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Abstract

Consumers, employees, students and others are often subjected to ‘sludge’: excessive or unjustified frictions, such as paperwork burdens, that cost time or money; that may make life difficult to navigate; that may be frustrating, stigmatizing or humiliating; and that might end up depriving people of access to important goods, opportunities and services. Because of behavioral biases and cognitive scarcity, sludge can have much more harmful effects than private and public institutions anticipate. To protect consumers, investors, employees and others, firms and private and public institutions should regularly conduct Sludge Audits to catalogue the costs of sludge and to decide when and how to reduce it. Sludge often has costs far in excess of benefits, and it can hurt the most vulnerable members of society.
Sludge Audits
CASS R. SUNSTEIN*
Robert Walmsley University Professor, Harvard Law School, Cambridge, MA, USA
Abstract: Consumers, employees, students and others are often subjected to
sludge: excessive or unjustied frictions, such as paperwork burdens, that
cost time or money; that may make life difcult to navigate; that may be
frustrating, stigmatizing or humiliating; and that might end up depriving
people of access to important goods, opportunities and services. Because of
behavioral biases and cognitive scarcity, sludge can have much more harmful
effects than private and public institutions anticipate. To protect consumers,
investors, employees and others, rms and private and public institutions
should regularly conduct Sludge Audits to catalogue the costs of sludge and
to decide when and how to reduce it. Sludge often has costs far in excess of
benets, and it can hurt the most vulnerable members of society.
Submitted 30 August 2019; accepted 30 August 2019
Sludge. Noun. Thick, soft, wet mud or a similar viscous mixture or liquid or
solid components, especially the product of an industrial or rening process.
Oxford Dictionary Online (2019)
Introduction
Consider the following cases:
1. To immigrate to a large country, people face onerous paperwork burdens.
Among other things, they must ll out a Declaration of Self-Sufciency and
an Afdavit of Support. Both of these are lengthy and confusing. People are
also required to make a telephone appointment with the immigration
authorities so that they can nd out what must be included on the forms
and exactly how. To do that, they must call a eld ofce. Each call has
a 45-minute hold time. If a form is lled out incorrectly, another call is
* Correspondence to: Professor Cass R. Sunstein, Robert Walmsley University Professor, Harvard
Law School, Cambridge, MA, USA. Email: csunstei@law.harvard.edu
Behavioural Public Policy, Page 1 of 20
©Cambridge University Press doi:10.1017/bpp.2019.32
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required, also with a 45-minute hold time. Many people who would be
lawful immigrants end up giving up.
2. To register a complaint about defective automobiles, consumers are
required to ll out lengthy online forms. The forms require detailed infor-
mation about where the vehicle was originally purchased and how it was
used. Some consumers do not have easy access to that information.
Others fear that their privacy might be invaded. Many of them decide
not to ll out the forms at all.
3. A cell phone company markets many of its phones with mail-in rebates.
Consumers are entitled to a rebate of US$200. The company is well aware
that many consumers will be excited about the potential rebate, but that
they will fail to mail in the forms. The company is pleased by that fact.
4. To x a broken keyboard from Banana (a computer company), consumers
have to make a telephone call to a customer service representative and then
make an appointment for an in-person visit. Once they arrive at the relevant
stores, waiting times are often long; they can be up to two hours.
5. Consumers can subscribe to programming from Amazing Science Fiction
Network, a television network; the subscription gives them access to a
great deal of programming, including shows that are available online but
not on television. Obtaining a subscription is easy. It is essentially one-
click. Canceling a subscription is not so easy. It requires a telephone call
with a signicant waiting time and a series of questions, nominally designed
to ensure that people really do want to cancel.
6. Poor students are entitled to receive nancial aid for university. To obtain
that aid, they have to ll out an elaborate government form. It has dozens of
questions, and many students nd it challenging to answer some of them.
As a result, they decide not to apply for aid at all (cf. Dynarski et al.,
2018; see also Bettinger et al.,2009).
7. Whenever people visit certain websites, they are informed of the privacy
polices of those sites, and if they want to proceed, they are asked to
check a box indicating that they consent. Sometimes the notice is in an
unfamiliar language.
8. A professor is asked to review an academic article for a journal. To do so,
she must register at the journals website. Registration is confusing and
complicated. As a result, she declines to review the article.
9. To obtain benets under a health care law, people must navigate a compli-
cated website. Many of them do not understand the questions that they are
being asked. For many people, the application takes a long time. Some of
them give up.
10. To obtain a visa to visit a country in Europe, Americans have to visit a
website that does not work well and requires prospective visitors to
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answer a host of difcult questions. Frustrated by the process, many
Americans decide not to visit that country.
11. Some students at a university are suffering from a mental health problem.
They want help from doctors at the universitys health services. To
obtain that help, they have to see their primary care doctor and receive a
referral. The process is cumbersome, time-consuming and (to many stu-
dents) humiliating.
All of these cases involve sludge:a viscous mixture, in the form of excessive
or unjustied frictions that make it difcult for consumers, employees, employ-
ers, students, patients, clients, small businesses and many others to get what
they want or to do as they wish (Thaler, 2018). I have three goals here. The
rst is to elaborate the idea of sludge, in part by distinguishing the related idea
of nudge. The second is to give an account of why sludge can be so harmful
to people, with reference to behavioral ndings about present bias, inertia,
limited attention and unrealistic optimism. As we will see, private and public
institutions sometimes have a strong interest in increasing sludge and some-
times have a strong interest in reducing it. The third and most important is to
call for regular Sludge Audits by both the private and public sectors.
