.
Defining goals that matter to people is critical, because the most powerful way to change a complex, soft system is to change its purpose. For example, if we had a national agreement that food is not just a commodity, a way to make money, but instead a way to nourish people and the planet and a means to safeguard our future, we could begin to reconfigure the system for that purpose. More generally, if we agreed that human well-being was a priority, creating more jobs would not ring so hollow.
Sadly, even if we did agree, complex systems are not subject to clever fixes. Rather, changes often have unexpected results (that shouldn’t happen with a clock), so change necessarily remains incremental. But without an agreement on goals, without statements of purpose, we are going to continue to see changes that are not in the interest of the majority. Increasingly, it’s corporations and not governments that are determining how the world works. As unrepresentative as government might seem right now, there is at least a chance of improving it, whereas corporations will always act in their own interests.
It’s been adequately demonstrated that more than minor tweaks are needed to improve life for most people. Let’s try to make sense of where the world is now instead of relying on outdated doctrines like “capitalism” and “socialism” created by people who had no idea what the 21st century would look like. Let’s ambitiously and publicly philosophize — as the conservatives do — and think about what shape a sensible political economy might take.
The big ideas and strategies for how we should manage society and thrive with the planet are not a set of rules handed down from on high. To develop them for now and the future is a major challenge, and we — progressives and our allies — have to work harder at it. No one is going to figure it out for us….(More)”.

Data Mining Reveals a Global Link Between Corruption and Wealth


Emerging Technology From the arXiv: “Social scientists have never understood why some countries are more corrupt than others. But the first study that links corruption with wealth could help change that…One question that social scientists and economists have long puzzled over is how corruption arises in different cultures and why it is more prevalent in some countries than others. But it has always been difficult to find correlations between corruption and other measures of economic or social activity.
Michal Paulus and Ladislav Kristoufek at Charles University in Prague, Czech Republic, have for the first time found a correlation between the perception of corruption in different countries and their economic development.
The data they use comes from Transparency International, a nonprofit campaigning organisation based in Berlin, Germany, and which defines corruption as the misuse of public power for private benefit. Each year, this organization publishes a global list of countries ranked according to their perceived levels of corruption. The list is compiled using at least three sources of information but does not directly measure corruption, because of the difficulties in gathering such data.
Instead, it gathers information from a wide range of sources such as the African Development Bank and the Economist Intelligence Unit. But it also places significant weight on the opinions of experts who are asked to assess corruption levels.
The result is the Corruption Perceptions Index ranking countries between 0 (highly corrupt) to 100 (very clean). In 2014, Denmark occupied of the top spot as the world’s least corrupt nation while Somalia and North Korea prop up the table in an unenviable tie for the most corrupt countries on the planet.
Paulus and Kristoufek use this data to search for find clusters of countries that share similar properties using a new generation of cluster-searching algorithms. And they say that the 134 countries they study fall neatly into four groups which are clearly correlated with the wealth of the nations within them….Ref: arxiv.org/abs/1502.00104  Worldwide Clustering Of The Corruption Perception”

Special HBR Collection on Innovation in Governance


“A Special Collection of Harvard Business Review in collaboration with the Government Summit consisting of a number of selected articles, led by a special article by HH Sheikh Mohammaed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai discussing how government can reinvent itself through innovation. The remainder of the articles discuss a series of thoughts in the field of innovation, including service delivery, types of innovation, the spread of digital technology, big data, talent and its role in organizational success and growth in general.”

Can Selfies Save Nutrition Science?


Trevor Butterworth at Stats.org: “You may have never heard of the Energy Balance Working Group, but this collection of 45 experts on nutrition, exercise, biochemistry, and other related disciplines have collectively thrown a “House-like” wrench into the research literature on everything from obesity to cancer and heart disease. Gregory House, the fictional and fantastically brilliant physician played by Hugh Laurie in the eponymous TV show frequently found his patients wanting in the court of self-reported truth: “I’ve found that when you want to know the truth about someone that someone is probably the last person you should ask.”
This is more or less what the Energy Balance Working Group have concluded in an “expert report” recently published in the International Journal of Obesity. If you want to know the truth about how much someone eats and exercises that someone is probably the last person you should ask….The problem is that self-reporting is a cheap and convenient source of data for research, while more accurate alternatives are either expensive and challenging or, as yet, more promise than reality (see sidebar)….
“There are at least two categories of solutions on the horizon. In one category, there are wearable monitoring devices that can collect objective, real-time data. Examples in the works or in use include photographic food diaries, records of chewing and swallowing behavior, and evaluating the time and intensity of movement using accelerometers and GPS, among others. It is important to note that there are still challenges converting these measurements into reliable estimates of energy intake and expenditure, but work is ongoing… David Allison, Distinguished Professor, Quetelet Endowed Professor of Public Health, University of Alabam”…(More)

