Behavioral Economics and the Energy Crisis in Europe

Curated on Posted on by Stefaan Verhulst

Blog by Carlos Scartascini: “European nations, stunned by Russia’s aggression, have mostly rallied in support of Ukraine, sending weapons and welcoming millions of refugees. But European citizens are paying dearly for it. Apart from the costs in direct assistance, the energy conflict with Russia had sent prices of gas soaring to eight times their 10-year average by the end of September and helped push inflation to around 10%. With a partial embargo of Russian oil going into effect in December and cold weather coming, many Europeans now fear an icy, bitter and poorer winter of 2023.

European governments hope to take the edge off by enacting price regulations, providing energy subsidies for households, and crucially curbing energy demand. Germany’s government, for example, imposed limits on heating in public offices and buildings to 19 degrees Celsius (66.2 Fahrenheit). France has introduced a raft of voluntary measures ranging from asking public officials to travel by train rather than car, suggesting that municipalities swap old lamps for LEDs and designing incentives to get people to car share…

As we know from years of experiments at the IDB in using behavioral economics to achieve policy goals, however, rules and recommendations are not enough. Trust in fellow citizens and in the government are also crucial when calling for a shared sacrifice. That means not appealing to fear, which can lead to deeper divisions in society, energy hoarding, resignation and indifference. Rather, it means appealing to social norms of morality and community.

In using behavioral economics to boost tax compliance in Argentina, for example, we found that sending messages that revealed how fellow citizens were paying their taxes significantly improved tax collection. Revealing how the government was using tax funds to improve people’s lives provided an additional boost to the effort. Posters and television ads in Europe showing people wearing sweaters, turning down their thermostats, insulating their homes and putting up solar panels might similarly instill a sense of common purpose. And signals that governments are trying to relieve hardship might help instill in citizens the need for sacrifice…(More)”.

GDP is getting a makeover — what it means for economies, health and the planet

Curated on Posted on by Stefaan Verhulst

Article by Ehsan Masood: “The numbers are heading in the wrong direction. If the world continues on its current track, it will fall well short of achieving almost all of the 17 Sustainable Development Goals (SDGs) that the United Nations set to protect the environment and end poverty and inequality by 2030.

The projected grade for:

Eliminating hunger: F.

Ensuring healthy lives for all: F.

Protecting and sustainably using ocean resources: F.

The trends were there before 2020, but then problems increased with the COVID-19 pandemic, war in Ukraine and the worsening effects of climate change. The world is in “a new uncertainty complex”, says economist Pedro Conceição, lead author of the United Nations Human Development Report.

One measure of this is the drastic change in the Human Development Index (HDI), which combines educational outcomes, income and life expectancy into a single composite indicator. After 2019, the index has fallen for two successive years for the first time since its creation in 1990. “I don’t think this is a one-off, or a blip. I think this could be a new reality,” Conceição says.

UN secretary-general António Guterres is worried. “We need an urgent rescue effort for the SDGs,” he wrote in the foreword to the latest progress report, published in July. Over the past year, Guterres and the heads of big UN agencies, such as the Statistics Division and the UN Development Programme, have been assessing what’s gone wrong and what needs to be done. They’re converging on the idea that it’s time to stop using gross domestic product (GDP) as the world’s main measure of prosperity, and to complement it with a dashboard of indicators, possibly ones linked to the SDGs. If this happens, it would be the biggest shift in how economies are measured since nations first started using GDP in 1953, almost 70 years ago.

Guterres’s is the latest in a crescendo of voices calling for GDP to be dropped as the world’s primary go-to indicator, and for a dashboard of metrics instead. In 2008, then French president Nicolas Sarkozy endorsed such a call from a team of economists, including Nobel laureates Amartya Sen and Joseph Stiglitz.