The purpose of Sludge Audits is to produce clarity about the magnitude of
sludge and to ensure transparency to relevant others, above all those who
are in a position to reduce sludge. As a result of that transparency, Sludge
Audits should motivate a careful assessment of how to reduce sludge, prefer-
ably with reference to both costbenet analysis and costeffectiveness ana-
lysis. It is important to note that Sludge Audits can be more or less formal
and elaborate. They might be highly quantitative, embodying an effort to cal-
culate both costs and benets. They might be more qualitative, with an effort to
understand what is being required and to ask, in a more intuitive way, whether
the existing levels of burdens are excessive. In either case, they should be seen
as part of a general effort to enlist behavioral ndings in an effort to simplify
government and policy-making (Sunstein, 2013).
For a preliminary glimpse of the potential benets of Sludge Audits, consider
the Transportation Security Administration (TSA) Precheck Program, designed
to speed up security lines at airports. The program, adopted by the USA in
2011, followed a kind of Sludge Audit; it was based on the conclusion that the
standard security processes contain sludge, in the sense that they are excessively
burdensome for many travelers. Those enrolled in the program are able to take
advantage of expedited screening and shorter lines a clear effort at sludge reduc-
tion. In a recent year, ve million people were enrolled. What are its benets?
Let us assume, conservatively, that on average those ve million people use
the program four times per year. If so, we are speaking of 20 million uses.
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Let us also assume, plausibly, that on average a user of the program saves
20 minutes per trip. If so, we are speaking of roughly 400 million hours
saved per year. Let us assume, nally, that an hour is worth on average US
$27.
1
If so, the benet of the TSA program is at least US$1 billion per year.
In any year, few regulations generate benets of that magnitude. To do a full
analysis of the welfare effects of the program, of course, we would need to
know the costs as well. Setting up and administering the program require sign-
icant resources. But it is safe to say that once the program is up and running,
the net benets are easily in the hundreds of millions of dollars.
The example is illustrative. Whenever a specied amount of time is saved by
a large population of consumers say, 200,000 hours the benets will not
exactly be trivial. Importantly, monetizing time savings is hardly sufcient to
capture those benets. Some of the benets of sludge reduction are psycho-
logical and hedonic a reduction of frustration, anxiety and perhaps a sense
of stigma or humiliation (Emens, 2015,2019; Herd & Moynihan, 2019). In
addition, sludge reduction efforts can greatly improve access to goods and ser-
vices, including antipoverty programs, education, job training and economic
opportunities. For consumers, students and employees, such efforts can
change lives. For companies, they can increase sales and goodwill. For govern-
ments, they can greatly improve performance. They can promote economic
development and growth. In many contexts, efforts to reduce sludge will
have disproportionate benets for the most disadvantaged members of
society; they can be an engine of opportunity. Diverse nations, concerned
about poverty and education, would do well to conduct Sludge Audits and
to prioritize sludge reduction.
Dening sludge
If sludge is understood to consist of excessive frictions, the concept is not
exactly mysterious. Much sludge consists of dreary or duplicative paperwork,
understood to include time spent online. Some of it involves waiting time, in
person or online. To be sure, we might have to do considerable work to
know whether frictions count as excessive; that is a normative question.
Even if we can answer it (and we often can), the term leaves unresolved ques-
tions. For example, the concept of administrative burdens(Herd &
Moynihan, 2019) is much broader, because such burdens may not be excessive.
1 In the USA, the federal government does not have a standard number, but in Regulatory Impact
Analyses it has used numbers from the Bureau of Labor Statistics, which reports an average in the
vicinity of US$27 (United States Bureau of Labor Statistics, 2019).
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Alternatively, the term admin(Emens, 2019) has been used to capture an idea
that overlaps with both administrative burdens and sludge, but that is broader
than either, because it includes multiple forms of work that are done within the
family.
What sludge is not
For conceptual clarity, we should not include monetary incentives or disincen-
tives within the concept of sludge. If consumers are told that they must pay a
specied amount to obtain insurance or that they can obtain a better seat on
an airplane for a small additional fee, they are facing costs, not sludge.
A ban is not sludge: if people are forbidden to smoke in public places, sludge
is not the problem. A mandate may or may not be sludge, depending on
what is mandated. If people are told that they have to go through an unneces-
sarily complex process to get help with depression or anxiety, they are certainly
being required to wade through sludge. If people are told that they must obtain
health insurance, the same conclusion holds to the extent that obtaining health
insurance involves excessive friction.
From one point of view, of course, there is no real distinction between mon-
etary incentives and the kinds of costs imposed by sludge. After all, time can be
monetized, and if the costs are hedonic, they can be monetized as well (Allcott
& Kessler, 2015). A monetary cost of a specied (low) amount is less than a
time cost of a specied (high) amount. If we believe that costs are simply
costs, then sludge might be characterized as a kind of cost whose magnitude
can be quantied and monetized. The only response is that qualitative distinc-
tions are useful, and there is an important qualitative distinction between (say)
a tax or a ne on the one hand and a pointless form-lling requirement on the
other. From the public sector, sludge is often an indirect, covert and inad-
equately scrutinized method of achieving particular policy goals by limiting
access to various programs and benets; a spotlight should be placed on that
method.
