Thinking, Fast and Slow (42 page)

Even more troubling is what happens when people are confronted with their inconsistency: “You chose to save 200 lives for sure in one formulation and you chose to gamble rather than accept 400 deaths in the other. Now that you know these choices were inconsistent, how do you decide?” The answer is usually embarrassed silence. The intuitions that determined the original choice came from System 1 and had no more moral basis than did the preference for keeping £20 or the aversion to losing £30. Saving lives with certainty is good, deaths are bad. Most people find that their System 2 has no moral intuitions of its own to answer the question.

I am grateful to the great economist Thomas Schelling for my favorite example of a framing effect, which he described in his book
Choice and
Consequence
. Schelling’s book was written before our work on framing was published, and framing was not his main concern. He reported on his experience teaching a class at the Kennedy School at Harvard, in which Bon he linthe topic was child exemptions in the tax code. Schelling told his students that a standard exemption is allowed for each child, and that the amount of the exemption is independent of the taxpayer’s income. He asked their opinion of the following proposition:

Your own intuitions are very likely the same as those of Schelling’s students: they found the idea of favoring the rich by a larger exemption completely unacceptable.

Schelling then pointed out that the tax law is arbitrary. It assumes a childless family as the default case and reduces the tax by the amount of the exemption for each child. The tax law could of course be rewritten with another default case: a family with two children. In this formulation, families with fewer than the default number of children would pay a surcharge. Schelling now asked his students to report their view of another proposition:

Here again you probably agree with the students’ reaction to this idea, which they rejected with as much vehemence as the first. But Schelling showed his class that they could not logically reject both proposals. Set the two formulations next to each other. The difference between the tax due by a childless family and by a family with two children is described as a reduction of tax in the first version and as an increase in the second. If in the first version you want the poor to receive the same (or greater) benefit as the rich for having children, then you must want the poor to pay at least the same penalty as the rich for being childless.

We can recognize System 1 at work. It delivers an immediate response to any question about rich and poor: when in doubt, favor the poor. The surprising aspect of Schelling’s problem is that this apparently simple moral rule does not work reliably. It generates contradictory answers to the same problem, depending on how that problem is framed. And of course you already know the question that comes next. Now that you have seen that your reactions to the problem are influenced by the frame, what is your answer to the question: How should the tax code treat the children of the rich and the poor?

Here again, you will probably find yourself dumbfounded. You have moral intuitions about differences between the rich and the poor, but these intuitions depend on an arbitrary reference point, and they are not about the real problem. This problem—the question about actual states of the world—is how much tax individual families should pay, how to fill the cells in the matrix of the tax code. You have no compelling moral intuitions to guide you in solving that problem. Your moral feelings are attached to frames, to descriptions of reality rather than to reality itself. The message about the nature of framing is stark: framing should not be viewed as an intervention that masks or distorts an underlying preference. At least in this instance—and also in the problems of the Asian disease and of surgery versus radiation for lung cancer—there is no underlying preference that is masked or distorted by the frame. Our preferences are about framed problems, and our moral intuitions are about descriptions, not about substance.

Good Frames

Not all frames are equal, and s Bon nd t="4%" wome frames are clearly better than alternative ways to describe (or to think about) the same thing. Consider the following pair of problems:

Respondents who see only one version of this problem reach different conclusions, depending on the frame. Most believe that the woman in the first story will go home without seeing the show if she has lost tickets, and most believe that she will charge tickets for the show if she has lost money.

The explanation should already be familiar—this problem involves mental accounting and the sunk-cost fallacy. The different frames evoke different mental accounts, and the significance of the loss depends on the account to which it is posted. When tickets to a particular show are lost, it is natural to post them to the account associated with that play. The cost appears to have doubled and may now be more than the experience is worth. In contrast, a loss of cash is charged to a “general revenue” account—the theater patron is slightly poorer than she had thought she was, and the question she is likely to ask herself is whether the small reduction in her disposable wealth will change her decision about paying for tickets. Most respondents thought it would not.

