The Office of Science and Technology Policy (OSTP) has requested comments pertaining to the governance of artificial intelligence (AI) technologies. The Technology Policy Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge of the impact of regulation on society. It conducts careful and independent analyses employing contemporary economic scholarship to assess policy issues from the perspective of the public interest.
This year marks the 40th anniversaries of two of the greatest achievements in manned flight. In 1976, US military pilot Eldon W. Joersz set the still-standing airspeed record of 2,193.2 mph in the Lockheed SR-71 “Blackbird.” That same year, the Concorde introduced the world to supersonic commercial travel with the first passenger flights to break the sound barrier.
New technology can cause significant changes in an industry, potentially improving both consumer welfare and governance. The initial reaction of many regulators to the advent of “ridesharing” platforms such as Uber and Lyft was either to outlaw them or to burden them with the same level of regulations as taxis. But policymakers are now beginning to take a new approach. They are aiming to achieve regulatory parity between ridesharing platforms and taxis by deregulating taxis. In a new study, “Rethinking Taxi Regulations: The Case for Fundamental Reform,” Mercatus research fellows Michael Farren and Christopher Koopman and senior research fellow Matthew Mitchell determine that taxi regulation is outdated in light of the transformative technology changes and business innovations of the last few years. Now is an opportune time for fundamental reform of the entire regulatory regime to create a fair, open, and competitive transportation market.
Over the last few decades, psychologists have challenged economists on the notion that people always make rational decisions. Economists, of course, recognize that people are not always perfectly rational. Modeling them as such often adds to the precision of the model’s result, without reducing its relevance. Put another way, economists assume that most of the time people act rationally enough that modeling them as perfectly rational does not get in the way of discovering new insights into human behavior.
Nevertheless, behavioral psychologists found this rational choice–based method wanting and have amassed a sizeable body of research demonstrating certain “anomalies” in laboratory studies that break from rational choice predictions. For example, behavioral psychologists Amos Tversky and Daniel Kahneman famously claimed that people are susceptible to certain biases that make them more risk averse to gaining wealth (and more risk seeking in losing it) than the standard rational choice model would predict. Furthermore, they claimed that framing choices in different ways elicits inconsistent behavior.
These ideas eventually coalesced into the field known as “behavioral economics” and have since made their way into public policy. An example of this is the Consumer Financial Protection Bureau (CFPB), which regulates consumer credit products, such as mortgages and credit cards, and consumer credit providers, such as banks, payday lenders, and cell phone providers. This agency was largely influenced by behavioral economics in setting its organizational mission and goals, such as protecting consumers from exploitation and manipulation by credit providers.
Despite these behavioral-based foundations (or perhaps because of them, as I will explain below), the CFPB has been criticized from both sides of the political divide for its aggressive bureaucratic expansion and failure to adhere to its original congressional mandate. Furthermore, the actions of the agency have directly led to the significant reduction in volume of certain credit products (e.g., residential mortgages, auto loans) in a manner that calls into question whether the agency is helping or harming consumers.
The purpose of this paper is to outline the impact of behavioral economics on public policy by examining its central influence on the CFPB. In particular, it explains how behavioral ideas have been converted into policies that fail to account for actual government practice, which has led to mixed results for consumers. While understanding just how people are susceptible to market influence is important, the premature application of behavioral economics to public policy risks undermining the goal of helping consumers.
Whether today’s policymakers intend or realize it, the evolution of informal and formal fiscal rules continues to shape today’s fiscal policy outcomes. This has led to chronic deficits, mounting debt, a dizzying complexity of tax and budget procedures, and unsustainably large unfunded obligations—all leading toward an overall bad and worsening fiscal outlook. Any serious discussion of reform must start by recognizing the current incentive structure embedded in the budget process. Piling on more formal constraints, without addressing the shifts in the informal rules, will be futile.
The US FDA receives funding through the general fund and user fees. Additional funding comes from the regulated industries. Specifically, the drug industry funds FDA through the Prescription Drug User Fee Act (PDUFA), and the medical device industry funds FDA through the Medical Device User Fee Act (MDUFDA). Both acts are considered a success for requiring FDA to improve approval time for drugs and devices. However, decreased approval times have not resulted in more drug and device innovation.
My testimony focuses on three key issues: first, the extent of the Social Security financial shortfall; second, whether we’re actually facing a so-called “retirement crisis;” and third, how the current structure of the nation’s largest retirement program, Social Security, provides disincentives to work and save and is in need of modernization if the program is to fit the needs of the twenty-first century and achieve fiscal sustainability.
Do citizens have the right to determine their own courses of treatment and to use medicines and devices that they believe could improve their health? In other words, do patients have a “right to try” medicines and devices that can help them?
Chairman Meadows and Ranking Member Connolly: I am honored to have been invited to testify before you on the process of competitive sourcing as an initiative in government purchases of goods and services.
I am a vice president at the Mercatus Center at George Mason University, where my work over the past 15 years has focused on mechanisms that would improve the quality of governance in America. Before joining Mercatus, I served as an elected member of the New Zealand Parliament and a member of the Cabinet of New Zealand and was later appointed New Zealand’s ambassador to Canada and the Caribbean. New Zealand implemented a series of reforms to budget procedures when I served as a legislator, and Canada made major changes to its budget processes during my tenure there.
My comments today will draw on my research, these experiences, and on research that we have done at the Mercatus Center on budget procedures throughout the United States.
Doug Badger appeared in front of the House Energy and Commerce Subcommittee on Oversight and Investigations to discuss funding for the Cost Sharing Reduction (CSR) program of the Affordable Care Act. …
On September 7, the Mercatus Center at George Mason University and the Cato Institute’s Center for Monetary and Financial Alternatives will team up for a day-long academic conference, hosting a distinguished group of scholars, to explore pressing questions about monetary policy rules.
Rebounding after disasters like tsunamis, hurricanes, earthquakes, and floods can be daunting. How do residents of these communities gain access to the resources they need to rebuild while overcoming the collective action problem that characterizes post-disaster relief efforts?
Please join the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University for a panel discussion featuring Hayek Program Senior Fellow Virgil Storr and his new book Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship.
As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payment systems and commerce in ways that benefit both consumers and businesses. Individuals can now avoid using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often involve transaction fees, restrictions, and security risks—and instead use bitcoins to pay each other directly for goods or services.