Under the denition used here, sludge is bad by denition; it consists of
excessive frictions. It should be clear that frictions or administrative burdens,
described purely as such, can be excessive, insufcient or optimal. If people
are asked whether they are sure that they want to delete some important le,
waive their legal rights, send an angry email or post something on social
media, the resulting burdens might be an effort to prevent mistakes or reckless-
ness. A mandatory cooling-off period for door-to-door sales, of the sort
imposed by the Federal Trade Commission in 1972 (United States Code of
Federal Regulations, 2003), is an example; so is a waiting period before
people can buy guns. Are-You-Sure-You-Want-Toquestions can provide
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both individual and social benets. In due course, I shall provide a preliminary
account of the legitimate reasons for administrative burdens.
Nudge and sludge
For good and for evil
It is natural to wonder about the relationship between sludge and nudge
(Thaler, 2018). For orientation: nudges are private or public initiatives that
steer people in particular directions but that also allow them to go their own
way (Thaler & Sunstein, 2008). A reminder is a nudge; so is a warning.
A GPS device nudges; a default rule, automatically enrolling people in some
program, is a nudge. To qualify as a nudge, an initiative must not impose sign-
icant material incentives (including disincentives).
This is a standard denition (Thaler & Sunstein, 2008; Oliver, 2015; Allcott
& Kessler, 2019), but it is not uncontested. As for sludge, so for nudge: a nudge
might not impose monetary costs, but it might impose costs of a certain kind;
graphic warnings impose hedonic costs, as do calorie labels (Thunstrom,
2019). If all costs are commensurable, we might be tempted to say that there
is no clean line between nudges and material incentives, and insist only that
nudges qualify as such if and only if they impose very low costs.
2
In addition, some people prefer to dene nudges as efforts to enlist, to
counter or to exploit behavioral biases (Rebonato, 2012). It is noteworthy
that this denition is usually chosen by those who are not particularly friendly
to nudges and nudging, but let us bracket that point. On this understanding, a
default rule would count as a nudge insofar as it exploits inertia. But it would
not count as such insofar as it works because it carries an informational signal.
And on this denition, a disclosure of purely factual information would not
count as a nudge, at least if it is not a response to a behavioral bias. Because
we are speaking of denitions and because the term nudgedoes not have a
self-evident meaning, there is no way to rule out, on purely linguistic or
logical grounds, the effort to restrict nudges to situations involving behavioral
biases.
The advantage of the standard denition and in my view, it is decisive is
that it captures a set of interventions that preserve freedom of choice while also
steering people in certain directions (Thaler, 2016). It is useful to have a term
for such interventions, and nudgeis suitable for that purpose. Admittedly, it
would also be useful to have a simple term for those nudges that enlist, counter
2 Usually that is true, but not always. For example, graphic health warnings might impose high
emotional costs on those who see them. People might be willing to pay signicant sums to avoid
being nudged in certain ways (Sunstein, 2019b).
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or exploit behavioral biases. Phishing for phoolscaptures much of the terri-
tory here. As Akerlof and Shiller use the term phishing, it includes exploit-
ation of a lack of information as well as exploitation of behavioral biases
(Akerlof & Shiller, 2016).
It should be clear that nudging can be used for both good and bad purposes.
Consumers might be defaulted into an expensive health care plan that fails to
suit their needs. Consumers might be defaulted into an insurance plan for cell
phones or laptops that is not at all in their interest. Consumers might be
nudged, through behaviorally informed advertisements, into buying cigarettes
or alcohol, even if it is not in their interest to do so. Nudging is a tool, no less
than subsidies, nes and criminal prohibitions. To evaluate nudges, we need to
know their welfare effects what they are achieving and at what cost (Tor,
2019). From one perspective, the normative test is simple: are nudges increas-
ing welfare? Of course it is true that the idea of welfare needs to be specied,
and it is important to emphasize that some specications of that idea emphasize
the well-being of the least well-off (prioritarianism; Adler, 2011).
Frictions and deliberation-promoting nudges
It would be possible to dene sludge simply as frictions, without adding the
word excessive. On that denition, sludge would be a kind of nudge a dis-
tinctive subset and it too could be imposed for good or for bad purposes
(Sunstein, 2019c). Intentionally or not, institutions public or private
might impose frictions as a way of promoting certain outcomes. And on that
denition, we could easily imagine sludge for good. On that view, Are-
You-Sure-You-Want-To notices would be a form of sludge; so too for
cooling-off periods. In ordinary language, however, sludge has a pejorative
connotation. It connotes something unpleasant, such as thick, soft, wed
mud or a similar viscous mixture or liquid or solid components(Oxford
Dictionary Online, 2019). Synonyms include mud,muck, slimeand
(importantly) ooze. Consumers, employees and students encounter all of
those.
It is helpful to reserve the term sludgefor impositions that have a negative
valence. Efforts to ensure that people do not act recklessly or impulsively
should be characterized as (helpful) nudges, not as sludge. Such efforts are
designed to strengthen the hand of the Planner over the Doer (Thaler, 2016),
or to fortify System 2 in the face of an insufciently deliberative System 1
(Kahneman, 2012). A vivid title makes the point: Handgun Waiting Periods
Reduce Gun Deaths(Luca, 2017). In this light, we can see that some helpful
nudges reduce frictions (make it easy), while other helpful nudges increase
frictions (make it hard). Nudges that increase frictions can be seen as deliber-
ation-promoting nudges, which have the goal of encouraging people to give a
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kind of sober second thought (Xianchi & Fishbach, 2013; Imas & Kuhn,
2016). In the context of consumer behavior, deliberation-promoting nudges
can be a blessing; they are an important way of nudging, and in many settings,
there should be more of them.