The version in which cash was lost leads to more reasonable decisions. It is a better frame because the loss, even if tickets were lost, is “sunk,” and sunk costs should be ignored. History is irrelevant and the only issue that matters is the set of options the theater patron has now, and their likely consequences. Whatever she lost, the relevant fact is that she is less wealthy than she was before she opened her wallet. If the person who lost tickets were to ask for my advice, this is what I would say: “Would you have bought tickets if you had lost the equivalent amount of cash? If yes, go ahead and buy new ones.” Broader frames and inclusive accounts generally lead to more rational decisions.

In the next example, two alternative frames evoke different mathematical intuitions, and one is much superior to the other. In an article titled “The MPG Illusion,” which appeared in
Science
magazine in 2008, the psychologists Richard Larrick and Jack Soll identified a case in which passive acceptance of a misleading frame has substantial costs and serious policy consequences. Most car buyers list gas mileage as one of the factors that determine their choice; they know that high-mileage cars have lower operating costs. But the frame that has traditionally been used in the United States—miles per gallon—provides very poor guidance to the decisions of both individuals and policy makers. Consider two car owners who seek to reduce their costs:

Suppose both drivers travel equal distances over a year. Who will save more gas by switching? You almost certainly share the widespread intuition that Beth’s action is more significant than Adam’s: she reduced mpg by 10 miles rather than 2, and by a third (from 30 to 40) rather than a sixth (from 12 to 14). Now engage your System 2 and work it out. If the two car owners both drive 10,000 miles, Adam will reduce his consumption from a scandalous 833 gallons to a still shocking 714 gallons, for a saving of 119 gallons. Beth’s use of fuel will drop from 333 gallons to 250, saving only 83 gallons. The mpg frame is wrong, and it should be replaced by the gallons-per-mile frame (or liters-per–100 kilometers, which is used in most other countries). As Larrick and Soll point out, the misleading intuitions fostered by the mpg frame are likely to mislead policy makers as well as car buyers.

Under President Obama, Cass Sunstein served as administrator of the Office of Information and Regulatory Affairs. With Richard Thaler, Sunstein coauthored
Nudge
, which is the basic manual for applying behavioral economics to policy. It was no accident that the “fuel economy and environment” sticker that will be displayed on every new car starting in 2013 will for the first time in the United States include the gallons-per-mile information. Unfortunately, the correct formulation will be in small print, along with the more familiar mpg information in large print, but the move is in the right direction. The five-year interval between the publication of “The MPG Illusion” and the implementation of a partial correction is probably a speed record for a significant application of psychological science to public policy.

A directive about organ donation in case of accidental death is noted on an individual’s driver license in many countries. The formulation of that directive is another case in which one frame is clearly superior to the other. Few people would argue that the decision of whether or not to donate one’s organs is unimportant, but there is strong evidence that most people make their choice thoughtlessly. The evidence comes from a comparison of the rate of organ donation in European countries, which reveals startling differences between neighboring and culturally similar countries. An article published in 2003 noted that the rate of organ donation was close to 100% in Austria but only 12% in Germany, 86% in Sweden but only 4% in Denmark.

These enormous differences are a framing effect, which is caused by the format of the critical question. The high-donation countries have an opt out form, where individuals who wish not to donate must check an appropriate box. Unless they take this simple action, they are considered willing donors. The low-contribution countries have an opt-in form: you must check a box to become a donor. That is all. The best single predictor of whether or not people will donate their organs is the designation of the default option that will be adopted without having to check a box.

Unlike other framing effects that have been traced to features of System 1, the organ donation effect is best explained by the laziness of System 2. People will check the box if they have already decided what they wish to do. If they are unprepared for the question, they have to make the effort of thinking whether they want to check the box. I imagine an organ donation form in which people are required to solve a mathematical problem in the box that corresponds to their decision. One of the boxes contains the problem 2 + 2 = ? The problem in the other box is 13 × 37 = ? The rate of donations would surely be swayed.

“They will feel better about what happened if they manage to frame the outcome in terms of how much money they kept rather than how much they lost.”

“Let’s reframe the problem by changing the reference point. Imagine we did not own it; how much would we think it is worth?”

“Charge the loss to your mental account of ‘general revenue’—you will feel better!”

“They ask you to check the box to opt out of their mailing list. Their list would shrink if they asked you to check a box to opt in!”