If you have to stand in line for hours to vote, you might not vote. If you have to get official permission to practice your religion, you might not practice your religion. It’s one thing to say that if the government takes your property, it has to pay you just compensation. But what do you have to do to get that compensation? The Constitution might give you a right to a fair trial. But if you have been accused of a crime, how, exactly, do you go about getting that?
Much of the law of freedom of speech is about sludge; it renders certain kinds of sludge unconstitutional. Under US law, there is something close to a flat ban on “prior restraints,” defined as restrictions on speech before people are allowed to say what they want. If you have to get a license before you can protest on public streets, you might not engage in protests.1 Constitutional law is alert to that point, and judges strike down licensing schemes for speech. The ban on prior restraints is a ban on sludge.2 Authoritarian leaders, determined to squelch rights, impose a lot of sludge. That is how they start, and it might get them most of what they want.
Eliminating sludge transforms people into rightsholders, as opposed to supplicants. Creating sludge does just the opposite.
Quite apart from the coronavirus pandemic, the sludge imposed on doctors and patients can literally kill.3 Efforts to reduce sludge in the domain of health care, through private initiative and through law, save lives.4 As a vivid example, consider the case of opioid use. Suboxone has become the linchpin of medication for opioid use disorder (OUD), and it is now considered the gold standard for treating that disorder. Suboxone combines buprenorphine and naloxone. It reduces cravings and makes overdoses, even fatal ones, far less likely.
For treating OUD, emergency rooms present an important opportunity. When patients overdose or just want help, they are treated and stabilized, but long-term Suboxone regimens are not routinely commenced. This life-saving approach should be the standard of care, but it has not yet become so. Why is this? The answer is sludge.5
By federal law, physicians in the United States must obtain a special X waiver in order to prescribe buprenorphine, one of the active ingredients in Suboxone. (Yes, the name really is X waiver.) The required time and administrative burdens required to obtain the X waiver have discouraged many otherwise willing physicians from becoming able to prescribe it. If more physicians obtained X waivers and offered Suboxone to motivated patients known to be at high risk of relapse, fewer people would die.
The sludge involved in getting an X waiver has defeated many willing physicians. A lot of them pay and sign up for training sessions, but they do not finish the combined eight-hour modules. Even among those who go to that trouble and pay the fee, some 30 percent fail to complete required post-training forms. It is true, of course, that some people insist that the training is important. But the question is whether, in its current form, its benefits justify its costs.
In an effort to overcome sludge, many physicians are aggressively encouraging their colleagues to “get waivered.” That’s good, but a far better policy would be to remove the X waiver requirement entirely. The effect of removing that requirement would be substantial. It would make the pathway for OUD prescription smoother for a great number of physicians who want to do the right thing. It would prevent unnecessary deaths.
This is just one example. Every day, nurses and doctors must deal with unnecessary and mind-numbing sludge that costs a great deal of time and money and that ultimately reduces the quality of care. The large costs of health care in the United States are produced, in significant part, by sludge, which means that reducing it would dramatically cut those costs and bring significant benefits to hospitals, doctors, nurses, and patients alike.6
It should now be clear that sludge imposes different kinds of costs. Some of them are easy to monetize; others are not. From one point of view, of course, there is no important distinction between the two. After all, time can be monetized—perhaps to the tune of twenty-seven dollars per hour (as discussed in chapter 1). But for time, any unitary number is too crude. For a lot of people, an hour is worth less than that; for a lot of people, it is worth much more. A great deal will depend on what people are asked to do with that time. For some people, an hour dealing with an in-person interview to obtain important benefits is very painful—and they would give up a fair amount not to have to do it. Other people don’t so much mind that.
If the costs of sludge are emotional (involving, for example, frustration and humiliation), it will be especially challenging to develop monetary equivalents, but perhaps we could do that as well. If we believe that all costs are the same, then sludge might simply be characterized as a kind of cost, whose magnitude can, in principle, be turned into monetary equivalents. But qualitative distinctions are useful, even essential. There is an important qualitative distinction between (say) a tax or a fine on the one hand and an endless and mind-numbing form-filling requirement on the other. There is an important qualitative distinction between having to pay a small license fee and being asked a series of embarrassing and intrusive personal questions as a condition for receiving a license or a visa. Some kinds of sludge make people feel like second-class citizens.