We can therefore construct a table with four cells (Table 1). The principal
concern here is Cell 4. Reasonable people can, of course, debate its precise
content. Excessive paperwork burdens, including excessive online burdens, cer-
tainly count. Time, taken as such, can count, as when people are asked to stand
in line or to wait on the phone to qualify for benets or to avoid burdens.
Obstacles to navigability as through complex sites, multiple questions, con-
fusing words and phrases, manipulative terms can be forms of sludge
(Luguri & Strahilevitz, 2019; Mathur et al.,2019).
At the same time, the idea of dark patterns,dened as user interface design
choices that benet an online service by coercing, steering, or deceiving users
into making unintended and potentially harmful decisions, is broader than
that of sludge. Deception and steering need not involve sludge. People could,
for example, be nudged into harmful choices, as when a costly or harmful
path or outcome is made especially easy to obtain (a kind of dark pattern).
In such cases, sludge may not be involved. Shrouded attributes (such as add-
on costs) might be self-consciously hidden from consumers (Gabaix &
Laibson, 2006), but it is fair to question whether they count as sludge.
Perhaps we could say that sludge is involved insofar as consumers have to
do real work to learn about those attributes.
Why sludge matters
It should be clear that those who impose sludge might do so intentionally or
inadvertently. From the moral point of view, intentional imposition of sludge
is especially objectionable, but inadvertent or clueless imposition of sludge
can be particularly harmful. Those who impose sludge are often attempting
to promote self-interested goals. Imposition of sludge can be a form of phish-
ing(Akerlof & Shiller, 2016), as, for example, through self-conscious efforts
to exploit inertia or present bias so as to lead people to buy unduly costly pro-
ducts or plans. When imposition of sludge is inadvertent, it might be a product
of ofcial cluelessness, as, for example, when bureaucrats or lawyers impose
administrative burdens that turn out to have serious or even devastating
adverse effects, even though those who designed them intended no such thing.
To understand why sludge matters, let us begin with the assumption that
people are fully rational and that they make some calculation about costs
and benets. Even if the benets are high, the costs of sludge might
prove overwhelming. These costs can take qualitatively different forms
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(Moynihan et al.,2014; Herd & Moynihan, 2019). They might involve the
acquisition of information, which might be difcult and costly to obtain.
They might involve time, which people might not have. They might be psycho-
logical, in the sense that they involve frustration, stigma or humiliation. (People
who are poor, elderly or disabled may feel especially frustrated, stigmatized or
humiliated.) For any of those reasons, it might be very difcult to navigate or
overcome sludge. In some cases, doing relevant paperwork might be literally
impossible; it simply may not be feasible for people to obtain the information
to enable them to ll out the forms or to learn how to do so. By themselves,
these points help explain the low take-up rates for many federal and state pro-
grams (Currie, 2004; Baicker et al.,2012; Gresenz et al.,2012; Bhargava &
Manoli, 2015), as well as the immense difculty that people often have in
obtaining permits or licenses of various sorts. In Chicago, [a]pproximately
17% of zoning licenses were not being processed and sent back due to insuf-
cient information(Regulatory Reform Team, 2015).
We should even see sludge as an obstacle to freedom, especially insofar as
it reduces or impairs navigability (Sunstein, 2019a). Freedom of choice is
important, but if people cannot get where they want to go, they are not
exactly free. Sludge can operate in the same way as coercion. It creates walls
and barriers.
Unredeemable sludge
An assortment of human biases amplify the real-world effects of sludge. For
many people, inertia is a powerful force (Madrian & Shea, 2001; Pottow &
Ben-Shahar, 2006), and people tend to procrastinate (Akerlof, 1991). If
people suffer from inertia and if they procrastinate, they might never do the
necessary paperwork. The problem is compounded by present bias
(ODonoghue & Rabin, 2015). The future often seems like a foreign country
Laterland and people are not sure that they will ever visit. It is often tempting
Table 1. Nudge and sludge.
Low friction High friction
Good Helpful make it easynudge (e.g., simpli-
cation; airport maps; automatic enrollment
in good pension plan) (1)
Deliberation-promoting nudge (e.g., are
you sure you want to?; cooling-off
periods; waiting periods) (2)
Bad Harmful make it easynudge (e.g., auto-
matic enrollment in costly overdraft pro-
tectionprogram) (3)
Sludge (e.g., form-lling nightmares; long
waiting times for driverslicenses or
visas) (4)
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to put off administrative tasks until another day. That day may never come,
even if the consequences of delay are quite serious.
To see the point, consider mail-in forms, unquestionably a type of sludge
(Edwards, 2007). Such forms provide people with an opportunity to obtain
some kind of gain, often in the form of a check, but they require people to over-
come inertia. An illustration of the relationship between behavioral biases and
sludge comes from a study of peoples failure to redeem such forms, with a
memorably precise name: Everyone Believes in Redemption (Tasoff &
Letzler, 2014). Across various markets, redemption rates usually range
between 10% and 40%, which means that a strong majority of customers
forget or simply do not bother. Because of the power of inertia, that might
not be terribly surprising. What is more striking is the nding that people
are unrealistically optimistic about the likelihood that they will ever redeem
forms. In the relevant study, people thought that there was about an 80%
chance that they would do so within the 30 days they were given. The actual
redemption rate was 31%. It is an overstatement to say that everyone believes
in redemption but most people certainly do.
