Is economics changing its mind about administrative burdens?
How different frameworks matter to how we think about frictions
Confession: I am not an economist.
(Hangs head in shame).
But I do work on public policy, in a public policy school, which means I spend a lot of time engaging with economists. So I have become an anthropologist of the field.
(Also, I am not a real anthropologist).
In the research area I work in, administrative burden, some of the basic assumptions involved (that frictions play a large role in access to public services, and may increase inequality) run contrary to some economic models, but are in line with others. But since I have started doing research on this topic, I’ve observed that economists are paying more attention to how burdens matter, even it it falls somewhat short of a full engagement with others working on the topic.
Ordeals as a targeting mechanism
There are multiple ways to describe frictions. And those different terms connote different assumptions and research traditions. I use the term administrative burdens. Another term is “ordeals” or “ordeal mechanisms” — ‘deadweight costs to qualify for a transfer’ (Nichols and Zeckhauser 1982: 372). Here, ordeals are assumed to serve as a mechanism for targeting limited resources, based on the idea that people who do not really need services will opt-out of a sufficiently onerous process, leaving those services for those that really want or need them.
There is an appealing neoclassical economic logic to this, since it treats people’s time as one more good they must manage. Many economists still teach this model in the classroom, and use it as a starting point to study frictions. This includes some terrific empirical work that treats the fact that more ordeals leads to more inequality and poorer rationing, contrary to the expectations of the ordeals model, as a puzzle. For example, Deshpande and Li consider their finding that closing Social Security Offices has a bigger negative effect on access to services on those with more severe disabilities and lower education.
Most broadly, our findings stand in contrast to the Nichols and Zeckhauser (1982) hypothesis in that field office closings reduce both productive efficiency and targeting efficiency based on current eligibility standards for disability programs. Moreover, if these programs are also intended to address economic inequality, our results by socioeconomic status indicate that field office closings exacerbate the very inequality that disability programs are intended to reduce.
This finding is unsurprising from an administrative burden perspective. Of course those with greater health issues and lower education will struggle more with more burdensome processes! Two new papers in Public Administration Review help to explain why. My paper with Elizabeth Bell, Julian Christensen and Pam Herd offers evidence that poor physical and mental health is associated with greater challenges overcoming burdens. A paper by Lucie Martin, Liam Delaney and Orla Doyle show that those with poorer health spend more time on administrative tasks and report more negative well-being outcomes associated with burdens. In short, those with poorer health are more likely to encounter burdens, struggle more with them, and are more unhappy as a result. So they may not patiently accept hassles even when they really need help.
This might all seem intuitive. My broader point is a Kuhnian consideration of how theoretical paradigms shape how we think about the world, to the point that such intuitive outcomes are overlooked.
The frameworks that we impose on a set of events condition the questions we ask, the analyses we apply, and the how we make sense of the answers.
For ordeal mechanisms, the framework assumes frictions enable efficient targeting of resources. Empirical outcomes where this proves not to be the case are treated as puzzling aberrations, rather than a sign that the model is wrong. This excerpt from a paper by Pam Herd, Hilary Hoynes, Jamila Michener and I explains the practical implications:
A framework that presents burdens as an ordeal mechanism creates some blind spots. One is that targeting may be counterproductive. For example, hassles reduce take-up of health insurance and are most likely to discourage the type of people—younger and healthier—the insurance pool needs to balance the numbers of older and sicker participants (McIntyre, Shepard, and Wagner 2021). In such cases, automatic enrollment not only increases participation for some groups but also generates a collective good. The comparison holds in the quite different policy domain of voting. Evidence is ample that hassles such as voter registration requirements differentially exclude more marginal voters: younger, poorer, minority, or immigrants (Grumbach and Hill 2021; Rigby and Springer 2011; Braconnier, Dormagen, and Pons 2017; Michener 2016). Indeed, the general gap between rich and poor when it comes to voting is a registration gap, not a voting gap: both poor and rich people who are registered vote at the same level (Herd and Moynihan 2018).
When hassles are not well targeted, they often end up affecting those who most need help. Why might this be the case? If we accept that some burdens are not simply tedious, but also complex and cognitively demanding, those with more resources become more likely to succeed in overcoming them. Here resources can include education, administrative literacy, money, social networks, flexible work schedules, reliable internet and phone connections, cognitive skills, health, and time. As a result, an administrative burden Catch-22 emerges: those needing the most help are less well positioned to overcome the barriers on which that help is conditioned (Christensen et al. 2020). Rather than targeting services only to those who needed them the most, burdens can end up becoming unnavigable for those without the resources to deal with them.
