As a follow-up to my earlier post, "Identity economics--a major breakthrough?", here's a look at how differences in ideological identities produce different activities, while simultaneously revealing a major conceptual problem with the minimalist "Third Way" infatuation with "nudges".
A couple of weeks back, at the Monkey Cage, Erik Voeten called attention to a very interesting finding about how Cass Sunstein-touted "nudges" can work like a charm to reduce energy consumption with liberals, but utterly fail with conservatives, who actually increased their energy usage in response to nudges pushing them the other way. This is, I believe, a fascinating example of how Identity Economics can help shed light on the limits of more narrow-minded technocratic fixes--and possibly even help to craft them more intelligently. (It should be noted that Sunstein's "nudges" are presented within the context of "behavioral economics", and take into account deviations from perfect information along the lines of Akerlof's earlier work, but they still fall within the overall narrative framework pushed by market fundamentalists that privileges approaches that don't rock the boat, don't raise systemic questions, and don't challenge existing structures of power.) Here's Erik:
This is pretty startling evidence of how political polarization affects every day life choices, and not in a good way (although the effects are not huge). The NBER paper [by Dora Costa and Matthew Kahn] is here, a short discussion by the authors is here and the abstract is below.
"Nudges" are being widely promoted to encourage energy conservation. We show that while the electricity conservation "nudge" of providing feedback to households on own and peers' home electricity usage works with liberals, it can backfire with conservatives. Our regression estimates predict that a Democratic household that pays for electricity from renewable sources, that donates to environmental groups, and that lives in a liberal neighborhood reduces its consumption by 3 percent in response to this nudge. A Republican household that does not pay for electricity from renewable sources and that does not donate to environmental groups increases its consumption by 1 percent.
In the discussion, the researchers add:
If the same message "turns on" greens but "turns off" more conservative individuals, then to reach out to all members of a diverse population requires a mixed-messages strategy....
To design nudges effectively, a "nudger" must anticipate how diverse subjects will respond. We have shown that while energy conservation nudges work with liberals, they backfire with conservatives. Greens may reduce their consumption in response to the receipt of a Home Energy Report because both private and social effects work in the same direction. They want to be good global citizens and suffer when they are made aware that they are "part of the problem."
The obvious lesson for field experiments is that on polarised issues even seemingly innocuous messages may trigger perverse effects. What works on average in this California county may not work on average in Lubbock, Texas if the proportion of greens is less.
By relying on Sunstein's original presentation, which she wrote about here, Amanda mis-stated the details, thinking that the "nudge" consisted of a "happy face" message for those who reduced their energy usage vs. a "frowny face" for those who did not. (more on the actual nudge below). This lead to her reflecting on how easily this could set conservative off--and she's definitely got a point there:
If the frowny face is perceived as belonging to liberals---and it probably is, since the face is sad that you are wasting energy---then seeing it frown might actually provide a conservative with pleasure, and therefore it rewards wastefulness. On this site, we've discussed the various "kick a hippie" anti-environmentalism initiatives that conservatives undertake to both reassure themselves that they're not bad people for wasting and to piss off liberals. (For instance, check out the comments here.) In fact, many conservatives are less about policy and principles in general, and their ideology can be summed up as hatred of those perceived to be liberals.
Yet, I find it even more interesting and important that the actual "nudge"--discussed in a moment below--was much less ripe for taking offense at than Amanda assumed. That only makes her point even stronger, in a way. But because it's so relatively innocuous, it also points us more strongly in the direction of Identity Economics, since matters of identity often hinge on seemingly small details.
Before turning to the details, one final note: What this reveals to me, at the most obvious level, is a modest pragmatic flaw in the Sunstein/Obama approach that may be rectifiable, but a fatal conceptual flaw, if the concept is that nudges provide a sort of silver bullet way around ideology--which is precisely what appears to be their talismanic function for the Obama mindset. The idea that such "neutral" "nudges" are uniquely suited for reaching conservatives is an illusion, reflecting the same cold, hard reality that Obama experienced in his vain attempt to gain bipartisan cooperation. What's far more likely is that nudges will only work as well on conservatives once liberals have established at least some degree of hegemony, so that saving the planet for our children's sake is no longer considered anti-American.
We view ideology as a set of exogenous prior beliefs, including those about the
importance of energy conservation. The ideological divide on environmental issues between
Democrats and Republicans will affect how a household responds to an energy conservation
"nudge."
The "nudge" that the electric utility company sends to treatment households in an ongoing
randomized experiment to encourage reductions in electricity consumption is a two page
Home Electricity Report (see Appendix A for a sample). The front page compares the electricity
consumption of the household with all neighbors with similar size homes and heat type and with
neighbors who are in the bottom 20th percentile of electricity usage. The back page compares the
household's electricity usage in the current month relative to the same time month in the prior
year and awards green stars in every month the household consumed less relative to the same
month in the past year (not shown in Appendix A). It also provides three tips for saving
energy, such as turning down the thermostat when using an electric blanket or purchasing an
Energy Star durable, and indicates the dollar amount in energy savings per year.
Here are jpeg versions of the Home Electricity Report, which I think shows itself to be relatively free from red flags:
If such a relatively innocuouos "nudge" instrument nonetheless shows a measurable "irrational" response, we can't help but conclude that (a) "nudges" are not in general a way around ideological differences, at least any more than carefully crafted political compromises, for example, and (b) identity economics is really onto something very important, which we ignore at our peril.