In the same study, the researchers made three efforts (with different groups
of people) to reduce the massive difference between the predicted and actual
redemption rates (Tasoff & Letzler, 2014). First, they informed participants
very clearly that in previous groups with similar people, redemption rates
were below a third. Second, they issued two clear reminders, one soon after pur-
chase and another when the deadline for redemption was near. Third, they made
redemption far simpler by eliminating the requirement that people must print out
and sign a certication page.
As it turned out, not one of the three interventions reduced peoplesopti-
mism. In all conditions, people thought that there was about an 80%
chance that they would mail in the forms. Moreover, and somewhat surpris-
ingly, the rst two interventions had no effect on what people actually did.
When hearing about the behavior of other groups, people apparently
thought, Well, those are other groups.Whatdotheyhavetodowithus?
In other contexts, reminders work because they focus peoples attention
and reduce the power of inertia. But in this case, reminders turned out to
be useless.
The only effective intervention was simplication, which had a strong impact
on what people actually did. By making it easier to mail in the form and thus
reducing sludge, simplication signicantly increased peoples willingness to
act. The redemption rate rose to about 54%, which means that the disparity
between belief and behavior was cut in half. Here, then, is concrete evidence
of the potentially signicant effect of sludge reduction in increasing peoples
access to valuable benets.
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Behavioral biases
Recall that inertia is a powerful force and that, because of inertia, people
might not ll out necessary forms or otherwise navigate sludge. That is
one reason that participation rates are often much lower with opt-in
designs than with opt-out designs (for an especially dramatic illustration,
see Bergman et al.,2018). Recall too that inertia is aggravated by present
bias, leading people to focus on the short term and neglect the future
(Ericson & Laibson, 2018). Suppose in this light that consumers must ll
out certain forms in order to be eligible for important benets or to avoid
signicant penalties. They might intend to do exactly that, but if the task
can be put off, or if it is burdensome or difcult, their behavior might not
match their intentions. The actual costs might turn out to be very high; the
perceived costs might be far higher. More generally, sludge has a signicant
impact that many people do not foresee. As the redemption study shows,
people are unrealistically optimistic about the likelihood that they will over-
come inertia. Even specialists might be surprised at the extent to which
apparently promising strategies fail.
In addition, sludge is used opportunistically by clever marketers who seek to
give consumers the impression that they will receive an excellent deal but who
know that consumers will not take advantage of the opportunity (Blake et al.,
2018; Persson, 2018). In many cases, government ofcials are doing the same
thing. They are proclaiming the availability of some benet, or masquerading
their efforts to reduce its availability, all the while using sludge opportunistic-
ally. Alternatively, or perhaps at the same time, they might be responding to
political values and commitments. Ofcials might use sludge as a rationing
device or as a way of conserving taxpayer resources. In some cases, sludge
has a damaging effect that ofcials do not anticipate. In particular, private
and public institutions might not understand the extent to which sludge will
adversely affect a population that they are seeking to help. Behavioral biases
might make administrative burdens essentially prohibitive or impose a
serious challenge in terms of navigability; people in the private or public
sectors might fail to anticipate that.
Sludge and scarcity
With respect to redemption, the power of simplication puts a spotlight on the
large consequences of seemingly modest sludge on the effects of choice archi-
tecture in determining outcomes (Thaler & Sunstein, 2008). Simplication and
burden reduction do not merely reduce frustration; they can change peoples
lives (Sunstein, 2013; Dynarski et al.,2018). An underlying reason for this is
that our cognitive resources are limited (Gabaix, 2018). Inevitably, we are
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able to focus on only a small subset of lifes challenges. For those who are
busy, poor, disabled or elderly, the problem of cognitive scarcity is especially
serious (Mullainathan & Shar, 2013). For that reason, it is important to
focus on the distributional effects of sludge whom it is most likely to hurt
(Roberts, 2018; Herd & Moynihan, 2019).
3
Recall the idea of prioritarianism,
a form of welfarism that puts an emphasis on improving the situation of the
least well-off.
As a practical matter, the burden of sludge is often borne principally by poor
people, and that is a burden that they cannot readily bear. A central reason for
this is that poor people must focus on a wide range of immediately pressing
problems. If a private or public institution is asking poor people to navigate
a complex system or to ll out a lot of forms, they might give up. But the
problem is hardly limited to the poor. When programs are designed to
benet the elderly, sludge might be especially damaging, at least if the popula-
tion suffers from reduced cognitive capacity. Something similar can be said for
immigrants or for people who suffer from a language barrier. For different
reasons, the problem of sex equality deserves particular attention. Because
women do a disproportionate amount of administrative work running the
household, arranging meals, taking care of children a signicant reduction
in sludge could address a pervasive source of social inequality, with ramifying
effects on other areas of life (Emens, 2019).
Justifying administrative burdens
Administrative burdens may or may not turn out to be sludge. Such burdens
can serve important goals (Sunstein, 2019c). They might help consumers,
patients, students and employees. They might be justied on welfare grounds.