There are also the normative or ethical concerns about taking the ordeals perspective as a guide for policy design, since it will encourage policymakers to impose a time tax on users, rather than to make public services more broadly accessible. You might persuade yourself this is ethically justifiable if your most critical assumption is scarcity of public goods. But it can direct attention away from other considerations. One is the benefits of public services, many of which more than pay for themselves. And the ordeals framework can encourage policymakers to accept or even welcome low take-up among those who are eligible and truly need public services. Policy and implementation ideas that center on adding hassles become more attractive, and discourage efforts to reduce burdens. The cumulative effect of this design framework are that public services are riddled with unnecessary hassles, undermining the already battered reputation of government.
The behavioral perspective is different
This August I spent a couple of days at the University of Galway for an interdisciplinary research workshop on the topic of burdens. Liam Delaney of the London School of Economics drew connections between behavioral economics and those of us approaching the topic from other traditions. Part of what struck me was the degree to which ordeal mechanisms was not featured as a reference point at all. This reflects, I think, the fact that ordeal mechanisms draws on neoclassical economic assumptions of individuals as rational utility-maximizers.
For the behavioral economists, this is so obviously wrong that it does not bear much consideration. By incorporating work from psychology that directly assaulted neoclassical assumptions, they feel less need to battle models that drew on those assumptions. It is no coincidence that a behavioral perspective led Richard Thaler and Cass Sunstein to focus on “sludge.”1
But the arrival of behavioral assumptions is relatively recent, and much of the existing infrastructure of US policy design reflects the influence of neoclassical models. Take, for example, the use of co-pays in health care, or tax-deductible accounts, which are premised on the assumption that health service users will shop around more carefully because they have “skin-in-the-game.” Or the idea that greater choice will lead to more efficient consumption of health insurance plans.
“Customers” in health care are sick, overwhelmed, and cannot manage the vast array of choices they face. So they often stick with defaults, or avoid services with even minor frictions. The US health system is expensive and inefficient, even if you ignore the extraordinary administrative costs that are simply delegated to users of health services. If you live in America, you are required to serve as your own healthcare navigator through this complex system.
Are economists changing their mind?
It was therefore compelling to read Liran Einav and Amy Finkelstein call for universal basic healthcare in the pages of the New York Times. Einav is a professor of economics at Stanford and Finkelstein a professor of economics at the Massachusetts Institute of Technology, two of the most important centers of the field. Here is what they say:
The risk of losing coverage is an inevitable consequence of a lack of universal coverage. Whenever there are varied pathways to eligibility, there will be many people who fail to find their path.
About six in 10 uninsured Americans are eligible for free or heavily discounted insurance coverage. Yet they remain uninsured. Lack of information about which of the array of programs they are eligible for, along with the difficulties of applying and demonstrating eligibility, mean that the coverage programs are destined to deliver less than they could.
The only solution is universal coverage that is automatic, free and basic.
At the heart of their argument is the idea that frictions serve as a barrier to access, rather than as a means for better targeting. Frictions exclude people who need help. They say that:
We arrived at this proposal by using the approach that comes naturally to us from our economics training. We first defined the objective, namely the problem we are trying but failing to solve with our current U.S. health policy. Then we considered how best to achieve that goal.
This is, I think, an effort to make fairly radical claims more palatable to a discipline which has pushed US health care to be much more market-driven than peer countries. Their insights may reflect their economic training, but not the dominant frameworks of economics, which has promoted policy ideas that have encouraged more complexity in design.
Along with the efforts of behavioral economists, the case made by Einav and Finkelstein may prompt other economists to look for new models, and new assumptions. It will be fascinating to see how this debate will play out within the field of economics.
From insularity to interdisciplinary
I’ve been thinking about how disciplinary frameworks operate, partly because they affect the capacity of social scientists to coordinate with one another, and to use their research to change policy.
Within the social sciences, economics has a reputation as not all that willing to acknowledge other fields of research, even when they engage on topics those other fields have studied. In practical terms, failing to engage with other perspectives comes at some costs when it comes to knowledge accumulation and coherence. To be clear, I think the effect goes both ways — social scientists in other fields are less likely to engage with economists who don’t acknowledge them, even when they could benefit from doing so. For example, Asmus Olsen and co-authors argue persuasively that the field of public administration is missing a lot of great studies on bureaucracy, especially in developing country settings, that are occurring within economics. Collectively, this fragmentation also hampers the ability of social science to persuasively address and solve pressing societal problems.
