Policy Options Future Public Square

THE PUBLIC SQUARE TALKING ‘BOUT GENERATIONS

The current generation of young adults is getting squeezed, financially and in lifestyle, says Paul Kershaw. But Tammy Schirle counters that generations can only be compared over a full lifetime, and that statistics don’t tell all about a good life.

La génération actuelle des jeunes adultes se fait pressurer en matière financière et de choix de vie, affirme Paul Kershaw. Tammy Schirle lui rétorque qu’on peut uniquement comparer les générations sur une vie entière et que les statistiques ne disent pas tout des facteurs d’une vie réussie.

PAUL KERSHAW Who’s really getting squeezed?

Notwithstanding the national malaise about the slow performance of Canada’s economy since 2008, economic indicators show that Canada is more prosperous than ever before. Our economy is now more than twice as big as it was in 1976. After adjusting for inflation and population growth, it produces around $35,000 more per household than it did then.

Yet many of us don’t feel better off, which is contributing to what has become widespread talk of a “middleclass squeeze.” It is a powerful phrase

that resonates with many Canadians and, to no one’s surprise, it has been grasped by those seeking political office as a useful mantra. But the focus on the middle class as an amorphous whole distracts attention from a more significant economic reality: it is mostly younger people in their mid-40s and under who are being squeezed out of the middle class. Meanwhile, the data show that the median Canadian age 55 and over (yes, the very middle of that older demographic) is doing better than the equivalent person did a generation ago as measured by income and wealth.

After adjusting for inflation, Statistics Canada data show that the typical 25-34-year-old working full-time is earning wages that are 11 percent (or about $3 an hour) lower than people of the same age did in 1976. By contrast, the median 55-64-year-old is making wages

that are 3 percent higher than the same age bracket did in 1976. The trend is even better for the older demographic when we measure household income: those older households are earning incomes about 20 percent higher than their counterparts a generation ago.

Young people’s wages are losing ground, despite the fact that those under 45 are far more likely to have post-secondary education than their parents (they also have more student debt, because inflation-adjusted tuition is double what it was in 1976). As people cope, there has been a rise in dual-earner households. Yet after adjusting for inflation, two young people still bring home little more than what one breadwinner often did in the mid-1970s.

The result? The working generations under age 45 are being squeezed — squeezed for time at home, and

Paul Kershaw is founder of the Generation Squeeze Campaign (gensqueeze.ca) and a policy professor in the University of British Columbia’s School of Population Health.

squeezed for money, because they carry higher student debts and mortgages while earning lower wages. And when they choose to have kids, they are squeezed for child care services, which remain in short supply and often cost the equivalent of another mortgage.

No political party is advocating fixing this generational income inequality. Those politicians tripping over themselves to cater to a “beleaguered” middle class make little allowance for generational differences, in large part because older Canadians wield greater political clout. This demographic bulge votes in greater proportions than younger Canadians.

And it is better organized. Since 1985, Canadian seniors (later joined by baby boomers) have lobbied effectively for their demands and desires through CARP (originally an acronym for the Canadian Association of Retired Persons). CARP explicitly notes on its website that translating research about healthy aging into public policy is made easier by the “political clout” that comes from “bringing like-minded people together.” CARP has built a membership over 300,000 people strong and vows to “march to a million” members.

But while we applaud CARP for advocating on behalf of our mothers and grandmothers, someone also needs to

ask who will advocate for the squeezed younger generations.

Buildingon the CARP model, the Generation Squeeze campaign is building an organization that speaks for younger Canada. The aim is not to work against the interests of our parents and grandparents, but to build equal generational power to which all political parties will respond with a better generational deal. Among the policy goals are safeguarding the foundations of medical care and Old Age Security for the aging population, while also adapting to the squeeze on the incomes, time and services available to those under 45.

Let’s look at the statistical basis of this generational gap. Income gains are just the tip of the iceberg when it comes to gauging the wealth of the average Canadian nearing retirement. Adjusted for inflation, average housing values of $383,000 have nearly doubled since 1976 ($203,000), leading to massive gains in personal wealth for those who entered the housing market a few decades ago. Statistics Canada data reveal that the median person age 55-64 enjoys household wealth that has risen by around 100 percent over to the previous generation.

But what’s been good for a generation phasing into retirement has been bad for their kids and grandchildren.

The typical 25-34-year-old working full-time today will need to save for 10 years to put away the 20 percent down payment needed to buy a home in a school district with average house prices. That’s twice as long as it took the typical young worker a generation ago, even though today’s down payment often purchases a smaller yard, a condo or a suburban home that requires a longer commute.

Governments have been slow to recognize these gaps. The federal and provincial governments currently allocate around $45,000 a year per retiree on important programs like medical care and retirement income supports, compared with $12,000 per person under age 45 for school, medical care, post-secondary, employment insurance, family tax breaks, child care and parental leave.

We all know spending per retiree should be higher than spending for younger Canadians. It is a fact that we are more likely to require health care in our later decades, and Canadian values do not expect citizens to continually sell our labour throughout old age to make ends meet. High amounts of government spending on seniors are not the problem. The problem is the slow pace of adaptation for younger generations.

But the solution lies in replicating past decisions to increase social spend-

ing on retirees. In the mid-1970s, 30 percent of Canadian seniors were poor. We fixed that by championing and adapting a pension and medical system that was able to wrestle the low-income rate among seniors down to between 5 and 7 percent — a rate lower than for any other age group in the country. Because we now spend around $50 billion more per year on medical care than in 1976 (when measured as a share of GDP), and another $30 billion on Old Age Security and the Canada/Quebec Pension Plans, my 98-year-old grandmother is not poor today; and my parents, in-laws, aunts and uncles have a far reduced risk of economic insecurity compared with the generation that retired before them. We must sustain these achievements.

But is also time to adapt social policies to meet the challenge of younger generations facing deep declines in their standard of living. Although we are not likely to reverse the fact that younger Canadians now earn many thousands of dollars less per year and pay housing prices that are hundreds of thousands of dollars more, there are policy solutions by which we could mitigate these trends.

Family policy is a prime mechanism to address the issues behind the squeeze. Better benefits for new moms

and new dads would ensure that it doesn’t cost younger generations the equivalent of a second mortgage in lost income when parents share 18 months at home with a new baby. Ten-dollara-day child care would mean parents would not have to pay the equivalent of another mortgage to allow both partners or lone parents to work.

Such changes would save one-earner, two-earner and single-parent families tens of thousands of dollars before their children reach age six, with which they could pay down the average student debt, reduce by years the time it takes to save a down payment or pay off a mortgage. Or this money could simply make it easier to deal with rent, benefit from the power of compound interest to save for retirement and afford slightly more work-life balance. Indeed, since the federal government added to the time squeeze for younger generations in 2012 by adding two more years of work before they are eligible for Old Age Security (qualifying at age 67, not 65), we should consider changes to employment practices that would free workers to have an extra few hours a week at home each year before they retire.

Paying for these policy changes would not require a dramatic change in the generational spending gap outlined above. In fact, we could pay for

these three changes by increasing the annual public allocation currently made per Canadian under the age of 45 from $12,000 to $13,000 — a mere extra $1,000 per year — and target this pooled investment to the expensive moment in people’s lives when they start their homes, jobs and families. All the while, we could retain annual spending per retiree around where it is now, at $45,000, to safeguard the medical care and retirement income support our aging family members expect.

We can pay for this investment in younger Canada either by reallocating existing expenditures (e.g., reduce less-efficient social spending, subsidies to industry and unnecessary tax expenditures) and/or by rolling back some of the tax cuts of the last decade. (Total government revenue fell five percentage points of GDP between 2000 and 2010, which represents a drop of around $80 billion in annual revenue.)

The only other option is the status quo — which is a bad deal for younger generations.

