Tuesday, 23 February 2016

Bad Habits and Commitment Devices

In my new book Bad Habits, Hard Choices, one of the key elements of my argument – an argument that says we should apply negative VAT to healthy foods and high VAT to unhealthy foods – is that we should re-cast VAT not as simply a tax, but as a ‘commitment device’.  My thinking on this has been crucially informed by two books in particular:
  • “The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain Since 1950” by Professor Avner Offer of Oxford University
  • “Strategies of Commitment and Other Essays” by Professor Thomas Schelling of Harvard University

With these in mind, I found myself contemplating the idea that, to all intents and purposes, everybody already knows that it really isn’t a good idea to drink all those sugar-in-suspension fizzy drinks, to eat so much salt and red meat and doughnuts.  But they all seem so tempting!  Our fragile animal brains, still driven by all those evolutionary millennia, guiding us remorselessly to the decision: just one more chocolate…

We don’t succumb all the time, of course; virtually all of us have had the experience of ‘resisting temptation’.  To a greater or lesser extent, we assert ‘self control’ – see Offer - in the face of the marketing onslaught.  Sometimes, on an idle Tuesday, we have had enough; and we pledge to stop smoking, drinking and eating ready meals.  We pledge to stop giving in to our children’s demands for the latest ridiculous drink they’ve seen advertised; we pledge to give them apples instead of chocolates; we pledge to cook them a proper meal rather than throw some sauce-smothered, additive-riddled, fat-laden ready meal in the microwave.

And, wonderfully, sometimes we succeed.  How?

The name for what we do is a ‘commitment device’.  Coined by the aforementioned and marvellous Thomas Schelling, the phrase refers to a mechanism by which the You of Today imposes a constraint on the You of Tomorrow.  Setting your alarm for the morning is a commitment device: Today You knows that, unless something stops you, Tomorrow You will sleep blissfully until lunchtime.  By setting the alarm, Today You imposes an obligation to wake at a particular time on Tomorrow You.

Taking a shopping list to the supermarket is a commitment device.  (My first economics teacher explained that going to the supermarket without a shopping list was tantamount to ‘economic suicide’.)  The you that sits calmly at the kitchen table to write a list of things you need is sending instructions, and thus restrictions, to the you that will be ambling up and down the aisles of enticement in an hour or two.

Limiting your options for spending too much by visiting your local stores rather than Oxford Street is a commitment device.  Setting yourself a spending limit before you even leave the house is a commitment device.  Writing on your hand the words ‘Buy the low fat version’ is a commitment device.  Cutting up your credit card so that you are simply unable to indulge in some retail therapy is a commitment device.

Commitment devices come in differing strengths; and different behaviours require different devices.  Head to the supermarket with a scrappy list and you are only lightly defended against the onslaught; you will still need considerable will power to enforce the commitment.  Head to the Mall without a credit card, and it will be really quite difficult to spend much money.

Head to the supermarket without any plastic, on the other hand, and feeding yourself and your family would become difficult, which is rather the opposite of what one might be after.  Similarly, heading to the Mall with a list that says ‘Handbag. Watch’ is unlikely to protect you from all those luxury brands.

Schelling himself thought first about smoking – indeed, his own smoking – and extended initially to other compulsive behaviours that we humans seem so keen on.  Virtually everyone has some sort of ongoing battle, with smoking or chocolate or gambling or alcohol or picking their nails or [insert your own personal demon here, should it not already have been listed].  And virtually everyone will have, on one or - more probably - many occasions, invented some sort of commitment device in an attempt to restrict or abandon their ugly behaviour.  The you of yesterday tried really hard to come up with a cunning plan – but the you of today still found a way to have a crafty fag or slip in a bonus doughnut.

As we also know, however, sometimes these commitment devices actually work.  And it turns out there are some relatively straightforward features that distinguish effective devices from ineffective devices.  They need to be easy to use, for example; and they need to have their effect at the right time.  By some margin the most important feature that distinguishes the effective from the ineffective, however, is the extent to which it is public rather than private.  In general, a commitment device that is devised by a group and then operates in a public fashion will be more effective than a device devised by an individual and applied in isolation.