There is evidence that this insularity in economics is real, but declining over time, perhaps a reflection of growing interdisciplinarity in research fields when it comes to dealing with big societal problems. I think of the administrative burden topic as one such problem. The development of the concept drew from psychology, political science, sociology, public administration and economics. For example, the work of economists Janet Currie and Robert Moffitt was essential. Some of the most insightful scholars contributing to the topic come from (e.g., Finkelstein, Sue Dynarski, Chloe East, Hilary Hoynes, Tatiana Homonoff), or are directly adjacent to (Carolyn Heinrich, Elizabeth Linos), the field of economics.
I hope more join the study of the topic with this interdisciplinary ethos — if you are an economist, think of this as an invitation! — since I think it would be more productive for lots of us to communicate with one another even when coming from different backgrounds. By contrast, reframing the topic by using different terminology, and ignoring work outside a specific discipline, creates artificial trade barriers between fields, and undermines the broader effort to address the problems that frictions create.
The value of coherence
Why does an interdisciplinary approach matter? The general logic is that engagement with a diversity of perspectives exposes blind spots and leads to an accumulation of knowledge.
I’ve spent my entire academic career in interdisciplinary spaces and have come to the conclusion that functional interdisciplinarity needs some basic measure of cross-disciplinary coherence to work. Otherwise we get the Tower of Babel problem, where those who would benefit from cooperation talk past each other because terminology and assumptions are so different. In practice, having a common language, and assumption about the nature of the problem, allows people from different backgrounds to engage in an actual collaborative exchange of insights, rather than to simply co-exist alongside each other.2 Quoting again from this paper on administrative burdens by myself (a public administration scholar), Pam Herd (sociologist), Hilary Hoynes (economist) and Jamila Michener (political scientist):
There is power in legibility and coherence. Naming something allows us to see it more clearly. It is difficult to accumulate knowledge when researchers use different terms and miss entire bodies of research. Framing something allows us to understand its consequences and to consider how to address it. These basic points are true for different but related domains: social science, politics, and policymaking.
For example, I have previously written about the importance of “purposeful problem framing” as a means by which social science can solve real-world problems. When done collectively, it also provides a basis for coordination between researchers:
Framing involves asking what is the problem to which we should direct our attention? Why should we care about this? In a world of competing issues, why focus on this one, and this particular understanding of the issue? The frame both shapes what topic we look at and how we look at it.
Some of these thoughts emerged from a summer of gadding about to talk and hear about administrative burdens. I already mentioned the workshop in Galway, which featured sociologists, public administration scholars, political scientists and behavioral economists. In July, we hosted an event at the McCourt School at Georgetown which brought together federal government officials, including many from the Office of Management and Budget who are leading burden reduction works in the federal government, along with a mix of qualitative and quantitative social scientists.
Three takeaways emerged, tied to the broader point about coherence.
We need better measures of burdens. Thats a topic for another blog. But if the last several years have centered on cementing the idea that burdens matter, understanding how to reduce them would be helped by deployment of consistent measurement tools.
A variety of perspectives — methodological, disciplinary, practitioner vs. academic — connects abstract ideas to good research and concrete policy change. This depends on the coherence discussed above, which enables deeper conversation. It was amazing to see how engaged federal regulators were in learning from a presentation of qualitative researchers on WIC access that gave tangible voice to the experience of users. Having a coherent framework in place made it straightforward for them to see how such work mattered to their formal responsibilities to identify burdens.
Policymakers have a language and framework to address problems in a way they did not before. The recent White House report on administrative burden reflects that, and government officials were explicit in crediting the value of coherence to the ability to build policy support for change. A scholarship that contributes to a coherent project is much more likely to change how the public and policymakers think about public problems.
It is a great time to be studying how frictions matter, and the impact that researchers can make will be all the greater if we do it with a tad more cohesiveness.
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If you are interested, here is a longer paper that makes a good faith effort to distinguish between academic frameworks of red tape, administrative burden and ordeals.
It is entirely possible to have “interdisciplinary” units in universities where faculty from different backgrounds co-exist but never cooperate.