It is time for politicians and policy-makers to stop ignoring intergenerational discrepancies within the middle class. The very housing trends that have driven up wealth for the median person in the older demographic mean millions of young Canadians face an economy that makes it harder to buy a first house, harder to spend time at home as their parents did and harder to save for a retirement that may not come with the same guarantees enjoyed today. We need social investments to address this generational gap. We need boomers and seniors to get on board for a better deal for their kids and grandchildren.

And, most of all, we need younger Canadians to recognize that political parties of all stripes respond to those who organize. If we build for ourselves an organization with political and market clout that matches CARP, governments are much more likely to adapt policies to address the pressing challenges of our generations with the same conviction they now devote to our parents and grandparents. n

SHUTTERSTOCK

TAMMY SCHIRLE

Would you want to be in your mother’s shoes?

I’ve met many people determined to convince me that their generation got a raw deal. They will pick and choose statistics to make their point, and every counterpoint is met with a “Yeah, but…” Ask who is better off — early boomers (born between 1946 and 1955) or some of Generation X (born 1971-80) — and the conversation starts to sound like a typical argument between teenagers and their parents. Neither understands the efforts and trials of the other. But it also raises the interesting matter of how to evaluate intergenerational inequities in well-being. And for that, we need to put the facts in context.

We could begin by comparing the financial well-being of boomers and youth. For example, in 2012, families under age 35 had a net worth of only $25,300, while those aged 55 to 64 had a net worth of over half a million dollars. Yet that discrepancy simply reflects the time it takes to accumulate assets over one’s lifetime. We could compare public spending on individuals. Provincial health expenditures on the average man aged 60-64 was $4,591, while expenditures on the average 25-29-yearold man were only $2,076. However, this merely reflects a deterioration in health with age in the context of a universal health care system (the average 90-year-old man costs over $26,000!). Such contemporaneous differences are not informative for judging the lot of different generations.

To evaluate well-being across generations, we need to compare apples with apples — realistically, an impossible task. Appropriate comparisons would need to see what happens to each generation over their entire life

cycle — from infancy to death — and try to derive an all-encompassing measure of lifetime well-being. We simply don’t have the data to do that. And even if we could collect the data, we’d have to wait until today’s youth die before we could reach a conclusion about which generation enjoyed a better life.

The best we can do is compare well-being at similar points in the life cycle, while appreciating the full context for judging well-being. I tend to think about most aspects of individual well-being in terms of three interrelated dimensions: family, work and leisure. I also tend to think about women in each generation. It’s among women that we can see some interesting similarities and also remarkable contrasts. Let’s consider the early boomer women and those from Generation X. The best available data allow us a chance to compare them between the ages of 25 and 34.

What do those data tell us? When they were between 25 and 34, most early boomer women were married (79 percent) and had kids (67 percent). The

typical early boomer woman gave birth to her first child around age 24. A large portion were employed at ages 25-34 (58 percent). On average those who worked did so for 30.7 hours per week. Only 13 percent had a university degree at this age. If working full-time, they could expect to be paid a wage rate 75-80 percent of what men aged 25-34 received.

The women in Gen X were less likely married (66 percent) or mothers (49 percent) when they were between ages 25 and 34. Typically, Gen X women had their first child around age 27-28. They were more likely to work at ages 25-34 (76 percent), and on average they worked 30.5 hours per week.

The averages mask an interesting trend, however. In Gen X, a higher percentage of women worked part time than did boomers. And a higher percentage also worked 40 hours or more per week. Almost a third of Gen X women had a university degree at ages 25-34. And those who worked full-time were paid at a wage rate that was 90 percent of what men aged 25-34 received.

Tammy Schirle is an associate professor of economics at Wilfrid Laurier University.

Between the ages of 25 and 34, the resources flowing in to support the household were remarkably similar across the two generations. The average after-tax income (adjusted to account for family size and to 2002 prices to account for inflation) of an early boomer family whose oldest member was aged 25-34 was just under $27,000, and the income for a Gen X family was just over $27,000.

In contrast to women in their generation, Gen X men aged 25-34 were less likely to be employed full-time than their early boomer counterparts. But the Gen X household had a lower after-tax income at earlier ages, and had much higher incomes than boomers when in their 30s. While only the crystal ball can tell us what their future holds, there are many reasons to expect the lifetime income of Gen X households will far exceed that of the boomers. The main reason is the higher level of education for men and women, and women’s greater attachment to the labour force.

Therest of the story is our interpretation of the data. I look at Generation X women and see a group that invested in themselves when relatively young, going to school and starting careers before establishing their families.

It’s a costly investment of time and money, but they expect their lifetime earnings to be much higher than those of their mothers, with smaller penalties for job interruptions. Choices to delay parenthood and marriage appear to result in better relationships: divorce rates have been on the decline in Canada. Overall, I would argue that a measure of the generational gap that considers one’s entire life cycle will clearly demonstrate women in Generation X are much better off than the boomers.

Of course my interpretation of the data reveals my personal experience and bias.

My mother was presented with few opportunities in her youth. With the expectation that she marry young, have several children and stay home to raise them, there was little reason for her to pursue higher education. As a single mom with no support later in life, with no work experience and little education behind her, moving forward in the labour market was tough. Her male counterparts with similar education and skills could find jobs with high enough wages to support a family; she could not. She struggled to balance training, work and kids for many years, eventually settling into a stable career

path. By the time she could afford to contribute to retirement savings, she felt it was a lost cause.

I think of myself, growing up knowing that a university education — in a male-dominated field — was an option, and I was encouraged to pursue whatever option appealed to me. Certainly, I maxed out the student loans (and did my share of complaining in my pre-Millennium Scholarship days), but they were quickly paid off when school was done, and I now reap a great return on that investment. I postponed marriage and children until I knew I had a solid foundation to support an independent life.

I struggle to balance work and family in ways my mom never imagined — she didn’t have to worry about breastfeeding in her office or making it to work without peanut butter fingerprints on her pants.

But my husband and I (combined) enjoyed a full year at home with our infant child with full job protection and generous benefits that my mother could not imagine. (Nor could she imagine a husband taking the role of primary caregiver to an infant!) Quality child care is expensive, but it’s only for a couple of years, and the price is not high enough that I’d give up my career or my chance to be a mom. There are many things about my life that might seem harder than my mom’s, but when I look at the big picture, I would not dream of trading places with her.

Perhaps other women come at this with a different image in mind. Many stay-at-home moms in the 1970s and ‘80s would not have wanted anything else, even if it brought more money into the household. They focused on their contribution to the household’s wellbeing, offering quality child care and organizing the family’s affairs. They may have spent many hours volunteering their time outside the home. The cost to their careers was viewed as a small price to pay. They may have gradually moved into the labour force to supplement the family income, even going back to school, as the family grew older.

Their daughters of today may be feeling pressured — socially or

financially — to go to school and define careers when they would rather follow in their mothers’ footsteps. Investments, particularly in housing, seem overwhelming. Several years of child care and inflexible work schedules seem an insurmountable problem. They sometimes hunger for the simpler lives they see their mothers had.

The point is that different perceptions of well-being make it impossible to conclude in any definitive way that one generation as a whole was better or worse off than the next. Things are not harder or easier. It is simply different.

An agenda that tries to arouse generational conflict misses the hard social problems that have nothing to do with anyone’s measure of a generational gap. We have small pockets of seniors living in dire poverty and need to find the best policies to help them. A nation that values opportunity and freedom to choose a path for oneself must find a route to ensuring all young people have access to education and training. Concern that many people aren’t saving enough for their retirement, even when they are able to do so, must translate into steps that help them save. These concerns can straddle generations. It’s where our focus should be. n

The digiTal agora l’agora numérique

Digital technology is changing the experience of public spaces, where lights can dance and screens deliver a dynamic, immersive experience. Is this just public entertainment? or will it change the politics of public space?

l’espace public se transforme sous l’effet des technologies numériques, qui font valser lumières et écrans pour créer une expérience immersive. S’agitil de divertissement ou du renouvellement politique de l’espace public ?

