July/August 2002
Volume 15, Number 6
Psychology and Public Policy
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Economists are increasingly getting involved in and shaping less traditionally economic domains like social welfare, education, health policy, environmental policy, drug policy, criminal justice. Economics is the science driving public policy.
Issues where psychology and other behavioral sciences should flourish are being guided by traditional economic theory, suggesting that people always act rationally, always motivated by self-interest, choice is always good, and there is never a free lunch.
That model is "arcane" according to Princeton University psychologist Daniel Kahneman.
"We should just accept for the moment that economics is the one science of policy," he said. "To some extent this is very handy for us. We have economists as a foil. Economists often make very strong assumptions, and the assumptions are very often wrong. Economic theory is an endless supply of null hypotheses to be refuted."
Kahneman's remarks were part of the Presidential Symposium, "Claiming a Place for Psychology in the Public Policy Arena," at the American Psychological Society's 14th Annual Convention.
John M. Darley, also of Princeton and chair of the symposium, said that psychologists do not have a very clear sense of how to come to terms with the conditions and rules of public policy debate. In many respects, Darley said, psychologists have "dealt ourselves out" of policy debate. Darley presided over the convention as APS President.
"We've made a number of major contributions to various fields, notably education, public and mental health," Darley said, "but what we have not done is establish a systematic and sustained presence in the formulation of public policy about current events of important national interest."
A SEA OF QUESTIONS
Public policy debate explores an endless sea of questions. The source of the information and data used to determine actual policy is at the core argument between psychological study and the standard economic model.
For instance, what will happen if we:
- legalize marijuana?
- give government heroin to heroin addicts?
- allow homosexuals to serve openly in the military?
- eliminate punitive damage verdicts from jury trials?
"These are inherently behavioral questions," said Robert MacCoun, University of California, Berkley, School of Public Policy. "Most of the public interest can be studied using traditional methods of psychological study. There is nothing inherently economic about these questions, yet economists are more likely than psychologists to offer, and be asked for, answers."
Various forms of applied psychology are crucial for policy implementation, MacCoun said. However, these tools, such as psychological engineering and diagnostic tools, are too narrow for many policy questions.
"I think psychology much more than economics makes a distinction between basic and applied science," MacCoun said. "In my career, I often find myself relying on basic science literature rather than on applied psychology literature precisely because we don't have data, we don't have experiments in many of these domains. What we need to do is extrapolate from experiments in human behavior."
Kahneman further distinguished between the application of ideas and applied psychology. The two are not the same, he said.
"Psychology that is ready for application is usually fairly elementary," Kahneman explained. "It is going to be so robust that we can reach conclusions with considerable confidence without doing experiments. And, since it is so easy, economists can do it themselves and not cite psychology at all."
For the time being, Kahneman suggested psychologists be content in their currently better-suited role as critics than problem solvers. He cautioned that psychologists are not in a position to claim any place at the table for public policy debate. Rather, psychologists should expand cross-discipline exchange and work more with economists, who are already enfranchised in policy formation, and sell psychology to them.
"Economists will accept the psychology before the psychologists do, and they will do the psychology they need to," he said. "We should know that claiming [a place] would get us nowhere. We have to be invited by the people who are already at the table, and these people are economists."
PSYCHOLOGY TODAY, ECONOMICS TOMORROW
MacCoun said the reason psychology is not prominently factored into public policy decision-making is because psychology acknowledges influences often ignored by economists and their model. He said psychology has heterogeneity - multiple modular mechanisms, including the idea that beliefs and preferences are not stable and people can hold different beliefs at the same time. With or without psychology's active input, economics is going to become increasingly psychologically savvy and, he said, "What we call psychology today might be called economics decades from now."
"Economics has traditionally talked about people as purposeful actors acting in those beliefs and desires," he said. "Psychologists are dealing with more levels and as such are at a disadvantage."
To emphasize the complex lens of psychology, MacCoun said psychology is easily retrospective. Hindsight bias aside, he said it is easy to look back at why something happened, but that same theory could easily explain the opposite outcome, and still other theories could just as easily mark the outcome. Psychology fails at the public policy roundtable by not easily being prospective and able to easily measure the way economists do, flawed as Kahneman and MacCoun pointed out.
"We are not ready to claim an approach to large problems," Kahneman said. "We don't have the theory and arrogance that allows other disciplines to claim they have a solution. What we can do now is provide criticism and improvement."
THE TROUBLE WITH ECONOMISTS
Matthew Rabin, an economist from the University of California, Berkley, said the trouble with economists is that they assume there are no problems with impulse control. Traditionally, economists had no language for regretting your course of action, excluding, for example, the idea that people are smoking in excess of what makes them happiest.
"Traditional economic models assume that people are unboundedly rational, unboundedly selfish, and unboundedly self-controlled," Rabin said. "Even when economists have allowed for departure from this, usually it's been assumed these departures are random or don't matter. It's also striking that it has been ignoring psychology and other social sciences."
Until recently, studies of happiness and well-being have had little effect on economics. If an economist measured well-being, the measurement would identify an increase of choice.
Kahneman, in collaboration with other researchers, including an economist, is developing a method to measure direct experience rather than people's satisfaction with direct experience. The study involved 1,000 working women in Texas who were asked to relive a very specific period in their lives.
The women were asked to describe the previous day as if it were a series of scenes, and then answer a set of questions to rate their feelings in relation to the scenes. Then the women were asked to do an additional exercise focusing on just one event, or scene. Researchers could then compare the two.
"We now believe that we can achieve the vision to construct an instrument to decompose people's lives into different categories of experience," Kahneman said. "It could be used to look at the burden of illness, different policies and different social experience. There is a large range of problems for which to frame this."