And in August, the White House announced a 15-year plan to develop a new summary statistic that would show how changes to natural assets — the natural wealth on which economies depend — affect GDP. The idea, according to the project’s main architect, economist Eli Fenichel at the White House Office of Science and Technology Policy, is to help society to determine whether today’s consumption is being accomplished without compromising the future opportunities that nature provides. “GDP only gives a partial and — for many common uses — an incomplete, picture of economic progress,” Fenichel says.

The fact that Guterres has made this a priority, amid so many major crises, is a sign that “going beyond GDP has been picked up at the highest level”, says Stefan Schweinfest, the director of the UN Statistics Division, based in New York City…(More)”.

Ethics, Integrity and Policymaking

Curated on Posted on by Stefaan Verhulst

Book by Dónal O’Mathúna, and Ron Iphofen: “…provides illustrative case studies that explore various research and innovation topics that raise challenges requiring ethical reflection and careful policymaking responses. The cases highlight diverse ethical challenges and provide lessons for the various options available for policymaking. Cases are drawn from many fields, including artificial intelligence, space science, energy, data protection, professional research practice and pandemic planning. Case studies are particularly helpful with ethical issues to provide crucial context. This book reflects the ambiguity of ethical dilemmas in contemporary policymaking. Analyses reflect current debates where consensus has not yet been achieved. These cases illustrate key points made throughout the PRO-RES EU-funded project from which they arise: that ethical judgement is a fluid enterprise, where values, principles and standards must constantly adjust to new situations, new events and new research developments. This book is an indispensable aid to policymaking that addresses, and/or uses evidence from, novel research developments….(More)”.

A systematic review of worldwide causal and correlational evidence on digital media and democracy

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Paper by Philipp Lorenz-Spreen, Lisa Oswald, Stephan Lewandowsky & Ralph Hertwig: “One of today’s most controversial and consequential issues is whether the global uptake of digital media is causally related to a decline in democracy. We conducted a systematic review of causal and correlational evidence (N = 496 articles) on the link between digital media use and different political variables. Some associations, such as increasing political participation and information consumption, are likely to be beneficial for democracy and were often observed in autocracies and emerging democracies. Other associations, such as declining political trust, increasing populism and growing polarization, are likely to be detrimental to democracy and were more pronounced in established democracies. While the impact of digital media on political systems depends on the specific variable and system in question, several variables show clear directions of associations. The evidence calls for research efforts and vigilance by governments and civil societies to better understand, design and regulate the interplay of digital media and democracy….(More)”

The Case for Abolishing Elections

Curated on Posted on by Stefaan Verhulst

Essay by Nicholas Coccoma: “Terry Bouricius remembers the moment he converted to democracy by lottery. A bookish Vermonter, now 68, he was elected to the State House in 1990 after working for years as a public official in Burlington. At first state government excited him, but he quickly grew disillusioned. “During my time as a legislator,” he told me in an interview last year, “it became obvious to me that the ‘people’s house’ was not very representative of the people who actually lived in Vermont.”

The revelation came while Bouricius was working on a housing committee. “The committee members were an outgoing and garrulous bunch,” he observed. “Shy wallflowers almost never become legislators.” More disturbing, he noted how his fellow politicians—all of whom owned their homes—tended to legislate in favor of landlords and against tenants. “I saw that the experiences and beliefs of legislators shape legislation far more than facts,” he said. “After that, I frequently commented that any 150 Vermonters pulled from the phone book would be more representative than the elected House membership.”

There is widespread disgust with electoral politics and a hunger for greater responsiveness—a hunger, in other words, for democracy.

Many Americans agree. In a poll conducted in January 2020, 65 percent of respondents said that everyday people selected by lottery—who meet some basic requirements and are willing and able to serve—would perform better or much better compared to elected politicians. In March last year a Pew survey found that a staggering 79 percent believe it’s very or somewhat important for the government to create assemblies where everyday citizens from all walks of life can debate issues and make recommendations about national laws. “My decade of experience serving in the state legislature convinces me that this popular assessment is correct,” Bouricius said.