Moment Factory lit up the Grey Cup Village in Montreal in 2008 by lending the various zones on the site unique “lighting signatures,” with images representing the city’s urban reality. Standing out from the nightlights of Montreal, the village was surrounded by an illuminated fence.

Photo: MoMent FaCtory (Montreal)

Much history has been shaped in public squares. the square is where people have gathered across the ages to share ideas and entertainment, to debate and dance, to demand change and celebrate it when it comes. Public squares originated in the Greek agora, but our identification with the public square crosses time and cultures: tiananmen in Beijing. tahrir in Cairo. Zuccotti Park in new york. the recent uprisings, from taksim in Istanbul to Maidan in Kiev. like battlefields and temples, public squares are where we go to express what it means to be human.

For centuries, the look of the public square has remained much the same, but the revolutionary impact of digital technology now has the square in its gaze. Massive computing power, advances in lighting and high-definition screens allow us to transform public spaces into multimedia hubs that change the experience of being there. these immersive technologies offer a dynamic, augmented reality. they enable people to interact with art and architecture and offer magical moments not only in public squares, but everywhere people gather: airports and museums, on bridges and in downtown corridors and stadiums.

Since last fall, visitors arriving in the renovated tom Bradley International terminal laX (los angeles) walk through a hall in which screens show colourful landscapes from the airport’s destinations, alongside the iconography of la — from the beaches to the hollywood sign. Designed by Montreal’s avantgarde Moment Factory, which has produced public spectacles in squares from Barcelona to Calgary, the main hall becomes an immersive, multimedia interactive space in which light columns react to passenger movement, where hours of visual candy is displayed on massive, elevated storyboard screens and a time tower in the centre evokes the spirit of the silent movie era.

the laX installation shows the new possibilities for public spaces. around the world, urban designers are experimenting with software to usher in a new age of the agora. For some, the aim is to create events and collective experiences, to promote beauty and to entertain (the dazzling show at laX is a welcome change from the high-end-brand

pornography that defines so many modern terminals). others see an opening to rescue public spaces from decay.

But the rush of technology to redefine our physical world also raises political questions. Who controls the messages of this powerful, immersive technology? the crowd, capable of democratic urges, but also of mob rule? the authorities, always eager for ways to control a message or better survey their citizens? hackers? or, on the brighter side, does the technology offer an opportunity to foster reconciliation in postconflict zones, to assist the recovery after disasters, and connect the present city and generation to the past and those who have left? Jan edlers, a founder of the Berlinbased realities:united, which incorporates new media into urban architectural projects, says the question is, “will it be purely for fun or will it be political?” We are only just beginning to ask.

- Bruce Wallace

PhotoS: toM BraDley terMInal at laX, MoMent FaCtory

In linz, austria, anybody can play on the interactive leD facade of the Fassadenterminal, changing the colours and arranging the tiles, like an architectural-scale kaleidoscopic rubix cube. It is the home of the ars electronica Center, a digital “museum” of the future, where the emphasis is on interaction and participation.

PhotoS: arS eleCtronICa (lInZ)

realities:united created BIX, a “communicative display skin” on the east facade of the Kunsthaus in Graz, austria: 930 circular fluorescent light tubes are integrated into 900 square metres of the Plexiglas facade, where images and films can be displayed.

toP Photo: ©2003 harry SChIFFer leFt

Photo: ©2003 Paul ott By CourteSy oF realItIeS:unIteD (BerlIn), StuDIo For art anD arChIteCture

Ode à la vie on the Sagrada

Familia, Barcelona, captivated spectators over three days in 2012 with a spectacular 14minute show that added sound, light and colour to the fantastic facade of Gaudi’s multi-spired cathedral. It was created by Moment Factory for the cities of Barcelona and Montreal.

PhotoS: MoMent FaCtory

Crystal Mesh by realities:united lights up the Iluma building complex in Singapore. It is a complicated matrix arrangement of modules, some lit by fluorescent light tubes forming “active patches” that at night illuminate the luminous, jewel-like facades.

PhotoS: realItIeS:unIteD

Sender is a “retrained” automobile manufacturing robot located on an empty building, literally in the middle of nowhere in Bergkamen, Germany, that sends out signals to — nobody — using a flag during the day and a light sabre at night. an art installation by realities:united, functioning, but with no beginning and no end.

PhotoS: © 2013 PhIllIP KaMInIaK By CourteSy oF realItIeS:unIteD

Big Vortex, which will send smoke rings 30 metres in diameter and 6 metres high that represent half a ton of fossil carbon dioxide over Copenhagen as a reminder of our Co2 emissions, is the ingenious environmental message of realities:united. It will be a waste-toenergy plant, and also a ski slope.

IlluStratIon: realItIeS:unIteD

We spend a great deal of time thinking about policy problems; we spend less on the mechanics of how we make the decisions that try to solve them. But understanding decision-making is essential to getting the results we want. The following articles look at some of the behavioural science that helps explain where we fall short. And they ask whether changes to the decision-making environment, from the arrival of big data to the emergence of global networks in the Internet age, can help us get better at it. nous consacrons beaucoup de temps à réfléchir aux grandes questions politiques, mais beaucoup moins aux mécanismes de décision qui permettraient de les résoudre. Il est pourtant indispensable de bien comprendre les processus décisionnels pour obtenir des résultats probants. Les articles qui suivent se fondent sur les sciences du comportement susceptibles d’expliquer nos insuffisances. Leurs auteurs se demandent également si l’évolution de l’environnement décisionnel, marqué à l’ère d’Internet par l’avènement de mégadonnées et l’émergence de vastes réseaux mondiaux, nous aidera à faire de meilleurs choix.

Making Decisions

Why We’re Bad at It... hoW We Could Be Better

An appeal for smarter decisions

Pour améliorer la qualité de leurs décisions, les responsables politiques doivent mieux comprendre les fondements scientifiques des processus décisionnels.

as someone who lives and works in Calgary and tends to identify with political views that lean left of centre, I’m often labelled as an anti-industry, antigovernment thinker. I confess that some of my nonacademic writing has been critical of both industry and government. I have written about similarities I see between the Calgary of today and Detroit decades ago and the statistical certainty that there will be oil spills from pipelines. I have also written from a perspective on energy strategy that deviates sharply from the views held by Prime Minister Stephen Harper’s Conservative government.

In spite of my views on specific issues, I have little interest in taking an ideological stand against industry or government. I see work in government as a noble and underappreciated calling (maybe I’ve watched too many episodes of The West Wing) and admire the emphasis on creativity and outside-the-box thinking of the best and brightest in business and industry.

So, if I’m not antigovernment and anti-industry, what am I? The answer is simple: I’m anti-lousy-decision-making, especially in public policy, where the outcomes affect us all. And if being against something requires that one must also stand for something, I stand for a decision-making process that meets a high, but eminently achievable, standard of quality.

Joseph Árvai is the Svare Chair in Applied Decision Research in the Department of Geography at the University of Calgary. He is an adviser to the US Environmental Protection Agency and a member of the US National Academy of Sciences’ Board on Environmental Change and Society. He can be reached on Twitter via @DecisionLab.

A high-quality decision-making process is one that accounts both for how rational decision-makers should behave and for how people actually behave. High-quality decision-making strives toward the idealized benchmarks for rationality set forth by the economic sciences, while recognizing that people — working individually or in groups — face significant psychological hurdles trying to get there.

Because of its repetitive nature, decision-making seems straightforward and intuitive. The commonly accepted narrative around decision-making goes something like this: When people are faced with a problem or opportunity, they gather information about it, identify a series of options for solving or addressing it, weigh the pros and cons of the options and then make a choice that results in maximum benefit for minimum cost. Good decision-makers are optimizers.

In reality, however, research and practice show that high-quality decision-making is neither straightforward nor intuitive. Research in the decision sciences, which can best be described as an uneasy — yet rarely boring — marriage between economists and psychologists, reveals several obstacles.