If we think about food again, for a moment, simply consider the difference between you personally deciding to reduce the number of ready meals you eat each week and a decision by your entire household to eat fewer ready meals.  You can immediately feel that not only would you individually find it harder to continue eating so many ready meals if no-one else in the household was doing so, but the whole household would find it easier to stop eating such rubbish if they had all agreed together than if each of them decided separately.

Schelling took this line of thinking the whole way.  He re-presented ‘law’ as commitment devices.  A legal statute – let’s say something like ‘it is illegal to drive a car whilst under the influence of alcohol’ – is the people of yesterday imposing a restriction on the people of today (us).  Social institutions, too, have this character, he suggests: the way a museum presents a particular cultural view of the world, the way a parliament presents a particular way of conducting debate, the way money presents a particular way of conducting exchange – all are inventions of past peoples, and act to shape or constrain the ways that the peoples of today and tomorrow see, think and behave.

And, in the same way that your shopping list or diced credit card may or may not work, may or may not be appropriate, so too with human laws and institutions.  Sometimes the people of yesteryear got it wrong and we need to amend or replace their commitment devices; the progressive repeal in recent years of the various laws against homosexuality would be a good example.

Thinking about it from this slightly bigger and longer term perspective gets us towards the idea of a ‘commitment strategy’.  Stopping an entire country smoking, for example, is the kind of thing that you can’t really do in one go.  You are probably going to need a whole host of mechanisms or ‘interventions’ or commitment devices.  A commitment strategy is a plan for such a situation, where a range of commitment devices will be necessary and where it will be important to think about which devices get used to achieve which outcomes at which times.

Note, again, the importance of the group dynamic in all this.  The commitment device known as ‘banning smoking in public places’ would have been impossible in the UK ten or twenty years earlier because smoking was still too prevalent: it was still sufficiently widespread to have the character of an injunctive norm.  By 2007, when the ban actually came into effect, smoking rates had fallen to levels whereby a sufficiently large majority of people did not smoke, to the point where the injunctive norm had flipped.  The story had changed.

Throwing all this together, and this thing we call ‘British society’ looks like a tangle of inherited commitment devices, broadly devised and implemented in a public fashion, evolving slowly, and carried around in our heads as a more-or-less tangible story that contains the rules of how to behave.  In general, and certainly if they’re going to be successful, new rules – new commitment devices – are considered and devised by our better selves, with the specific intention of trying to restrict the weaker selves that we know we will at some point be tomorrow, or the day after.

Which gets us back to shopping and unhealthy foods.  Millions of us believe, and routinely tell the nice researchers when they ask us in surveys, that our health is our top priority.  Yet we buy and eat a simply astonishing amount of food that makes us ill.  We eat food that harms our hearts, clogs our arteries, gnaws away at several vital organs and makes us fat.  The main reason we do this is not that we’re stupid; it’s not even that there is always a gap between what we say and what we do.  It’s because we are subjected unremittingly to a sophisticated assault from all sides, a surround-sound of interwoven stories that has been saturating our mammal minds for so long that we barely even notice any more.  We inhabit an environment in which ever more aspects of our lives require us to fulfil the role of consumer, a role in which we experience an intoxicating sense of choice, but in which only choices that serve the interests of capital are presented.  The asymmetry is acute; and we have not yet put in place the strategies, devices or tools to redress the imbalance.

So what if, rather than each of us battling on our own to eat the right amount of fruit, avoid the fatty rubbish, cut back on the chocolate, stop drinking the sugar-in-suspension drinks, and so on and so forth, what if instead we decided to do it together?  What if, as citizens today, we agreed on some commitment devices to control our consumer selves tomorrow? What if we could use a reformed VAT as just such a device?

In, out, in, out, shake it all about

I have two dominant anxieties about the EU referendum.

The first is encapsulated in the comic strip character Mayor Johnson.  Clever, well-educated and dangerous, Johnson has grafted a public persona of bumbling haplessness onto a private personality modelled on his hero, Winston Churchill, to whom he bears a striking and steadily increasing physical resemblance.

