THE OBAMA ADMINISTRATION IS NOT ABOUT BEHAVIORAL ECONOMICS.

3362206077_5d6b5d0602.jpgI don't mean to be churlish about this, because the intellectual history in Frank Foer and Noam Scheiber's "Nudge-ocracy" is really quite good. But enough with the attempts to tie Obama to behavioral economics. The apparent influence of the nascent field on the actual policy proposals emerging from the administration is minimal. The stimulus was not behavioral in nature. It was straight Keynesian spending. The health care policies we've seen so far are rote recitations of consensus proposals of the sort that non-behavioral think tanks have been peddling for years. Cap and trade is a policy architecture we applied to sulfur dioxide 15 years before Cass Sunstein published Nudge. Eliminating student loan middlemen and converting Pell Grants to mandatory money are not the sort of behavioralist advances that appear in Dan Ariely's Predictably Irrational.

It's true, of course, that various Obama-associated economists are interested in behavioral economics. Peter Orszag is famous for showing that graph on the power of changing the 401(k) default to opt-out rather than opt-in. Cass Sunstein wrote Nudge. But this is a young discipline. It's being popularized a whole lot faster than it's being filled out. Cutting edge behavioral economics couldn't do much more than change policy-making on the margins. There's no coherent "behavorial economics" vision for health reform or bank recapitalization. The example of a behaviorally informed policy that Foer and Scheiber offer, for instance, is a form of auto-enrollment in Medicare Part D called "intelligent assessment." It's a useful tweak that's responsive to the widely-reported complexity of choosing a drug plan. But it's a marginal one, and not the sort of thing that would require a behavioralist mindset.

Foer and Scheiber go on to attribute the Obama administration's unwillingness to nationalize the banks as evidence that "what the Obama administration has done these last few months is simply scale up the logic of nudging, albeit massively." But is that true? The Obama administration itself has said they doubt they have the capacity to nationalize the banks or the congressional support to authorize such a policy. Ben Bernanke has said he doesn't have the legal authority to do it. And plenty of administration sources have explained the Geithner plan as an effort to avoid returning to Congress for more funding.

The sad reality of the American political system is that it's fairly immune to anything so elegant as a particular economic theory. Even if Obama did have a coherent vision for the mechanics of his policies, it's not clear that Ben Nelson and Evan Bayh and Susan Collins would share that vision, and that would pretty much be that. And his administration knows it. The Obama administration, probably rightfully, has a very grim view of Congress's capacity to support inventive policymaking. But their theory of policymaking has been, also rightfully, that little happens without congressional support. And so they've oriented their policy proposals around ideas that have preexisting support in Congress rather than banking on the hope that the elegance of their new ideas will create support where it didn't initially exist.

But that's not behavioralism. That's Rahm Emanuelism.

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