The largest and least surprising of these is the robust finding that people are not strict optimizers. Rather than evaluating their options by thoughtfully evaluating pros and cons, people take shortcuts. And, while taking shortcuts is commonplace, most decision-makers fail to understand or recognize the practice and — importantly — the systematic biases that accompany it.

The German psychologist Gerd Gigerenzer views these “fast and frugal” shortcuts as an essential and effective (in that they may lead to quasi-optimal decisions) aspect of human decision-making. Without them, the vast majority of the decisions people face in their daily lives — what to

JOSEPH ÁRVAI

Policy-makers need to understand the science behind decision-making behaviour if they hope to get better at it.

wear, what to eat, which movie to watch, etc. — would be too time-consuming and, hence, overwhelming. It’s impossible to argue against this position.

On the other hand, it’s equally worth noting that complex policy decisions involving national affairs such as energy and pipelines, or international affairs like choices about humanitarian interventions and a national policy on climate change, require more than the application of fast and frugal shortcuts.

These decisions require more accuracy, for the costs associated with getting them wrong may be significant and felt for generations to come. And because these decisions require greater accuracy, they demand more effort from decision-makers.

What does more effort in decision-making look like? In decision science parlance, “effort” isn’t a matter of trying harder or, in some cases, even working harder. It is a matter of adding much-needed structure to processes that are too often unstructured and diffuse in the minds of decision-makers.

At its most basic level, decision-making is about two things: solving problems and addressing opportunities. To do a good job of either means taking the time to understand what the real problem or opportunity is. Will it require a single decision at a single time with a discrete choice? Or will it require a series of overlapping and interrelated decisions made over an extended period of time?

Take the Canadian government’s position on oil sands. The problems and opportunities in the oil and the overall energy sectors are not limited to whether to develop the oil sands. They require choices about investments in a much broader national energy landscape, such as whether a onesize-fits-all approach to energy works for all of the provinces (it doesn’t), the question of carbon taxes, and incentives for the development and deployment of renewables. These decisions will necessitate a series of interconnected choices over time about a very wide range of investment options.

Nothing in the federal government’s policy agenda suggests it is prepared to make these kinds of interrelated choices. Indeed, the real leadership in energy decisionmaking is coming from those who understand the importance of looking past investing in a single energy source, the “adapt or die” industry players who embrace the innovative thinking that today’s energy decisions require.

Making high-quality decisions also means choosing options that best address decision-makers’ values and objectives. Straightforward, right? Nope. History is replete with examples of people doing a poor job of aligning choices and policies with their objectives. Think of the Donner Party’s fatal decision to take a “shortcut” to California, which left them in the snowbound Sierra Nevada; prohibition in the US to curb crime, which instead fuelled the gangster class; and George W. Bush’s obsession with overthrowing Saddam Hussein instead of finding Osama

bin Laden (or instead of dealing with the decay of domestic infrastructure and financial regulations, for that matter), which resulted in the bloody quagmire of the Iraq War.

Why does this happen? On the one hand, it’s because making trade-offs among competing objectives is hard intellectual work. It’s much easier to make a decision to go ahead with an oil and gas pipeline because we’ve convinced ourselves it makes short-term economic sense than it is to make a decision to go ahead — or, perhaps, not — based on thoughtful trade-offs between long-term economic costs and benefits, environmental risks, social welfare and the concerns of First Nations.

People routinely fail to make decisions that are in line with their objectives for an even more simple and troubling reason: They don’t take the time to think deeply about what it is they want to achieve — what their objectives are — in the first place.

This is not just a matter of coming up with some vague notion of a desirable outcome. It’s about being clear about the relationships among different objectives; for example, the relationship between growing the economy and protecting the environment. Decision scientists refer to these as “ends” objectives. It’s also about understating the relationship within objectives; for example, how different kinds of investments — the Canadian government’s recent focus on the digital media and the tech sector or its historic interest in natural resources — are “means” to the “end” of growing the economy. The bottom line here is that values and objectives are prime for all of our decisions, big and small. We neglect them at our peril.

The rise of what is broadly called Big Data has given new impetus to those who believe that more and better information will solve our decision-making troubles. The term Big Data is generally taken to refer to the digital exhaust from our time spent online: our searches, commercial transactions, social media interaction, movements tracked by GPS devices and so on. The sheer amount of data we generate has spawned hopes that we can take the guesswork and estimation out of decision-making. The number of data points will eliminate the need for statistical sampling. Big Data will simply tell us what we need to know and what to do. And it is cheap.

We are far from the point Where We can hand decisionmaking over to an algorithm.

But Big Data can be misleading. Viewed out of context, or out of order, data can give us wrong answers, or be used to reinforce our prejudices. They can show correlations among events (think of the success of Google Flu Trends in predicting the rise in illness in places where flu-related searches had spiked). But uncovering the causes behind the data are still susceptible to our biases (did the search spikes occur because more healthy people were provoked to do so by media reports of a possible flu epidemic?).

Big Data and the algorithms that seek to analyze it are certainly valuable, and they are only in the early stages of development. But we are far from the point where we can hand decision-making over to an algorithm. The human component — asking the right questions of the data and making sure they are used to serve our objectives and not the other way around, and deriving the right answers from them — remains crucial to good decisions.

We can easily see the difficulty in outsourcing decisions to the data sets in the struggle to craft climate change policies. No one can say we lack data on the issue. The Intergovernmental Panel on Climate Change has now produced five reports, based on comprehensive information gathering and modelling produced by thousands of scientists. Yet all those data do not provide us with iron-clad projections about the precise impact of different variables on the future climate. They can’t, and they never will.

Because many policy decisions about climate lack a structure that would help policy-makers design strategies that are sensitive to the trade-offs between competing objectives, Big Data doesn’t help as much as it should to improve the decision process. The physical science does not resolve the social science challenges.

Is the boom in natural gas fracking a route to a lower- carbon energy substitute; does it have unintended consequences for the health and environment of local communities? Is reviving nuclear power a viable option, or are the perceived risks too high for a world spooked by Three Mile Island, Chernobyl and Fukushima? Is the massive capital expenditure required by adaptation technologies more acceptable to citizens than

the considerable slowdown in economic growth from the shift away from carbon-based fuels?

The decisions that are at the ends of these questions require trade-offs that Big Data alone can’t make. If used wisely, Big Data can help us make better decisions. But it does not remove the need for human insight.

so what is a policy-maker to do in light of these judgmental challenges? The obvious answer is to slow down, to take the time needed to bring structure to complex decisions. In my research lab at the University of Calgary, we have been working extensively with decision-makers in industry, government and communities on how to improve the quality of decision-making, from daily decisions to high-level ones where the impact will be felt by many for years to come.

We hear a frequent argument that the speed at which decisions must be made is ever-increasing. Social media, short news cycles and an impatient desire for quick fixes to all kinds of problems are ramping up the pressure on decision-makers. Not only is there no time to slow down, but the amount of time that seems to be available is shrinking.

This is a real concern. Making decisions in a time-heightened atmosphere can lead to a greater reliance on the emotional side of our decision-making capabilities rather than the analytical side. The psychologists Robert Zajonc, Paul Slovic and Daniel Kahneman have written at length about two systems of decision-making: one based on rapid emotional responses, gut instincts and intuition; the other on analysis and calculation. The best decisions come when both systems are working in unison.

The perceived need for speed in decision-making and the demand for quick responses to complex problems play to the strengths and weaknesses of our emotional rather than our deliberative side. Emotions bring much-needed feeling to data, which is otherwise sterile and without meaning. But too much emotion acts as a blinder.

It can keep us focused on elements like fear or anger that can distract us from more mundane but vital factors, such as the data on risk and probability of different outcomes.

Given the dual role of emotion in decision-making, the best advice remains to pause and reflect. Does the decision really require speed? If it does — as in the need to flee from a threat — you’ll know. So, by all means, let emotions rule. If the decision doesn’t require speed, the best advice is to take a slower, more deliberate tack.