The idea—technically known as “sortition”—has been spreading. Perhaps its most prominent academic advocate is Yale political theorist Hélène Landemore. Her 2020 book Open Democracy: Reinventing Popular Rule for the Twenty-First Century explores the limitations of both direct democracy and electoral-representative democracy, advocating instead for government by large, randomly selected “mini-publics.” As she put it in conversation with Ezra Klein at the New York Times last year, “I think we are realizing the limits of just being able to choose rulers, as opposed to actually being able to choose outcomes.” She is not alone. Rutgers philosopher Alex Guerrero and Belgian public intellectual David Van Reybrouck have made similar arguments in favor of democracy by lottery. In the 2016 translation of his book Against Elections, Van Reybrouck characterizes elections as “the fossil fuel of politics.” “Whereas once they gave democracy a huge boost,” he writes, “much like the boost that oil gave the economy, it now it turns out they cause colossal problems of their own.”…(More)”.

Calls to “save democracy” won’t work if there is little agreement on what democracy is

Curated on Posted on by Stefaan Verhulst

Article by Nicholas T. Davis, Kirby Goidel and Keith Gaddie: “One of the most consistent findings in academic research is the existence of something called the principle-implementation gap. People can agree that an idea is perfectly reasonable but will largely reject any meaningful action designed to achieve it. It happens with government spending. People want government to create public goods such as law enforcement, healthcare, and national defense, but oppose new (or additional) taxes. It happens with climate change. The public largely accepts the idea that human-caused climate change is occurring but is unwilling to reduce their reliance on fossil fuels. And it happens with racial equality. People decry racism, but they reject policies that reduce inequality. It also happens, it turns out, with democracy. People claim to love democracy, but willingly sacrifice democratic norms in pursuit of partisan political ends.

A recent New York Times/Siena Poll illustrates this point. Most Americans (71 percent) said they believed American democracy was endangered, but there was little agreement on the nature of the threat or the appropriate corrective action. In response to an open-end question, the most frequently identified threat (mentioned by only 14 percent of respondents) was corruption, not the undermining of democratic norms or the rule of law by former President Donald Trump and the almost 300 Republican candidates running for public office in this year’s midterm elections who deny the legitimacy of the 2020 presidential election.…

Despite much weeping and gnashing of teeth about the “crisis of democracy,” a singular, widely shared understand of democracy is not on the ballot. Or, if it is on the ballot, it appears to be losing.

Why don’t right-wing populist threats against democracy inspire, mobilize, or persuade a public that professes to believe in democracy?

Our new book, Democracy’s Meanings: How the Public Thinks About Democracy and Why It Matters, suggests at least two reasons. First, according to open-ended responses, citizens mostly view democracy through the lens of “freedom” and “elections.” The United States is having an election this fall. It may be less free and less fair in some places than others, but, overall, the electoral apparatus in the United States hasn’t cracked apart – at least in the minds of ordinary voters who don’t pay much attention to the news or care much about the intricacies of electoral law….(More)”.

Cloud Empires: How Digital Platforms Are Overtaking the State and How We Can Regain Control

Curated on Posted on by Stefaan Verhulst

Book by Vili Lehdonvirta: “The early Internet was a lawless place, populated by scam artists who made buying or selling anything online risky business. Then Amazon, eBay, Upwork, and Apple established secure digital platforms for selling physical goods, crowdsourcing labor, and downloading apps. These tech giants have gone on to rule the Internet like autocrats. How did this happen? How did users and workers become the hapless subjects of online economic empires? The Internet was supposed to liberate us from powerful institutions. In Cloud Empires, digital economy expert Vili Lehdonvirta explores the rise of the platform economy into statelike dominance over our lives and proposes a new way forward.

