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It's all in the heuristics

“Choose good health, low cholesterol, and dental insurance…. But why would I want to do a thing like that?”
John Hodge, Trainspotting

Making decisions is a right of passage. Part of growing older and being given responsibility is the opportunity to exercise your own choice and face the consequences. Of course, these choices are often constrained by our personal capabilities. The left have traditionally centred on economic constraints. It has also been recognised that there are fundamental social and physical limitations on individuals’ choices. However, when considering the role for increased choice in public services less attention is given to how we choose. The fact is most of the time we make what amounts to a best guess. Does choice really mean chance?

Know-it-alls

The choice agenda in public services could provide a virtuous circle for public service reform. Citizens are fed up with having things done to and for them by bureaucrats and politicians (who they don’t trust anyway). If public services respond to what they want then they become happier. Choice re-engages people with the service in question: people care a lot about their healthcare, child’s schooling and local police priorities and once they are able to effect change beyond the dreary trip to the ballot box in a one-party constituency there’s a far more powerful incentive to get involved. Once we open up public services to citizens’ choices then the services themselves have an incentive to become more flexible and respond to the wishes of those that use them rather than the bureaucrats in Whitehall.

As Alan Milburn recently argued:

“In an era where citizens are better informed and more inquiring, doing things to people will no longer work. Today, the priority must be to fashion an active citizenship where the state enables more people to make choices for themselves, so they are better able to realise their own aspirations.”

For choice in public services to deliver the potential benefits outlined citizens need to be, as Alan Milburn points out, better informed and more inquiring. On the face of things of course they are not. Whilst in international comparison the news habit in the UK remains strong, national newspaper readership has fallen from around 70% of the population to just over 50% in the late 1990s and is lower still today. Television news shows a similar decline and the viewing and reading of local news has suffered an even more vertiginous deterioration. The lower down the socio-economic scale you are the less likely you are to read or watch the news on a regular basis.

Unsurprisingly fears of a know nothing electorate aren’t new. Political philosophers, such as Philip Converse, have long been sceptical about the public’s ability to take rational decisions in mass democracy. Opinion poll research from the mid-1920s onwards seemed to confirm that most of the population know very little about candidates’ policies. During the 2001 General Election in the UK researchers found that, ‘despite the barrage of media headlines on the campaign… the British public displayed widespread ignorance about party policies on Europe, asylum seekers and taxation.’

For proponents of consumer choice this is precisely the point. As Ilya Somin recently argued:

‘a person “voting with her feet”… is in a wholly different situation than is the ballot-box voter. If a “foot voter” can acquire advantages… that creates a much stronger incentive for foot voters to acquire relevant information.’

Tough Choices

It is when you know best that having a choice really matters. It’s easy enough working out when you would like your hospital appointment or knowing when childcare needs to be available for you because of your shift working patterns. The difficulty in making an informed choice comes when information is hard to assess and even if available of poor quality. Even when we feel we are informed that information may not be complete or accurate, and this can prove problematic. The MMR controversy illustrated the dangers of individuals acting on poor information. Because of poor public understanding of the risk associated with MMR, stoked by media panic, parents unwittingly actually increased the overall risk of serious harm to their children by attempting to act in their children’s best interest and avoiding the vaccination. The key to successful public service reform will be devolving decisions down to the right level and addressing information problem so government works to empower citizens.

But we also need to understand better how individuals actors take decisions. The sovereign consumer, homo-economicus, makes rational decisions with the aim to maximising their individual welfare based on perfect information. But as stated above information is never perfect even if it is available. Furthermore, people behave irrationally. As Sen argued in Rational Fools, homo-economicus is hardly human at all. Passion, spite, generosity and prejudice impact on our “rational” judgement.

Most decisions aren’t based on the rational weighing of the options. Gathering information and analysing it takes time. To become even reasonably well informed on two competing options takes far longer than is usually available. So we use shortcuts known as heuristics. Heuristics enable us to navigate our way through the thousands of choices we need to take in a complex world. Television advertising not only heightens brand awareness but part of the persuasion message is one of trust. If a company advertise on television they aren’t generally fly-by-night. We buy cars because people we know have one so they must be good. We vote for candidates because of party allegiance rather than their manifesto commitments or even because we’d prefer to have a pint with them than the other one.

Even the reasonably well informed use heuristics. A recent study reported in the BMJ found that, ‘clinicians rarely accessed and used explicit evidence from research or other sources directly’ instead choosing to rely on ‘brief reading but mainly by their own and their colleagues' experience, their interactions with each other and with opinion leaders, patients, and pharmaceutical representatives, and other sources of largely tacit knowledge.’

Your decisions will only be as good as your heuristics. Bad heuristics like bad information make for poor decisions. Advertisers and other unscrupulous types such as politicians will try and trade on this knowledge. For example, basing your choice of food on the alleged health benefits suggested on the packet won’t make for healthy eating, and the picture you saw of George Bush landing on an aircraft carrier doesn’t mean he’s been to a war zone before.

Whilst we don’t measure up to the perfect homo-economicus, in the main decisions based on rules of thumb and less than perfect information work pretty well. You don’t need to know how to drive a train to quickly grasp how to travel from A – B. Knowing that as a rule we tend to guess on far less information than we would need to make a rational judgement does not mean making public services more responsive to choices is a bad thing. However, the choice agenda needs to take better account of both information and how people take decisions in real life situations.

The proposed traffic light system for food is a good example of how this can work. It uses short-cuts (red=bad) to enable consumers to make their own informed decisions. But this is a simple example. As most acknowledge, league tables don’t tell you all you need or would want to know about a hospital or school. A conversation with another parent or patient could tell us far more partly because we can ask the questions that we would like answered and partly because you can convey far more rich information in greater depth this way.

To get the best out of reform there are three questions we need to go on to answer: How much information is enough to take an informed decision; How can information be provided?; and to what extent will we tolerate the potential for the inevitable poor decisions by individuals?