But it’s not just a slower pace that matters. It’s also structure: the need to think about multiple objectives, a diversity of alternatives and informed trade-offs. Take, for example, the recent deliberations led by the National Energy Board (NEB) on the proposed Enbridge Northern Gateway pipeline, which would carry bitumen from the oil sands in Alberta to tidewater in northwestern British Columbia before it is loaded onto ships bound for Asia. In spite of the “no time to lose” rhetoric from the federal government on oil sands development, coupled with aggressive lobbying and public relations efforts by industry, it has been over four years since the NEB issued its terms of reference for the regulatory review of the pipeline.

Yet for all the time taken, the decision-making process about Northern Gateway has barely progressed. Even though the NEB recently recommended federal approval of the pipeline, its construction — if it ever happens at all — is, at best, years away, with no sign of achieving broad acceptance.

The decision-making process for Northern Gateway was marred by chaos and frustration. Many stakeholders wonder why other alternatives aren’t on the table. Many analysts view the hearings and its outcome as illegitimate. Many experts still squabble about the meaning of the data characterizing pipeline risks. And many people have vowed to continue the fight against the pipeline. If ever a recent Canadian policy decision screamed out for a better structure, it is this one.

Fixing the process to get good decisions in a timely way requires fresh thinking from governments. Here, the behavioural sciences can help. The Democrats in the White House and the Conservatives on Downing Street have begun to formally embrace insights from the behavioural sciences as a way to improve the quality of their decision-making, strengthening their in-house and science-based decision-making capabilities. Behavioural science has moved from theory to action, in government and, increasingly, in corporations.

Are Canada’s civic and corporate leaders ready to commit to a path of capacity building around better decision-making? To do so would require understanding that the stakes are high in the choices we face, from getting the energy and environment mix right to how we respond to the changing shape of our economy in an age of technological transformation. These are questions with implications for humanity and the planet. We can’t afford to fail. n

Playing with time

JENNIFER JACQUET

Solving some of our planet’s most wicked problems will require cooperation. But our preference for instant gratification means we need a new approach to encouraging cooperation on big decisions.

Nous ne pourrons régler les graves problèmes de notre planète sans coopération. Mais étant donné notre prédilection pour les résultats éclair, il nous faudra développer une nouvelle approche de collaboration pour prendre les décisions majeures qui nous attendent.

no single country acting alone will be able to fix the problems that confront us globally. From climate change to species conservation and the depletion of resources like clean water, choosing an effective response depends on our willingness and ability to cooperate. That means that the solutions to resolving issues like climate change may lie not with the physical sciences that produced the extensive evidence and defined the problem, but with the sciences that study human behaviour, which can test different paths to a solution. And it means understanding that why we decide to cooperate — and to what extent — has become the most pressing issue of our time.

As an environmental scientist, I design experiments that study human behaviour. I want to know what it will take for us to choose to make the sacrifices required to combat the scourges of overfishing, freshwater shortages and climate change.

We know more about why we balk at cooperating. A study I led with researchers from Canada and Germany, published in Nature Climate Change in 2013, found that when the rewards of cooperating are delayed — especially delayed to future generations — people are less likely to make the sacrifices necessary for success. In the real world, our preference for instant gratification encourages some of us to “defect” from group cooperation in order to reap immediate benefits. Our collective-risk game in the lab found that this tendency increases when the benefits of cooperating are delayed to benefit future generations, rather than those alive today.

That lab scenario is what we face when it comes to finding strategies to deal with climate change. The cost of the changes we need to make today — from accepting lower economic growth to carbon taxes or subsidizing renewable energy — are felt immediately, while many of the benefits of these steps that could result in a less-hot planet will be reaped by our grandchildren.

The media coverage of our work focused on our evidence as proof that humans are not behaviourally inclined to make the necessary sacrifices for climate change that humans are not behaviourally inclined to make the sacrifices for climate change. To those who oppose the costs

Jennifer Jacquet is a clinical assistant professor in the Department of Environmental Studies at New York University. She is interested in large-scale cooperation dilemmas such as climate change and overfishing.

of sacrifice, it was a convenient excuse to avoid action. To others who wonder why we seem incapable of forging cooperation, it provided one answer rooted in science to explain our lack of will.

Our research into decision-making shows that scientists are looking in new places for answers to problems like climate change. After five rounds of international scientific consensus on the state of the climate, the solution probably does not lie in providing more facts about the pace, certainty and potential implications of climate change.

Instead, it may depend on getting the social science right, with a better understanding of how and why we decide to cooperate. It will also depend on the political will.

When it comes to studying human cooperation, scientists usually focus on the tension between the individual and the group. The problem was articulated by ecologist Garrett Hardin in his famous 1968 essay, “The Tragedy of the Commons,” which described how people acting in their own best interest will damage the long-term common good.

Hardin’s initial concern was overpopulation, but the theory has implications for environmental sustainability. We see one such tragedy in action on the high seas, where the benefits of overfishing are individualized as profits to fishing companies but the costs are shared by all who depend on future fisheries. Under such circumstances, the tendency is to overexploit fish stocks. Studies have shown that fish populations that travel the high seas are under greater stress from overfishing than fish populations that stay in national waters.

Significantly, the costs of failing to cooperate are not borne by the generation that overexploits the resource. Instead, they are deferred to future generations of humans and wildlife, adding another tension to the tragedy of the commons: time.

Time is one reason that privatization — often heralded as the antidote to the tragedy of the commons — does not necessarily solve the problem. Mathematical models and real-world evidence demonstrate that overexploitation can occur even when resources are under private ownership, because the mechanism by which we value something re-

ceived right now more than the same thing received in the future is discounted.

The concept is easy to grasp. People would rather take $100 today than the same amount a year from now. And most people prefer to take $100 today to taking $110 in a year.

This human bias toward instant gratification has grave implications when applied to the exploitation of commons that are at risk, whether it is fish stocks or the atmosphere. If people cannot be convinced to defer rewards, then even private ownership will not be able to halt overexploitation.

And if we are to avert this disaster for the planet and ourselves, we need to better understand the behavioural traits that put it all at risk.

Much has been written on time discounting, and many experiments have tested discounting in individual decision-making. But when my colleagues and I examined the research literature, we found no experiments that introduced discounting into an experiment on cooperation.

In our experiment, we added a time element to a game of collective risk. We gave multiple groups of six participants €40 per person to invest in climate change actions. If participants cooperated and pooled their money for a total of €120 for climate change action, returns on their investment in the form of an additional €45 each were promised. The various groups were offered climate returns on their investment according to one of three time scenarios: one day later; seven weeks later; or in planting oak trees, an intergenerational scenario that would lead to climate benefits several decades down the road but would not personally accrue to the participants.

Although many individuals invested initially in the long-term intergenerational investment, none of the groups achieved the €120 target. The majority of groups cooperated when the benefits were paid out the next day, a minority of groups when the benefits were paid out seven weeks later; but none of the groups that were offered the intergenerational condition cooperated.

experiments like this help us understand why cooperation on a long time scale is difficult. But they also provide a

ansWers to problems like climate change may lie not in more facts but in a better understanding of hoW and Why We decide to cooperate.

model where we can test how different interventions work in the lab to explore possible ways to curb discounting and whether some policy interventions might have unintended effects. Our results explain why it is important to find policies that provide short-term benefits. They help to explain why adaptations to climate change — for example, large sand-bars and carbon capture and storage — might be more attractive than mitigation, because the benefits of adaptation would accrue to current generations, while the benefits of some forms of mitigation might provide gains only in the distant future.

Our results also show some curious behaviour that economists would probably diagnose as irrational. While no group in our third, intergenerational treatment succeeded in reaching the €120 target, the average group contribution was still €57, and one group even got as close as €116. We need to find the reason for this intergenerational cooperation. The individuals in our experiment were playing our game for money, but in this third intergenerational treatment, other things they valued obviously came into consideration.