To understand why sludge matters, let’s begin with the assumption that people are fully rational and that in deciding whether to wade through sludge, they make some calculation about costs and benefits. Even if the benefits of that wading are high, the costs might prove overwhelming.7 Those costs might involve acquisition of information, which might be difficult and expensive. They might involve time, which people might not have. They might be psychological, in the sense that they involve frustration, stigma, and humiliation. For any of those reasons, it might be very difficult to navigate or overcome the sludge.
In some cases, getting through sludge might be literally impossible; for example, it simply may not be feasible for people to fill out the necessary forms. They may not have and may be unable to get the information they need. By themselves, these points help explain the stunningly low take-up rates for many federal and state programs,8 as well as the immense difficulty that people often have in obtaining permits or licenses of various sorts.9 We should even see sludge as an obstacle to freedom, especially insofar as it reduces or impairs navigability.10 If you cannot find your way through a fog, it makes sense to say that you are, to that extent, less free.
People are not, of course, perfectly rational. No reader of Shakespeare, Dickens, or Joyce, or observer of daily life, is unaware of this point. But decades of work on judgment and decision-making, coming from psychologists and behavioral economists, have specified how people depart from perfect rationality.11 The relevant research has uncovered an assortment of biases to which most of us are subject. Those biases amplify the real-world effects of sludge. You might speculate that when the stakes are high—when real money is on the line—people won’t be subject to behavioral biases. But that plausible speculation is wrong. Even when there are strong economic incentives, human beings do not behave as they should.12
For purposes of understanding the relationship between sludge and behavioral biases, a central point is that for many people, inertia is a powerful force.13 We tend to keep doing what we are doing. In addition, people tend to procrastinate.14 If they do not have to do something right now, they might plan to do it tomorrow, and when tomorrow comes, that will continue to be their plan. Even when people do have to do something right now, they might find a reason to delay. If people suffer from inertia and if they procrastinate, they might never do necessary paperwork. That is one reason that participation rates are typically much lower with opt-in designs than with opt-out designs.15 When people are asked to opt into some program, the rate is often between 40 percent and 60 percent, even when it is an exceedingly beneficial program. Even a relatively modest amount of sludge can cut participation rates from 100 percent to under 50 percent.
The problem of inertia is compounded by present bias.16 To many of us, the future seems like a foreign country—Laterland—and we are not sure that we will ever visit. It is tempting to put off administrative tasks until another day. That day may never come, even if the consequences of delay are quite serious.
Suppose in this light that under national regulations, individuals, small businesses, and start-ups must fill out certain forms in order to be eligible for important benefits or to avoid significant penalties. They might find the task daunting and not even try. Or they might sincerely intend to do what must be done, but if the task can be put off, or if it is burdensome or difficult, their behavior might not match their intentions. The actual costs might turn out to be very high; the perceived costs might be far higher. They might start and never finish. To get ahead of the story: it would make a lot sense for public officials to “scrub” existing paperwork burdens to make sure that they are not doing unintended or inadvertent harm. That is the idea of a Sludge Audit. The 2020 war on sludge, spurred by the coronavirus pandemic, is a case in point.
There is a great deal of unlovely jargon within the executive branch of the US government. The product of an activity is called the deliverable. A task that follows a meeting is called a do-out. A request for action is described as the ask. If someone needs to continue a discussion with a colleague, she will promise to circle back. A person outside the government who will publicly approve of what the government is doing is called a validator. If a meeting with the president is canceled, it is pulled down. If a project must be abandoned or put on hold because of competing demands on people’s time and attention, the problem is one of bandwidth. Of course, such terms can be found in many other places, including in businesses, but they are used with particular regularity in the White House itself.
Of the various unlovely terms, bandwidth is the most useful and the most interesting. The central idea is that public officials have the capacity to focus on, and to promote and implement, only a subset of the universe of good ideas. Bandwidth is limited partly for political reasons. In any particular period, members of Congress, executive branch officials, and the public itself may be unwilling to support more than a small set of proposals. But much of the problem involves the limits of time and attention. A proposed reform might seem excellent, and it might even be able to attract considerable political support, but perhaps the minds of the people who might pursue it are occupied, and perhaps they do not have the time to learn about it and to explore its merits. Within government, some good ideas fail to go anywhere not because anyone opposes them, but because the system lacks the bandwidth to investigate them. As it turns out, the problem of sludge is a case in point.