Great though Churchill undoubtedly was – as Johnson’s own biography of the man attests – he and his myth are inextricably linked with the narrative of Empire.  To recall Churchill is to recall the War, and Potsdam, and an England that still, just, ruled the waves.  To cite Churchill as an inspiration is to imagine that a mighty nation still exists, a nation soon to rouse from its slumbers and capable of once again shaping the world.  To imagine such a nation is to deny the challenges confronting the world of the twenty first century, and to deny, too, the realities of the past fifty or sixty years.

The denial is not Johnson’s alone, of course.  Every day, and especially every Sunday, our televisions positively groan with export-oriented costume dramas, dramatic re-creations of re-factualised pasts and pastiche documentaries about long-dead kings, queens, murderers and cults.  Seemingly terrified by an uncertain and bewildering future, huge numbers of Britons appear to take refuge in the re-imagined past, a past of certainties and authenticity, of simplicity and honour, of power and glory.  Once upon a time we were Great; and, when we were, everything else was great too.  We all want a great future – so let’s get back to being Great again.

Johnson both physically and figuratively embodies this belief.  (Trump is the American version.) He is the manifestation of a myth.  The mythological term upon which he – and others – rely is ‘sovereignty’.  And my anxiety is grounded in the potential power of that myth.

In the bright light of the facts, a few densely populated islands just off the north western seaboard of the continental landmass known as Europe are about to make a decision with fifty-year consequences.  The only – the only – rational thing to do is to remain intimate with our friends and neighbours.  To cast ourselves adrift – to have sovereignty over our own little boat as the storms grow ever fiercer – would be folly of an extreme kind.

And yet, and yet, it might actually happen, through the power of myth.

My second anxiety, reinforcing the first, comes from my experience a dozen or so years ago when I facilitated a series of discussions about whether the UK should or should not join the Euro.

London First, a business-led lobbying and campaigning group, wanted to explore whether the Euro would be good or bad for London.  I suggested that there were four possibilities:

- the UK joins the Euro, and it’s bad for London
- the UK joins the Euro, and it’s good for London
- the UK doesn’t join the Euro, and it’s bad for London
- the UK doesn’t’ join the Euro, and it’s good for London

As a half-decent economist, I was able to construct an argument in support of each of these positions.  Why not, I suggested, hold four ‘business breakfasts’.  I’ll pitch one argument – one scenario – to each breakfast. Four breakfasts, four scenarios.  We'll prompt debate and discussion, which will in turn help businesses, and London First, decide on what position to adopt.

And so it came to pass.  At each breakfast, a group of a dozen or so business folk, all pretty senior, all from major London-based businesses, all with responsibility for dealing with the issues associated with the Euro.  At each breakfast, I gave an opening presentation, setting out just one of the four possibilities – in, good; in, bad; out good, out bad.

My expectation had been that debate and discussion at each breakfast would reveal the various pros and cons, would elicit insights and perspectives from the various participants and would bring into the light the facts and figures upon which a rational decision could be based.

In fact what happened was that each and every meeting ended up agreeing with my initial presentation.  Irrespective of which scenario it was.  What became clear was that the very people who one might most have supposed would have some useful insights, perspectives, facts and figures in fact had no idea at all.  What became clear was that a single persuasive argument – a single story – could fill the vacuum.  It didn’t actually matter what the story was, so long as it was a good one.

And thus my second anxiety.  Most people, I suspect, have little or no idea whether staying in the EU is better than getting out, or vice versa.  On top of that, the people who ought to have the facts and figures probably don’t know either.  In such a vacuum, what matters is – the story, the myth.  And who tells it. If a comic-book character – quite literally, a person from a story – tells an easy-to-understand story to millions of people for whom such stories are already central to how they cope with the vicissitudes of day-to-day life, then the myth really might win.

I can hardly bear to imagine it.  So much so, I’m off to consult with the goblins and the leprechauns to see if they’ve got any bright ideas.