Lab experiments can provide insights into human behaviour, but there are limitations. In the real world, we’re dealing not with six players but with hundreds of countries and corporations, and these countries and corporations come to climate negotiations with different resources, political power and influence. In addition, the costs of climate change and the benefits of mitigation are not evenly distributed across all actors, as they are in our experiment. We know that the tropics and small island states will bear disproportionate punishment for a problem to which they barely contributed. We know certain species, like coral reefs, are going to be less able to adapt to climate change than others.

But the biggest difference, one that is so obvious it feels glib to mention it, is that there is no chance of pressing the reset button, as we can in our experiment. What’s happening to the earth’s atmosphere is not a game, and we cannot start over. n

The network solution

DON TAPSCOTT

The emergence of global solutions networks offers hope for a better way to address global problems. But we need to understand how they work and protect them from nationstates that sometimes try to suppress them.

faut mieux comprendre leur fonctionnement et les protéger contre les états-nations tentés de les bâillonner.

Technology has brought us to the cusp of new hope for solving global problems. Until now, we’ve relied on a model based on nation-states and global institutions controlled by states. Throughout the 20th century, national governments cooperated to build global institutions in order to facilitate joint action and address global problems. Most of these organizations were part of the post-SecondWorld-War global architecture: the Bretton Woods system for managing commercial and financial relationships among the 44 founding states, followed by international organizations such as the International Monetary Fund, the World Bank, the G7 (later the G8 and now, following Russia’s takeover of Crimea, probably back to the G7 again) and the World Trade Organization.

But in recent years, these large international institutions have fallen short of expectations. While we have seen progress on issues such as poverty, half of the world’s children remain destitute and malnourished. Some countries’ priorities remain egregiously misplaced: 1 percent of the global military budget could fund public education for every child on the planet. Progress on issues like trade lib-

Don Tapscott is the executive director of the Global Solution Networks program at the Rotman School of Management, University of Toronto, and the author of 14 books, most recently (with Anthony D. Williams) Macrowikinomics: New Solutions for a Connected Planet. @dtapscott

eralization and dealing with climate change has been slow or nonexistent, leading to despair in some quarters that the world lacks effective tools to deal with issues and crises of global dimensions.

Fortunately, a new paradigm for solving global problems is emerging. The Internet’s connectedness, transcending national borders, has given rise to rich networks of problem solvers, decision-makers and activists. New nonstate networks of civil society, private sector, government and individual stakeholders are achieving new forms of cooperation. They address every conceivable issue facing humanity, from poverty, human rights, health and the environment to economic policy and even the governance of the Internet itself.

This is a new development on the world stage that holds the promise of helping us make better decisions in solving global problems. Enabled by the digital revolution, these networks are proliferating across the planet and increasingly have a major role to play in enabling global cooperation and governance. We call them global solutions networks.

But the rise of these networks also brings new questions: Do these networks lack legitimacy because they were not democratically elected? In whose interests do they act? To whom are they accountable?

And just as they show signs of becoming an effective mechanism to address global problems, the old nation-state is fighting back to reassert control over what it perceives as a threat to its power. The technology that enabled activists

Si l’émergence de « réseaux mondiaux de solutions » laisse espérer de meilleures façons de résoudre les problèmes planétaires, il nous

to organize and challenge governments in countries such as Egypt has been appropriated by authoritarian rulers to help reassert control in Syria, for example. Edward Snowden’s leaks of extensive National Security Agency (NAS) surveillance and access to data have prompted a backlash in many countries, with some governments — opportunistically or otherwise — seeking to establish national control over their digital pipes and data.

This has brought these young global solutions networks to an inflection point. A battle is shaping up between the old and new paradigms. And if we are to seize upon the opportunities offered by these new networks, it is essential to understand them better, so we know what we are nurturing.

until now, there has been no systematic study of global solutions networks or an attempt to understand their potential to improve the state of the world. Little has been done to evaluate what makes these networks tick, how they succeed or fail and what impact they have on solving problems. Nor do we have a handle on how they address the tough issues of legitimacy, accountability, representation and transparency.

That’s why the Martin Prosperity Institute at the University of Toronto, in partnership with 15 corporations, foundations and governments that include those of the United States, Mexico and Ontario, has launched a multimillion-dollar global investigation of the new networks in order to understand how they can be more effective and fulfill their enormous potential.

These multistakeholder networks have four characteristics. First, they are coalitions, attracting participants from at least two of the four pillars of society: government or international institutions; corporations and business interests; civil society; and individual citizens. Second, the networks are global or at least multinational. Third, they harness some form of digital communications tools and platforms to achieve their goals. Fourth, they are not controlled by a state. They can be created by the nation-state but must have been released from its control.

Our research has identified 10 types of networks.

There are policy networks, such as the International Competition Network, that create policies for companies and governments. Watchdog networks like Human Rights Watch are funded by corporations and philanthropists and scrutinize the behaviour of governments everywhere. Knowledge networks like TED create global knowledge on a scale never seen before.

Operational and delivery networks actually deliver the change they seek, supplementing or even bypassing the efforts of traditional institutions. Diasporas are global communities formed by people who are dispersed from their ancestral lands but share a common culture and strong identity with their homeland. Some networks act as platforms for those who seek change. A great example is Ushahidi—the website that was initially established to map reports of violence in Kenya in the post-election fallout of 2008 and evolved into a global network to enable people to share information and organize for change.

Standards networks, driven largely by corporations, now determine global standards in most areas of human activity. More elaborate networked institutions, such as the World Economic Forum or the Clinton Global Network, are addressing a wide variety of issues but, unlike formal state-based institutions, are self-organizing rather than being controlled by governments.

There are resources on the planet governed by multistakeholder networks rather than traditional government institutions. The Internet itself is managed by such a governance network, where states have little involvement, let alone control.

A new approach to meeting the challenges posed by climate change offers one example of global solutions networks in action. At this year’s World Economic Forum in Davos, notwithstanding record revenues for some companies and all-time highs in some stock markets, much of the conversation centred on a deep concern that climate change is poised to wreak havoc on the world’s people and economy.

SHUTTERSTOCK

Yet it has been 16 years since the signing of the Kyoto Accord, and the volume of greenhouse gas emissions continues to climb. Clearly the old way of addressing this problem through international diplomatic negotiations leading to an enforceable treaty is failing. Our challenge, however, is that rescuing the fragile spaceship we call earth still requires coordinated global action. No one country or actor can solve this problem alone.

Thankfully there is a willingness to seek a new way forward. With states having made such little progress in addressing climate change, much of the action is now focused on business and multistakeholder networks to generate momentum toward action. Hundreds of advocacy networks such as the Alliance for Climate Change are working to educate, mobilize and change the policy of governments and global institutions.

The next global government gathering to discuss climate change will be in 2015, but in preparation, the United Nations will, for the first time, convene a climate summit involving a meeting of heads of state and government along with business, finance, civil society and local leaders. The meeting in September is not part of a formal negotiating process. But UN Secretary-General Ban Ki-moon wants the conference to catalyze decision-making among governments, business, finance, industry and civil society to drive a global shift toward a low-carbon economy. Nation-states, he believes, cannot get there alone.

To many, a global digital infrastructure that enables these networks offers not just promise but peril. Past media revolutions — the printing press, radio, television and then cable television, to name the most prominent — have arrived accompanied by grand claims that they were ushering in a new paradigm that would democratize information. Each time, governments and corporations, initially caught off guard, rallied to put fences around the latest medium, reasserting control for reasons of power and profit.

The Internet faces the same array of forces. Courtesy of Edward Snowden, we now have a sense of just how deeply organizations such as the NSA have inserted their tentacles into the digital infrastructure to monitor the activities of hundreds of millions of Americans and non-Americans. Many other countries have their own version of the NSA. To be sure, states have legitimate needs to ensure security and protect citizens from bad actors such as terrorists. However, around the world many states have crossed the line and are now using the Internet as a tool for spying, control and even repression.

