Acting in the public interest – a framework for analysis - ICAEW

• giving up where targets seem unattainable; 212• unconscious bias towards what suits us; 213• over commitment to prior decisions to avoid acknowledging error; 214• satisficing rather than optimising, as heuristic ‘mental shortcut’ behaviour applies priorexperience and first impressions through rules of thumb; 215 216 and• becoming suspicious where there is information asymmetry. 217It follows from the last point above that the perceived trustworthiness of those responsible for apublic interest action will directly affect reaction to it. For example, the widespread belief in theUK that roadside speed cameras are revenue-generating devices rather than to enhance safetydiscourages willing compliance.Hindsight research into the causes of erroneous decisions suggests that we are influenced bypast experiences, prejudgements and attachments that can lead us to misleading conclusionsabout current situations. 218It is important for those responsible for implementing public interest measures to work on theassumption that people will react based on human nature as it is, rather than as it ‘should be’.Earlier thought leadership work by ICAEW analyses the record of the UK government’s childand working tax credit system, introduced in 2003. 219 It resulted in massive over- and underpaymentsand several investigations were carried out. The problems were at least partiallyattributed to lack of information, and over-complexity, which put people off claiming, orresulted in incorrect claims. This seems to be a clear example of something done on the basisof how it was thought people ‘ought’ to behave, rather than how they actually do.9.1.3 PresumptionThen there is the issue of whether people should be treated as innocent until proven guiltyor vice versa: should any system of government assume ‘all people are knaves’? 220We started this report observing that in most societies, there is a basic presumption thatpeople should be able to go about their legitimate business. Sometimes ‘legitimate’ isunclear – for example where what is legal and the greyer area of what is ‘just’ do not overlap.Nevertheless, an assumption of guilt unless innocence is proven does not sit easily with this.There is also a risk that a presumption of guilt will result in sub-optimal regulation: such apresumption is likely to result in an economically worse outcome than that of a system basedon a different presumption, unless there is reason to suppose that most of those regulatedactually are likely to misbehave. 2219.1.4 The approach to implementationThe approach for the implementer to use will take the above factors into account but willalso depend on the degree of constraint intended and the extent to which it is expectedthat there is already a propensity for people to do what is wanted of them:• Deviation from the normCompulsion through law, regulation and enforcement creates the maximum amountof constraint in terms of complying with what is required (at least in the short term).An information approach achieves the least constraint and incentives come somewherein between.• Alignment of requirement with self-interestIncentives can be used to promote behaviour through self-interest, but law or regulationis likely to be more effective where the desire is to change behaviour in a manner thatwould otherwise be resisted. Where there is already a self-interest in doing what is wantedor it is likely that inbuilt values will cause the required behaviour, information is likely tobe more effective.212Ciulla, ‘Ethics and Leadership Effectiveness’.213Bazerman quoted in Marnet, ‘History Repeats Itself: The Failure of Rational Choice Models in Corporate Governance’.214Marnet, ibid.215Marnet, ibid.216Kay, The Truth About Markets.217Kay, ibid.218Finkelstein, Whitehead and Campbell, ‘Think Again: Why Good Leaders Make Bad Decisions and How to Keep it from Happeningto You’.219ICAEW, Information for Markets and Society.220Hume, referred to in Engelen, ‘Thinking Things Through: The Value and Limitations of James Buchanan’s Public Choice Theory’.221Engelen, ibid.Implementation63