Economists focus on the problem of scarcity—on how people allocate their resources (including both time and money) in the face of many competing demands. In an extraordinarily illuminating book, bearing directly on the effects of sludge, Sendhil Mullainathan and Eldar Shafir explore something quite different, which is the feeling of scarcity, and the psychological and behavioral consequences of that feeling.17 The feeling of scarcity differs across various kinds of experiences. One can feel hungry, busy, lonely, or poor, and the consequences of those feelings are not the same. With respect to sludge, a central point is that in the face of cognitive scarcity, the navigation challenge is worse than daunting.
The feeling of scarcity puts people in a kind of cognitive tunnel, limiting what they are able to see. It depletes their self-control. It can make them more impulsive and sometimes a bit dumb. And by occupying the mind, scarcity can prevent people from attending to other matters, emphatically including sludge. If your mind is full, it will have a hard time handling new material. Social scientists have done many experiments involving cognitive load. In such experiments, they ask people to solve complex problems and then test whether the effort affects their behavior in other respects—for example, by leading them to choose chocolate cake over fruit. A standard finding is that their self-control is diminished; they are more likely to go for the cake. Scarcity works in the same way. It imposes a kind of “bandwidth tax” that impairs people’s ability to perform well. Sludge imposes that kind of tax, and when people are already facing high taxes, they cannot easily handle more.
In an experiment that illuminates the adverse effects of sludge, Mullainathan and Shafir asked a group of people to imagine that their car needed to be fixed, that the repair would cost $300, and that they were making a choice between getting it fixed immediately or waiting (and hoping that the car might work for a while longer). Then the authors asked: How would you make this decision? Would it be an easy or hard decision to make? After receiving people’s answers, the authors asked them a series of questions of the sort that appear on conventional intelligence tests. Well-off people and poor people did not show any difference in intelligence.
In a second version of the experiment, the authors posed exactly the same problem, but with a single difference: the cost of the repair was $3,000 rather than $300. Here is the remarkable finding: After encountering the second version of the problem, poor people did significantly worse than well-off people on the same intelligence test. What explains the difference? The answer is not more challenging arithmetic. When the authors posed nonfinancial problems, the use of small or large numbers produced no difference between poor people and rich people. Nor did the problem involve a lack of motivation. When the authors paid people for correct answers (and thus gave poor people an especially strong incentive to do well), the $3,000 version continued to create a large difference between poor people and well-off people on general intelligence questions.
For people without a lot of money, it is extremely challenging to try to figure out a way to come up with $3,000. To meet that challenge, they have to think extremely hard, which is depleting, and which makes it harder to do well on subsequent tasks. After people are depleted in that way, they do worse on intelligence tests. Mullainathan and Shafir replicated their general result with sugarcane farmers in India, finding that they do far worse on intelligence tests before a harvest, when they have little money and are preoccupied with how to make ends meet, than after a harvest, when cash is plentiful. Stunningly, the effect of plentiful cash was equivalent to a nine- to ten-point boost in IQ.
A depletion of bandwidth also reduces people’s capacity for self-control. After being asked to try to remember eight-digit numbers, people are more likely to be rude in difficult social situations. The general lesson is that when people’s attention is absorbed by other matters, they are more likely to yield to their impulses. With this lesson in mind, Mullainathan and Shafir insist that certain characteristics that we attribute to individual personality (lack of motivation, inability to focus) may actually be a problem of limited bandwidth. The problem is scarcity, not the person. Compare a computer that is working slowly because a lot of other programs are operating in the background. Nothing is wrong with the computer; you just need to turn off the other programs.
Scarcity tends to produce more of the same. For example, most of us are susceptible to the planning fallacy, which means that we are unrealistically optimistic about how long it will take to complete a project. By definition, busy people face a particular problem of cognitive scarcity, because they are attending to their current projects and so are more distracted. The underlying problem is that when people “tunnel,” they focus on their immediate problem. When they are doing that, how likely is it that they will find their way through sludge?
To understand the point, it is useful to consider the words of the economist Esther Duflo, Nobel Prize winner and one of the world’s leading experts on poverty:18
We tend to be patronizing about the poor in a very specific sense, which is that we tend to think, “Why don’t they take more responsibility for their lives?” And what we are forgetting is that the richer you are the less responsibility you need to take for your own life because everything is taken care [of] for you. And the poorer you are the more you have to be responsible for everything about your life.… Stop berating people for not being responsible and start to think of ways instead of providing the poor with the luxury that we all have, which is that a lot of decisions are taken for us. If we do nothing, we are on the right track. For most of the poor, if they do nothing, they are on the wrong track.