The Internet has the potential for awesome neutrality. It is a platform that can serve the “many to many,” and ultimately will be what we want it to be. It will do what we command it to.

If we want it to be a platform for mobilizing the world to combat carbon emissions, that’s what it will be. If we want it to be a tool for building a network to defund public education, as some Tea Party members have proposed, it will

be that, too. The Web enables terrorist organizations such as al-Qaeda to metastasize, and yet it enables us to deliver highlevel educational curriculum beyond Ivy League classrooms.

That neutrality threatens those interests that don’t like the way the Internet embraces the philosophy of openness. The corporate opponents of openness want to construct toll booths that would charge different rates for different types of service. Others want to prevent access to some portions of the Internet completely. Many governments fear a world in which their citizens are able to access and share information, like Turkish Prime Minister Tayyip Erdogan, who has tried to prevent his country’s citizens from seeing damaging material on his government by banning Facebook and YouTube. In a cat-and-mouse game, Net-savvy Turks are trying to find ways around his censorship, while he resorts to even more authoritarian means to suppress Internet freedom.

Erdogan is hardly alone. China aggressively restricts the type of information its citizens can share or that can be

brought into the country via the Internet. Iran is trying to organize its own Iranian Internet that would be closed to the world and carry communications only with so-called Iranian values.

It’s clear that something big is happening. Civil society organizations, companies, academia, governments and individuals are working together in new ways on shared concerns, endeavours and challenges. People everywhere are collaborating like never before in networks, striving to reinvent our institutions and sustain our planet, our health and our existence. Just as behavioural scientists study the human decision-making process, we need to understand the digital DNA of these organizations in order to discover how they tick, and how they can be made more effective in the global policy-making process.

But to do so, we must protect them from attacks driven by the self-interested urges of an old system struggling to retain power and control. The fate of this struggle is not an academic matter. Its outcome will have much to say about whether this promising alternative to the old failed ways can survive and flourish. n

the internet’s neutrality threatens those interests that don’t like the Way it embraces the philosophy of openness.

ELLEN PETERS

Research shows that our level of numeracy affects the quality of our decisions. When facing complicated personal and public policy choices, those who are good with numbers make better decisions; we need to accommodate those who aren’t.

Notre degré de numératie influe sur la qualité de nos décisions, indiquent les recherches. Face à de difficiles questions personnelles et politiques, ceux qui maîtrisent les chiffres prennent ainsi de meilleures décisions. Aussi nous faut-il soutenir ceux qui sont moins doués.

There is a Pickles cartoon in which the little boy asks Grandpa for help with math homework. The grandfather replies that he can’t help and he’s not ashamed to admit it because “they say five out of four people have trouble with fractions.” He’s partially right. Findings from the National Adult Literacy Survey confirm that American math skills leave much room for improvement. And Canadians are faced with a sobering decline in their position in the OECD’s global student assessment rankings.

It’s becoming increasingly clear that math deficiencies are not just bad for Grandpa. Many of our broader policy failures — from bursting real estate bubbles to the inability to make proper health choices — can be linked, in part, to poor numeracy. Research shows that numerical ability is an important skill in analyzing choices and making judgments. So while policy-makers increasingly look to market-based policy solutions to problems, we see evidence that consumers do not always have the skills required to navigate these

problems. The result is that many policies fail to deliver promised efficiency and welfare gains. In fact, our free-market economy may systematically be creating further disparities in health and finances based on numeric ability.

But all is not lost. Behavioural research shows that presenting numeric information in ways that make it easier to understand and use can help everyone — and particularly the less numerate — to act more effectively. The more numerate we are — whether due to learned skills or better information presentation — the less likely we are to make bad personal choices. That finding may have implications for how we tackle our biggest problems, such as individual health choices that have a cumulative impact on the cost of health care, financial choices that may determine how we live in retirement and judgments about the scientific consensus on climate change.

Numeracy has implications beyond the mastery of numbers. It affects our ability to process what we are being told, evaluate information and make informed choices. In short, better numeracy makes us less susceptible to being manipulated and less likely to be swayed by anecdotes or other nonstatistical appeals for our support.

Whenfive out of four people have trouble with fractions

Ellen Peters is professor of psychology and director of the Behavioral Decision Making Initiative at Ohio State University.

apowerful example of the role numeracy can play in contributing to threats to national economies is the case of the US subprime market implosion. According to Paul Krugman, these toxic loans were offered primarily to those least able to understand them. A 2001 study for AARP (formerly the American Association of Retired Persons) shows that retirement-age borrowers were three times more likely to hold a subprime mortgage than younger borrowers. Borrowers who were female and older and those who were members of nonwhite minority groups were more likely to hold subprime mortgages than their male counterparts. All these vulnerable groups tend to score lower in tests of numeric ability.

In a 2006 Maryland Law Review article, legal scholar Lauren Willis quotes a former finance company employee saying that “finance companies try to do business with blue-collar workers, people who have not gone to college, older people who are on fixed incomes.” The perfect customer, according to Willis’s source, was “an uneducated widow who is on a fixed income, hopefully from her deceased husband’s pension and Social Security, who has her house paid off, is living off of credit cards, but having a difficult time keeping up with her payments.”

Certainly, women such as the prototypical one described above are likely to have a hard time understanding the risk of a teaser-rate mortgage. But poor number skills exist among women and men and in every demographic group, including the highly educated. Nor are the problems introduced by innumeracy limited to financial questions.

Numeracy skills are also related to the ability to follow doctors’ instructions, such as taking a prescription correctly. In one study, low numeracy was common in patients who took warfarin to reduce stroke risk, and this lower numeracy was associated with poorer control of health problems. Innumeracy has also been associated with a lower likelihood of quitting smoking, more hospital and emergency room visits (among, for example, patients with asthma), and higher hemoglobin A1c levels among diabetics.

The implications for policy-makers are clear. The growing emphasis on improving health and financial outcomes rests on a presumption of informed consumer choices. Yet many individuals lack the skills and knowledge to process this information. Nobel-Prize-winning economist Daniel McFadden concluded in one study, for example, that 40 percent of those enrolled in US Medicare had little or no knowledge of the Part D prescription drug program, and that among those with low socio-economic status, bad health and low cognitive ability, the share deemed to be “poorly informed” was more than half (54 percent).

Those poor individual choices, when multiplied, carry enormous collective costs.

so if policy-makers can’t fix Grandpa’s math weakness right away, they need to acknowledge the impact of his lower level of numeracy in his decision-making.

One often-proposed solution is to simply provide people with more options and more information to allow for true autonomy and the best decisions. But that approach also has flaws that are rooted in our behaviour. Columbia Business School professor Sheena Iyengaar conducted a famous taste-test study of jam varieties in upscale grocery stores in Menlo Park, California, which she writes about in her book The Art of Choosing. She found that more people did indeed stop at the booth to try a sample when a greater number of jams were offered. But while the greater variety was initially more attractive, more jam was sold when fewer choices were offered. Ultimately, greater choice proved to be less effective in convincing people to choose.

Research by Ellen Garbarino of the University of Sydney and Duke University business professor Julie Edell Britton showed that people making decisions were even willing to pay more for simpler options than for an options palate that required more effort. And my research with Judith Hibbard, Nathan Dieckmann and others demonstrates that the comprehension and quality of decisions increases as the amount of effort required to process the information decreases. For example, less numerate consumers in one

policy-makers can present information so it is salient, available and less of a cognitive burden.

study understood almost 40 percent more information about the quality and cost of a hospital choice when we gave them only quality and cost information compared with when we gave them additional information as well.

Public policies often appear to presume that “more” (more information, more options) will produce better outcomes. However, in this era of informational access and informational excess, there are reasons to be cautious in adopting such an approach. Keeping it simple by providing consumers with less information in the study described above meant that they chose the highest-quality hospital 62 percent of the time compared with only 40 percent of the time when we gave them a more complex choice. Jack Soll and colleagues at Duke University demonstrated similar effects with understanding of credit card use. They found that simplified credit card statements significantly reduced the tendency among the less numerate to underestimate the size of the monthly payments required to pay off a debt.

