It’s Not Just Status-Quo Bias

by on Aug.27, 2009, under Politics

In this week’s New Yorker, James Surowiecki argues that one of the obstacles to public acceptance of health-care reform is a bias in favor of the status quo:

But the public’s skittishness about overhauling the system also reflects something else: the deep-seated psychological biases that make people resistant to change. Most of us, for instance, are prey to the so-called “endowment effect”: the mere fact that you own something leads you to overvalue it.

And then later:

Compounding the endowment effect is what economists dub the “status quo bias.” Myriad studies have shown that, even if you set ownership aside, most people are inclined to keep things as they are: when it comes to things like 401(k)s, for instance, people tend to adopt whatever their company’s default option is, and with things like asset allocation or insurance plans people tend to stick with whatever they start with. Just designating an option as the status quo makes people rate it more highly. Some of this may be the result of simple inertia, but our hesitancy to change is also driven by our aversion to loss.

I believe it. But I think Surowiecki overlooks several critical elements of what’s going on right now.

First, people aren’t being asked to give up what they have now in favor of a defined Public Health Reform Policy X. They’re being asked to contemplate giving up what they have now in favor of a pig in a poke. There are four versions of health reform already in Congress with a fifth yet to be written, and while the four in existence are broadly similar, who the hell knows what will come out of the Senate Finance Committee or what the final bill will look like? It could be anything from a strong public-option plan to one that offers mandates without price protections.

Of course Democrats knew that this was a risk, which was why most of them wanted to have draft bills on the table before they left for August vacation. But even if they’d accomplished that much, they’d still have faced a second unacknowledged problem: nearly all the versions of health reform currently under serious consideration go farther than the plan Obama campaigned on.

It was Clinton and Edwards, not Obama, who offered plans with universal coverage mandates like the ones in all the bills that have been written. Obama only proposed to mandate coverage for all children and attacked the Clinton/Edwards universal mandate idea, a line of attack Paul Krugman warned against in this now eerily-prescient column. It was Clinton and Edwards, not Obama, who offered a strong public insurance option. Obama’s plan included something called an “exchange” (from the Roll Call link above):

Obama’s system, called the National Health Insurance Exchange, would point consumers to a plan that best suits them. It would “act as a watchdog and help reform the private insurance market by creating rules and standards for participating insurance plans to ensure fairness and to make individual coverage more affordable and accessible,” according to Obama’s campaign Web site.

Personally, I never understood how that was supposed to work.

Finally, the centerpiece of Obama’s domestic agenda during the campaign was never health care at all. It was a tax cut. He already enacted that cut as part of the stimulus bill, though no one seems to be aware of it so he’s getting no credit for it.

So, to review: on top of status quo bias we have an undefined alternative, the fact that that alternative will nearly certainly not be what people voted for, and the fact that most people don’t know that the main domestic policy priority they thought they were voting for has already been accomplished.

I’m glad things have moved in the direction they have. When it came down to Clinton and Obama I voted for Obama, but nearly entirely because of Iraq. I recognized that Clinton’s health care proposals were better, and I think it’s great that Congress is moving much closer to her ideas. I also don’t have any amazing insights about how things should have been done better or could be done better in the months to come.

I guess I’m just getting a little bit tired of the howls of betrayal coming from certain quarters. There is no question that President Obama has so far failed to deliver on some of his campaign promises (notably, to undo Don’t Ask Don’t Tell and to do something meaningful about our history of torture). But on health care Democrats have the chance to enact a better policy than we actually voted for.

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3 Comments for this entry

  • Josh K-sky

    You’re quite right to point out that there isn’t a plan to stand in favor of (at tonight’s Diane Watson town hall, for example — anybody going?), and quite right to point out that Obama’s health care was the subject of wild cognitive dissonance on the part of progressives. But I think the more agita the better right now. The howls you linked to aren’t leveling betrayal at Obama but at the whole Democratic Party. If Obama wanted to cut progressives off by saying “you knew what you were getting if you read my website” he legitimately could, but it’s to the credit of progressives in the House and in the streets that the public option has any lifebreath left at all.

  • Joshua Malbin

    I don’t know. As you demonstrated in your Whole Foods post, there’s agita and there’s agita. There’s focused action that uses identifiable levers of power to try to achieve an end–in this case, represented online by efforts like the organizing and whipping FireDogLake is doing. And then there’s yelling that makes potential allies think to themselves, “Well, there’s just no pleasing those people.”

    But I’m not saying anything you don’t already know.

  • Josh K-sky

    No, but you’re saying it better. Yay FDL agitatin’! Boo Charlie-Brown-with-the-football whinging!

    Yay robotic nurses that look like bears.

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