Self-control problems
We have seen that administrative burdens might be designed to counteract self-
control problems, recklessness and impulsivity. They can be a way of protect-
ing people against their own errors. They can strengthen the hand of the
Planner in the face of an insufciently deliberative Doer. For that reason,
they can serve as nudges, curing a behavioral problem. For mundane decisions,
nudges are frequently encountered online, with questions asking whether con-
sumers are sure that they want tosend an email without a subject line, acti-
vate a ticket, cancel a recent order or delete a le. Such nudges can be an
3 The idea has support in the Paperwork Reduction Act, which requires particular emphasis on
those individuals and entities most adversely affected(United States Code, 2012a).
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excellent idea. Similar nudges, imposed by private and public institutions,
might make sense for life-altering decisions, such as marriage and divorce.
Cooling-off periods can be a blessing (Rekaiti & Van der Bergh, 2000; Wie
& Kim, 2015). Recall the case of gun purchases, where waiting periods save
lives.
Privacy and security
Private and public institutions often impose administrative burdens in order to
obtain information about peoples backgrounds their employment history,
their income, their criminal history (if any), their credit rating, their family
history, their places of residence. Those who seek to work in government, cer-
tainly at levels that involve national security, are required to provide a great
deal of information of that sort (United States Ofce of Personnel
Management, 2010). It is at least reasonable to think that if private and
public institutions are to receive some or all of that information, it must be
with peoples explicit consent. If so, the question is whether to ask people to
face administrative burdens or instead to intrude on their privacy. Perhaps it
is not so terrible if ofcials choose the former.
At one period, of course, ofcials had no real option. They could not intrude
on privacy because they lacked the means to do so. Increasingly, however,
private and public institutions actually have independent access to that infor-
mation, or they might be able to obtain it with a little effort online. But
would that be desirable? Not necessarily. In some cases, there is a trade-off
between irritating burdens on the one hand and potential invasions of
privacy on the other. Consider, for example, the question of how much infor-
mation credit-card companies should acquire before offering cards to custo-
mers. We might welcome situations in which such companies can learn what
is required and simply send people offers or even cards. Whether we should
do so depends in part on what information they have and whether it might
be misused. When governments have to acquire the relevant information, the
risks might be thought unacceptable.
The question of security is closely related. To set up an online account, con-
sumers might be asked to provide, and might be willing to provide, sensitive
information involving, for example, their bank account or their credit
card. People might have to answer questions about their address, their Social
Security number or their mothers maiden name. Forcing people to answer
these questions can be a bother, but it might be justied as a means of ensuring
against some kind of breach. Ideally, of course, we would have some clarity
about the benets and costs of obtaining the relevant information. But if
benets and costs are difcult to specify, it might make sense to have a
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rough-and-ready sense that not-especially-onerous burdens are desirable to
prevent the worst-case scenarios.
Acquiring useful data
Companies and governments might seek to acquire data that can be used for
multiple purposes, and this might benet the public a great deal. For
example, companies might want to know a great deal about consumers, so
as to be able to serve them better. Or ofcials might want to know whether
people who receive employment training or some kind of educational
funding are actually beneting from the relevant program. What do they do
with that training or that funding? Those who receive information-collection
requests might complain of sludge. But the relevant burdens might be
justied as a means of ensuring acquisition of important or even indispensable
knowledge. In the modern era, acquisition of information might promote
public and private accountability. It might save money. It might spur innov-
ation. It might even save lives.
Eligibility and qualications
When private and public institutions impose administrative burdens, one
reason involves eligibility restrictions; another involves record-keeping.
Those who seek a loan must ll out forms. The central reason is to ensure
that they actually qualify. People should not receive government benets
unless they are entitled to them. It is true that with the increasing availability
of information and with machine learning, private and public institutions
might be able to nd the relevant information on their own. In the private
sector, some companies use the idea of prequalication, which means that
they have enough information to know in advance that some people are
already qualied for goods or services. Sometimes forms can be prepopu-
lated; as a result, forms might not be necessary. In the domain of taxation,
one example is the idea of return-free ling, which eliminates the need for
taxpayers to ll out forms at all (Goolsbee, 2006). In the fullness of time, we
should see signicant movements in this direction, but those movements
remain incipient.
4
The most obvious explanation for sludge goes by the name of program
integrity(e.g., Protecting Americans from Tax Hikes Act, 2015; Book et al.,
2018; Centers for Medicare and Medicaid Services, 2019; Social Security
4 I do not discuss here the possibility that sludge is a method of targeting; that is, of ensuring that
goods go to people who most want or need them. For a detailed treatment, see Sunstein (2019c).
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Administration, 2019). Suppose that the Internal Revenue Service decided to
send the Earned Income Tax Credit to apparently eligible taxpayers. If it
could do so at low cost, and if the apparently eligible taxpayers are in fact eli-
gible, there would be little ground for objection. The problem, of course, is the
word apparently. It is possible that some of the recipients will not in fact be
eligible. Whenever people are automatically enrolled in a program, some of
them may not meet the legal criteria.
When this is so, regulators must choose between: (a) a design ensuring that
some eligible people will not receive a benet; and (b) a design ensuring that
some ineligible people will receive a benet. If the idea of program integrity
is meant to refer to the number of errors, the choice between (a) and (b)
might turn purely on arithmetic: which group is larger? If automatic enrollment
means that 500,000 eligible people receive the benet who otherwise would
not and if sludge means that 400,000 ineligible people receive the benet
who otherwise would not, automatic enrollment is justied.