Having a more numbers-savvy population would help to increase the quality of decisions that we make. In the short term, policy-makers can present information in ways that make it salient, available and less of a cognitive burden. For long-term success, education and its resulting increases in numeracy and decision abilities may be crucial. We face complicated problems and, in a democracy, we need people to make smarter choices. Helping them do the math is a good place to start. n

From the lab to the real world

BARUCH FISCHHOFF

Behavioural science risks leading decisionmakers astray if its findings are overhyped.

Les sciences du comportement risquent d’induire en erreur nos décideurs politiques si l’on surestime la portée des recherches.

Quirks are quotable. The popular media voraciously report on behavioural research described as showing how our decision-making can be buffeted by seemingly minor cues. We read how we can be unwittingly nudged to make choices by the size of plates in restaurants, the placement of products on shelves, the background music in advertisements, the ambient temperature when choosing colours and memorable movie scenes when dating. Experiments demonstrating decision-making biases can be fascinating, especially when they are accompanied by engaging personal stories (“Turns out I was worried about all the wrong things”) or images (think of those irrationally irresistible chocolate truffles).

Demonstrations of susceptibility to subtle influences are important. Even tiny changes in individual decision-making can mean a lot. Shifting the behaviour of just a small percentage of consumers can help mean the difference between profit and loss. Elections sometimes swing on small changes in voter turnout. Smart messaging can help public health officials increase vaccination rates or encourage employees to save for retirement, making big differences in individual lives and society as a whole. Those possibilities — for public policy as well as for profit — have led to a burst of enthusiasm for behavioural research under the premise that it can unlock the secrets to minor advantages.

But before policy-makers, political consultants and modern Mad Men go trolling through academic literature

Baruch Fischhoff is the Howard Heinz University Professor in the Departments of Social and Decision Sciences and Engineering and Public Policy at Carnegie Mellon University, where he heads the decision sciences major program. He is the co-author of Risk: A Very Short Introduction (Oxford University Press, 2011).

for behavioural gold, they should note that the subtle cues that work in a lab are not always as effective in the real world.

And before those of us in the lab promise too much, we should recognize the risks of leading decision-makers astray and discrediting our science by overhyping the practical importance of our research, however sound its foundations.

In psychology, as in biology, successful experimentalists are skilled at getting the effects that they want. Biologists know how to grow the organisms that interest them, while suppressing others. Psychologists know to how isolate the cues that interest them, while holding other factors constant.

That skill allows experimentalists to focus on the effects that matter to them, by making them as large as possible while excluding alternative explanations of what they observe, and by controlling them as much as possible. That control distinguishes experimental biologists from epidemiologists, who must struggle to find a signal in the noise of the complex world that shapes health and disease. And it separates experimental psychologists from economists, who must contend with masses of data as they try to deduce the beliefs and preferences that people reveal in their choices.

But the price paid for that control is the difficulty of generalizing findings from the rarefied conditions of the lab to the complex world in which life transpires. The behavioural researcher may discover that experimental effects are like orchids: elegant, replicable and theoretically informative, but not easily reproduced or observed outside the greenhouse of the lab.

In the lab, a single cue such as a reminder of our own mortality might tip an uncertain and unimportant decision: say, how much candy to eat, how hard to work on an experimental task or what to say about our intentions to exercise. Outside the lab, though, we may be bombarded by competing

cues that affect our choices: the reminder of a sad movie, the sight of an infuriating politician, a reaction to the colour red or concern for the well-being of future generations.

As a result, it’s hard to predict what anyone will do in any specific real-world situation without knowing all the cues that are present and how potent they are. Scientists in a sub-sub-field continue to study the nuances of their favourite cue, in order to understand just how it works. Gradually, they learn how various factors affect it: Seeing what others do? Being paid for “the right answer”? Having prior experience?

That knowledge allows them to make better — but never firm — predictions about what will happen in the real world. This results in predictions such as “Older people will probably behave like college students, unless perhaps they pay closer attention to unusual cues or have prior experience or have more stable emotions or…”

Having trouble extrapolating from the lab to the world should not discourage behavioural researchers. Indeed, the very difficulty of replicating lab results demonstrates the

power of subtle changes in cues, which creates opportunities for future research that potentially uncovers new processes and cues and the reasons for limits to familiar ones.

In a story familiar to psychology students, Clever Hans (der kluge Hans in German) was a turn-of-the-20th-centuryhorse that appeared capable of doing maths — but only for its trainer. It was a comparative biologist and psychologist Oskar Pfungst, who traced the horse’s apparent abilities to detect subtle (and perhaps unwitting) cues in the trainer’s body language. That discovery — the “Clever Hans” effect — helped spur research into nonverbal communication.

Conversely, if nothing affects an effect, it is hard to learn how it works. My colleagues and I once experienced a maddeningly robust result that turned out the same way, no matter how we varied the experimental conditions.

We were studying how people assess the limits to their own knowledge. A typical research item would be: “Is absinthe (a) a liqueur or (b) a precious stone? Choose the correct answer. Now give the probability, from 50% to 100%, that your answer is the right one.” We ran the study in many ways. But whatever we tried, the most important variable was always how difficult the questions were. People tend to be overconfident with hard questions and underconfident with easy ones.

It took studies that disrupted this pattern to suggest its sources. For example, asking subjects to think about why they might be wrong found that people are unduly swayed by reasons supporting their chosen answers and do better when they stop to think. Giving people aggregate feedback (“You’ve been wrong 20% of the time when you’ve been 100% confident”)

over-the-top reporting can be explained in cognitive and motivational terms.

revealed patterns that did not emerge naturally. Decision-making research, it turns out, is as complicated as the decisions it studies.

What, then, is the public to make of those behavioural studies that find their way onto news sites and sometimes go viral? In terms of informing personal or public policy decisions, learning about any research should be to the good. It shouldn’t hurt to know something about how, say, plate size can signal how much is normal to eat, or how anger can blind us to reasons for our problems other than the source of our ire.

But neither should we expect too much from these discoveries. No single factor is the whole story for any decision, and expecting more is a formula for failure, as a result of unwarranted faith in simplistic explanations or policies.

Like any other behaviour, over-the-top reporting can be explained in cognitive and motivational terms.

Cognitive explanations consider the effects of natural ways of thinking. For example, people tend to see events

as more likely when those events are easily remembered or imagined. Reliance on this mental shortcut (known as the availability heuristic) is generally effective. But it can also produce biased judgments. Vivid crime reports can exaggerate a sense of danger. Creative news reports can make minor psychological effects highly imaginable. Scientists who see an effect every day can forget how skilled they are at creating it.

Motivational explanations consider the effects of desires on behaviour. Thus scientists and reporters may deliberately oversell their stories, perhaps arguing that their audiences expect hype and therefore know how to discount it. Or they may unwittingly be less critical of evidence that supports their story than of evidence that does not. They may even be succumbing to the temptation to imagine the results of studies that have yet to be conducted.

Good public policy cannot be based on intuition. Demands for evidence-based public policy must seek out research based on many studies, conducted in diverse settings, by scientists with different perspectives. Such complex collaborations, which pool evidence from multiple sources, are normal in engineering but uncommon in the social sciences. Without them, however, it’s impossible to give simple ideas the detailed attention needed to turn them into viable policies.

The ability of individual scientists to exercise control in lab settings allows them to produce vital insights into processes that affect how we make decisions. But to use those insights to improve decision-making in complex, real-world situations where such control is impossible, we will need to draw on the processes studied by many investigators. Without such collaborative research, disciplined by rigorous empirical evaluation, the nascent behavioural revolution in policy will fall short, failing to live up to its potential, and will become just another disappointing fad. n