The problem of finding the right track is more serious for some people, and for some demographic groups, than it is for others. For those who are busy, sick, poor, disabled, taking care of small children, or elderly, cognitive scarcity is a special challenge. That conclusion clarifies the importance of focusing on the distributional effects of sludge—on whom sludge is most likely to hurt.19
For a glimpse of the distributional promise of sludge reduction, consider some research from the United Kingdom.20 Starting in 2008, that nation adopted a policy of automatic enrollment in pension plans—one of the largest such reform efforts in the world. By making enrollment automatic, the new policy eliminated sludge. Before the reform, people with low levels of mental health were significantly less likely to participate in pension plans. The reform wiped out the disparity; it drove it down to zero. As the authors note, the finding is consistent with others, showing that automatic enrollment typically reduces the gaps in pension participation among low-income employees and also women.
The point is hardly limited to pension plans. The sludge-reduction effort during the coronavirus pandemic was motivated in part by a clear recognition of distributional issues. People without a lot of money, or struggling with illness or old age, were intended beneficiaries of many programs. If they had to run a gauntlet in order to get what they were entitled to, they might get it too late or not at all. The response was to cut sludge.
It is important to emphasize that as a practical matter, the victims of sludge are often the poorest among us. A central reason is that if you are poor, you have to focus on a wide range of immediately pressing problems.21 If the government is asking poor people to navigate a complex system or to fill out a lot of forms, they might be especially likely to give up. But the problem is not limited to the poor. When programs are designed to benefit the elderly, sludge might be especially damaging—certainly if the population suffers from reduced cognitive capacity.
For different reasons, the problem of sex equality deserves particular attention.22 Because women do a disproportionate amount of administrative work—running the household, arranging meals, taking care of children—a significant reduction in sludge could address a pervasive source of social inequality, with ramifying effects on other areas of life.
1. Cf. Cox v. New Hampshire, 312 U.S. 569, 575, 576 (1941) (upholding a licensing scheme that regulated only the “time, place and manner” of speech).
2. Cf. Thomas Emerson, The Doctrine of Prior Restraint, 20 Law & Contemp. Probs. 648, 670 (1955) (describing prior restraint as a “particular method of control which experience has taught tends to create a potent and unnecessary mechanism of government that can smother free communication”).
3. See Felice J. Freyer, Emergency Rooms Once Offered Little for Drug Users. That’s Starting to Change, Bos. Globe (Dec. 10, 2018), https://www.bostonglobe.com/metro/2018/12/09/emergency-rooms-once-had-little-offer-addicted-people-that-starting-change/guX2LGPqG1UdAf9xUV9rXI/story.html (https://perma.cc/FH6P-C2UF).
4. See id. (describing Massachusetts General Hospital’s efforts to increase emergency-room resources for patients addicted to opioids).
5. I draw here on work with Jeremy Faust. See Jeremy Samuel Faust & Cass R. Sunstein, Opinion, Cut the Federal Bureaucratic Sludge, Bos. Globe (Oct. 8, 2019, 5:00 AM), https://www.bostonglobe.com/opinion/2019/10/08/cut-federal-bureaucratic-sludge/JsLjUUdmy2WwA6xdQXjoGI/story.html.
6. See David Cutler & Dan Ly, The (Paper) Work of Medicine: Understanding International Medical Costs, 25 J. Econ. Persps. 3 (2011).
7. See Pamela Herd & Donald P. Moynihan, Administrative Burden: Policymaking by Other Means 23 (2019); Donald Moynihan et al., Administrative Burden: Learning, Psychological, and Compliance Costs in Citizen-State Interactions, 25 J. Pub. Admin. Res. & Theory 43, 45–46 (2014).