But it would be possible to see things differently. Suppose that automatic
enrollment gives benets to 200,000 eligible people who would otherwise
not receive them, but also to 200,001 ineligible people who would also other-
wise not receive them. We might think that if the 200,001 people are nearly eli-
gible if they are relatively poor it would not be so terrible if they received
some economic help. Alternatively, we might think that taxpayer money is
accompanied by clear restrictions, and if it is given out in violation of those
restrictions, a grave wrong has been committed which means that even a
very modest breach of program integrity for the advantage of those who are
not eligible is unacceptable. The most extreme version of this view would be
that a grant of benets to a very large number of eligibles would not compen-
sate for the grant of benets to a very small number of ineligibles. From a wel-
farist standpoint, the most extreme version is hard to defend: a grant of benets
to 100 people who are almost (but not) eligible would seem to be a price worth
paying in return for a grant of benets to a million people who are in fact eli-
gible. But the correct trade-off is not self-evident, and reasonable people will
differ in their conclusions.
Sludge Audits
Many institutions should be conducting regular Sludge Audits. Governments
should certainly be doing so. The same is true of a wide assortment of
private institutions. Banks, insurance companies, hospitals, universities and
publishers could save a great deal of money by reducing sludge, and they
could greatly improve the experience of the people who interact with them.
They might even be able to change peoples lives. It is worth underscoring
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the case of hospitals, where sludge can not only create immense frustration, but
also impair health and even produce premature deaths.
I have noted that Sludge Audits can take both formal and informal forms.
They might involve a great deal of quantication or they might be more quali-
tative. In either case, three reforms would do a great deal to improve the current
situation. First, institutions should undertake a periodic lookbackat existing
burdens to see if the current stockcan be justied and to eliminate those that
seem outmoded, pointless or too costly. This reform would build on existing
lookback requirements for regulation in general (Sunstein, 2014). Second,
institutions should choose the least burdensome method for achieving their
goals. This is essentially a requirement of costeffectiveness. If, for example,
annual reporting would be as effective as quarterly reporting, then agencies
should choose annual reporting. Third, institutions should ensure that the
benets of administrative burdens justify the costs.
It is true and important that costbenet balancing is not always simple for
such burdens. Quantication might be challenging; monetary equivalents
might be difcult to devise. In such cases, a crude approach would be to under-
stand the costbenet justication not as an effort to compare social costs and
social benets, understood in economic terms, but instead as entailing an
assessment of proportionality. Are signicant administrative costs being
imposed, and if so, are they likely to serve signicant purposes? What is the
actual magnitude of the costs and what is the magnitude of the gains? Real
numbers would help inform decisions and combat sludge. It is worth empha-
sizing the fact that even a crude form of costbenet analysis would be infor-
mation forcing. It would create a stronger incentive to have accurate accounts
of the number of burden hours, and also to turn them into monetary equiva-
lents. It would simultaneously create an incentive for ofcials to be more
specic and more quantitative about the expected benets of administrative
burdens which often turn out to be sludge.
To understand that incentive, it is important to make some distinctions. In
the easiest cases, Sludge Audits would immediately show institutions both
public and private that the existing level of sludge is not in their interests.
With respect to the public sector: if it turns out to be difcult for children to
have access to free school meals because the sludge is excessive, ofcials
might take steps to reduce it (Sunstein, 2013). If it turns out to be hard for stu-
dents to obtain nancial aid because the forms have more than 100 questions,
an understanding of that fact might produce serious sludge reduction efforts
(Sunstein, 2013). If it turns out that needy families have a hard time receiving
food to which they have a legal right, sludge reduction, perhaps through the use
of online services, might seem quite appealing.
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With respect to the private sector: if it turns out to be difcult for consumers
to do what must be done to buy a product say, an automobile a company
might simplify the experience. Doing so might attract more customers and
produce a wide range of reputational benets. It is not exactly news that con-
sumers will have a far worse experience with a company if it is difcult to
obtain a response to their complaints. Many companies have innovated cre-
atively in an effort to reduce such problems. We could easily imagine a kind
of competition to be a sludge-free government or company with respect to
everything that matters to citizens or consumers. The same could be true for
employees, investors and students.
At the opposite pole, public or private institutions might know or learn
that sludge is in their interest, and a Sludge Audit would not create an incentive
to reduce it. If sludge discourages immigration, some ofcials would be pleased
to impose sludge, and perhaps to increase it. If sludge reduces entry into certain
professions, ofcials, attuned to the interests of existing entrants, might not be
displeased. It might well be good business to make it very easy to start a sub-
scription and sludgy to stop. Careful testing might show that such a strategy
is optimal. A complaint process that involves a degree of sludge might not
merely lter out unjustied complaints; it might also save money when com-
plaints are justied. Under imaginable circumstances, sludge is in the competi-
tive interests of rms. If so, the question remains: is this a kind of behavioral
market failure for which a regulatory response is appropriate? The answer
will often be yes.
The largest point is that for public institutions a Sludge Audit will often
reveal that there are signicant opportunities for improving performance.
Every year, for example, the US government is required to publish something
like a Sludge Audit: the Information Collection Budget (ICB) of the United
States (United States Code, 2012b). The ICB quanties the annual paperwork
burden that the US government imposes on its citizens. A recent report nds
that in 2015 Americans spent 9.78 billion hours on federal paperwork
(United States Ofce of Management and Budget, 2016). In spite of signicant
shifts,
5
this burden has been high for a long time. The ICB also offers details
across agencies showing, among other things, that the Department of
Treasury is responsible for well over half of the total paperwork burden.