Digital platforms create new marketplaces and prosperity on the Internet, Lehdonvirta explains, but they are ruled by Silicon Valley despots with little or no accountability. Neither workers nor users can “vote with their feet” and find another platform because in most cases there isn’t one. And yet using antitrust law and decentralization to rein in the big tech companies has proven difficult. Lehdonvirta tells the stories of pioneers who helped create—or resist—the new social order established by digital platform companies. The protagonists include the usual suspects—Amazon founder Jeff Bezos, Travis Kalanick of Uber, and Bitcoin’s inventor Satoshi Nakamoto—as well as Kristy Milland, labor organizer of Amazon’s Mechanical Turk, and GoFundMe, a crowdfunding platform that has emerged as an ersatz stand-in for the welfare state. Only if we understand digital platforms for what they are—institutions as powerful as the state—can we begin the work of democratizing them…(More)”.

The Global Impact of Social Innovation: Disrupting Old Models and Patterns

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Book edited by Alexander Ruthemeier, Seda Röder, Kathleen Schröter, and Philipp Plugmann: “Social Innovation is not just a buzzword, it’s a global opportunity. However, it is also a very wide and heterogeneous field. The aim of this book is to give the reader different perspectives, concepts and experiences to understand the challenging tasks of the future while also showcasing some existing best-practice examples, impact-investing and social innovation strategies that successfully empower communities and individuals to shape a better life…(More)”.

Writing the Revolution

Curated on Posted on by Stefaan Verhulst

Book by Heather Ford: “A close reading of Wikipedia’s article on the Egyptian Revolution reveals the complexity inherent in establishing the facts of events as they occur and are relayed to audiences near and far.

Wikipedia bills itself as an encyclopedia built on neutrality, authority, and crowd-sourced consensus. Platforms like Google and digital assistants like Siri distribute Wikipedia’s facts widely, further burnishing its veneer of impartiality. But as Heather Ford demonstrates in Writing the Revolution, the facts that appear on Wikipedia are often the result of protracted power struggles over how data are created and used, how history is written and by whom, and the very definition of facts in a digital age.

In Writing the Revolution, Ford looks critically at how the Wikipedia article about the 2011 Egyptian Revolution evolved over the course of a decade, both shaping and being shaped by the Revolution as it happened. When data are published in real time, they are subject to an intense battle over their meaning across multiple fronts. Ford answers key questions about how Wikipedia’s so-called consensus is arrived at; who has the power to write dominant histories and which knowledges are actively rejected; how these battles play out across the chains of circulation in which data travel; and whether history is now written by algorithms…(More)”

What Moneyball-for-Everything Has Done to American Culture

Curated on Posted on by Stefaan Verhulst

Article by Derek Thompson: “…The analytics revolution, which began with the movement known as Moneyball, led to a series of offensive and defensive adjustments that were, let’s say, catastrophically successful. Seeking strikeouts, managers increased the number of pitchers per game and pushed up the average velocity and spin rate per pitcher. Hitters responded by increasing the launch angles of their swings, raising the odds of a home run, but making strikeouts more likely as well. These decisions were all legal, and more important, they were all correct from an analytical and strategic standpoint….

When universal smarts lead to universal strategies, it can lead to a more homogenous product. Take the NBA. When every basketball team wakes up to the calculation that three points is 50 percent more than two points, you get a league-wide blitz of three-point shooting to take advantage of the discrepancy. Before the 2011–12 season, the league as a whole had never averaged more than 20 three-point-shot attempts per game. This year, no team is attempting fewer than 25 threes per game; four teams are attempting more than 40.

As I’ve written before, the quantitative revolution in culture is a living creature that consumes data and spits out homogeneity. Take the music industry. Before the ’90s, music labels routinely lied to Billboard about their sales figures to boost their preferred artists. In 1991, Billboard switched methodologies to use more objective data, including point-of-sale information and radio surveys that didn’t rely on input from the labels. The charts changed overnight. Rock-and-roll bands were toppled, and hip-hop and country surged. When the charts became more honest, they also became more static. Popular songs stick around longer than they used to. One analysis of the history of pop-music styles found that rap and hip-hop have dominated American pop music longer than any other musical genre. As the analytics revolution in music grew, radio playlists became more repetitive, and by some measures, the most popular songs became more similar to one another…(More)”.