8. See Janet Currie, The Take Up of Social Benefits 11–12 (Inst. for the Study of Labor in Bonn, Discussion Paper No. 1103, 2004) (examining rates of enrollment in social benefits within the United States and United Kingdom); see generally Katherine Baicker, William J. Congdon & Sendhil Mullainathan, Health Insurance Coverage and Take-Up: Lessons from Behavioral Economics, 90 Milbank Q. 107 (2012) (examining low health-insurance take-up rates from a behavioral-economic perspective); Carole Roan Gresenz, Sarah E. Edgington, Miriam Laugesen, & José J. Escarce, Take-Up of Public Insurance and Crowd-Out of Private Insurance Under Recent CHIP Expansions to Higher Income Children, 47 Health Servs. Res. 1999 (2012) (analyzing the effect of expanding CHIP eligibility on health-insurance take-up rates); Saurabh Bhargava & Dayanand Manoli, Improving Take-Up of Tax Benefits in the United States, Abdul Latif Jameel Poverty Action Lab (2015), https://www.povertyactionlab.org/evaluation/improving-take-tax-benefits-united-states (https://perma.cc/TPW8-XDHU) (noting that “many people who are eligible for social and economic benefits do not claim those benefits” in the United States).
9. Regulatory Reform Team, Case Study: Chicago Licensing and Permitting Reform, Data-Smart City Solutions (Mar. 19, 2015), https://datasmart.ash.harvard.edu/news/article/case-study-chicago-licensing-and-permitting-reform-647 (https://perma.cc/X3YJ-JSLM) (assessing the regulatory landscape of the city of Chicago, and finding, among other things, that “approximately 17% of zoning licenses were not being processed and sent back due to insufficient information”).
10. On this theme, see Cass R. Sunstein, On Freedom (2019).
11. An engaging overview is Richard H. Thaler, Misbehaving (2016).
12. See Benjamin Enke et al., Cognitive Biases: Mistakes or Missing Stakes? (CESifo, Working Paper No. 8168, 2020), https://www.ifo.de/DocDL/cesifo1_wp8168.pdf?fbclid=IwAR3NcT1bGAYWjDbRPp7ki6Mfq5IQb-XtJQuMg3hLgVcPvLIWhkRJe81hUeA.
13. Brigitte C. Madrian & Dennis F. Shea, The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior, 116 Q.J. Econ. 1149, 1185 (2001) (identifying inertia as a force working against participation in 401(k) plans); see also John Pottow & Omri Ben-Shahar, On the Stickiness of Default Rules, 33 Fla. St. U. L. Rev. 651, 651 (2006) (“It is by now recognized that factors beyond drafting costs might also cause parties to stick with an undesirable default rule.”).
14. George Akerlof, Procrastination and Obedience, 81 Am. Econ. Rev. 1, 1–17 (1991) (examining several “behavioral patholog[ies],” including procrastination).
15. For an especially dramatic illustration, see Peter Bergman, Jessica Lasky-Fink & Todd Rogers, Simplification and Defaults Affect Adoption and Impact of Technology, but Decision Makers Do Not Realize This (Harvard Kennedy Sch. Faculty Research Working Paper Series, Working Paper No. RWP17-021, 2018), https://ssrn.com/abstract=3233874 (https://perma.cc/YWN6-BBCJ).
16. See Ted O’Donoghue & Matthew Rabin, Present Bias: Lessons Learned and To Be Learned, 105 Am. Econ. Rev. 273, 273–78 (2015).
17. See Sendhil Mullainathan & Eldar Shafir, Scarcity (2015).
18. Susan Parker, Esther Duflo Explains Why She Believes Randomized Controlled Trials Are So Vital, Ctr. for Effective Philanthropy: Blog (June 23, 2011), https://cep.org/esther-duflo-explains-why-she-believes-randomized-controlled-trials-are-so-vital/.
19. See Pamela Herd & Donald P. Moynihan, Administrative Burden: Policymaking by Other Means (2019). For helpful related discussion, see Jessica Roberts, Nudge-Proof: Distributive Justice and the Ethics of Nudging, 116 Mich. L. Rev. 1045 (2018). The idea has support in the PRA, which requires “particular emphasis on those individuals and entities most adversely affected.” 44 U.S.C. § 3504(c)(3) (2012).
20. Karen Arulsamy & Liam Delaney, The Impact of Automatic Enrolment on the Mental Health Gap in Pension Participation: Evidence from the UK (Geary Inst., Working Paper No. 202004, 2020), https://ideas.repec.org/p/ucd/wpaper/202004.html.
21. For a series of demonstrations, see Herd & Moynihan, supra note 19, at 30–31.
22. See text accompanying supra note 19 (explaining that a disproportionate amount of everyday administrative burdens falls on women).