It should not be difcult for governments all over the world to produce an
ICB, cataloguing paperwork burdens. To be sure, those burdens may not be
5 The signicant drop in scal year 2010 was principally the result of reassessments of existing
burdens rather than an actual drop in burdens. But there was a signicant reduction in actual
burdens from new initiatives, in the vicinity of US$386 million (United States Ofce of
Management and Budget, 2011).
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sludge; some of them are undoubtedly justied. In addition, the worst forms of
sludge might not be paperwork at all (consider time waiting in line). But for
governments, an ICB is an important start, not least because it is likely to
spur sludge reduction efforts. Private institutions should be producing
similar documents, if only for internal use, and public transparency might
well be a good idea.
Organizations dedicated to consumer protection, economic growth,
workersrights, sustainability, sex equality, voting rights, poverty reduction,
mental health, immigrantsrights, visa reform and small businesses and start-
ups do not march under banners demanding, Sludge Reduction Now!But
time is the most valuable commodity that human beings have. We should
nd ways to give them more of it.
Acknowledgments
Special thanks to Richard Thaler for valuable comments on a previous draft and for many
discussions; thanks too to Liam Delaney for superb comments. Parts of this essay draw on
Cass R. Sunstein, Sludge and Ordeals, 68 Duke Law Journal 1843 (2019); that essay,
intended for a legal audience, emphasizes legal issues and legal reforms, whereas this
essay emphasizes the use of Sludge Audits, explores behaviorally informed deregulation
and offers a signicantly revised denition of sludge.
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... Sludge has received a lot of attention from researchers recently. [15][16][17][18] Most examples come from situations in which consumers are disincentivized from making wise choices by having to fill out unnecessary forms or deal with other sorts of friction. 15,18 For instance, few people actually obtain manufacturers' rebates because of the trouble involved in requesting them. ...
... [15][16][17][18] Most examples come from situations in which consumers are disincentivized from making wise choices by having to fill out unnecessary forms or deal with other sorts of friction. 15,18 For instance, few people actually obtain manufacturers' rebates because of the trouble involved in requesting them. 16 As Thaler has pointed out, however, sludge can also have a broader influence, by encouraging "self-defeating behavior such as investing in a deal that is too good to be true." ...
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‘Hypernudge’ describes a group of phenomena which occur at the intersection of behavioural science and computer science, and law. The term been increasingly used in the latter field, though sparingly in behavioural science. As such, ‘hypernudge’ remains largely absent from the behavioural science lexicon, inhibiting the field from participating within vital discussions surrounding the use of psychological insights with ubiquitous computing. In this article, I search for the ‘nudge’ in hypernudge by critiquing the differences between the two concepts from a behavioural science perspective. I ‘find the nudge’ in hypernudge by conceptualising a hypernudge as a system of nudges which change over time and in response to feedback. In this sense, a hypernudge is not a type of nudge, but an arrangement of nudges. This article then engages in an extensive discussion of the implications on this concept for the hypernudging programme, and for nudging more broadly.
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Paradoxes, contrary propositions that are not contestable separately but that are inconsistent when conjoined, constitute a pervasive feature of contemporary organizational life. When contradictory elements are constituted as equally important in day-to-day work, organizational actors frequently experience acute tensions in engaging with these contradictions. This Element discusses the presence of paradoxes in the life of organizations, introduces the reader to the notion of paradox in theory and practice, and distinguishes paradox and adjacent conceptualizations such as trade-off, dilemma, dialectics, ambiguity, etc. This Element also covers what triggers paradoxes and how they come into being whereby the Element distinguishes latent and salient paradoxes and how salient paradoxes are managed. This Element discusses key methodological challenges and possibilities of studying, teaching, and applying paradoxes and concludes by considering some future research questions left unexplored in the field.
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There has been an increasing effort to integrate behavioral insights into public policy. These insights are often reliant on social psychological research and theory. However, in this relatively young field, policy interventions and behavioral insights are often built on laboratory-based psychological research with effects that can prove to be unstable in the 'real world'. In this Element, the author provides a brief history of how behavioral insights have been applied to complex policy problems. The author describes ways in which behavioral insights have been successful and where they have fallen short. In addition, the author examines unintended negative consequences of nudges and provides a more nuanced examination of their impacts on behavior change. Finally, the author concludes with a set of recommendations for generating more effective practical applications of psychology to the field of public policy.
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Professor Sunstein (2017) discusses the possible causes for and policy implications of the failure of nudges, with special attention to defaults. Though he focuses on nudges that fail when they should succeed, Sunstein recognizes that some failures reveal that a nudge should not have been attempted to begin with. ‘Nudges that fail’, however, does not consider fully the relationship between the outcomes of nudging and their likely welfare effects, most notably neglecting the troubling case of nudges that succeed when they should fail. Hence, after clarifying the boundaries of legitimate nudging within a libertarian-paternalistic approach and noting the fourfold relationship between the efficacy of nudging and its normative desirability, this article evaluates more fully the case of failed nudges and examines the hitherto unaddressed problem of successful yet undesirable nudges. This analysis shows that the failure of nudging bears only limited diagnostic value, while the success of a nudge is even less indicative of its normative status. The article concludes with recommendations for policy-makers who wish to employ nudges that are not only efficacious, but also likely to advance the subjective well-being of the individuals they target.