U.S. to release indexes of federal data


The Sunlight Foundation: “For the first time, the United States government has agreed to release what we believe to be the largest index of government data in the world.
On Friday, the Sunlight Foundation received a letter from the Office of Management and Budget (OMB) outlining how they plan to comply with our FOIA request from December 2013 for agency Enterprise Data Inventories. EDIs are comprehensive lists of a federal agency’s information holdings, providing an unprecedented view into data held internally across the government. Our FOIA request was submitted 14 months ago.
These lists of the government’s data were not public, however, until now. More than a year after Sunlight’s FOIA request and with a lawsuit initiated by Sunlight about to be filed, we’re finally going to see what data the government holds.
Sunlight’s FOIA request built on President Obama’s Open Data Executive Order, which first required agency-wide data indexes to be built and maintained. According to implementation guidance prepared in response to the executive order, Enterprise Data Inventories are intended to help agencies “develop a clear and comprehensive understanding of what data assets they possess” by accounting “for all data assets created or collected by the agency.”
At the time, we argued that “without seeing the entire EDIs, it is impossible for the public to know what data is being collected and stored by the government and to debate whether or not that data should be made public.”
When OMB initially responded to our request, it didn’t cite an exemption to FOIA. Instead, OMB directed us to approach each agency individually for its EDIs. This, despite the fact that the agencies are required to submit their updated EDIs to OMB on a quarterly basis.
With that in mind, and with the help of some very talented lawyers from the firm of Garvey Schubert Barer, we filed an administrative appeal with OMB and prepared for court. We were ready to fight for the idea that government data cannot be leveraged to its fullest if the public only knows about a fraction of it.
We hoped that OMB would recognize that open data is worth the work it takes to disclose the indexes. We’re pleased to say that our hope looks like it is becoming reality.
Since 2013, federal agencies have been required to construct a list of all of their major data sets, subject only to a few exceptions detailed in President Obama’s executive order as well as some information exempted from disclosure under the FOIA.
Having access to a detailed index of agencies’ data is a key step in aiding the use and utility of government data. By publicly describing almost all data the government has in an index, the Enterprise Data Inventories should empower IT management, FOIA requestors and oversight — by government officials and citizens alike….(More)”.

More Power to the People: How Cities Are Letting Data Flow


Stephen Taylor at People4SmarterCities: “Smart cities understand that engaging the public in decision-making is vital to enhancing services and ensuring accountability. Here are three ideas that show how cities are embracing new technologies and opening up data to spur civic participation and improve citizens’ lives.

 City Texts Help Keep Food on the Table
In San Francisco, about a third of the 52,000 people that receive food stamps are disenrolled from the program because they miss certain deadlines, such as filing quarterly reports with the city’s Human Services Agency. To help keep recipients up to date on their status, the nonprofit organization Code for America worked with the city agency to create Promptly, an open-source software platform that sends alerts by text message when citizens need to take action to keep their benefits. Not only does it help ensure that low-income residents keep food on the table, it also helps the department run more efficiently as less staff time is spent on re-enrollments.
Fired Up in Los Angeles Over Open Data
For the Los Angeles Fire Department, its work is all about responding to citizens. Not only does it handle fire and medical calls, it’s also the first fire agency in the U.S. to gather and post data on its emergency-response times on the Internet through a program called FireStat. The data gives citizens the opportunity to review metrics such as the amount of time it takes for stations to process emergency calls, the time for firefighters to leave the station and the travel time to the incident for each of its 102 firehouses throughout the city. The goal of FireStat is to see where and how response times can be improved, while increasing management accountability….(More)”