Farnam Street helps you make better decisions, innovate, and avoid stupidity.

With over 350,000 monthly readers and more than 87,000 subscribers to our popular weekly digest, we've become an online intellectual hub.

The Budget Vs The Brain: The difficulties of entitlement reform

Jonah Lehrer on the difficulties of entitlement reform:

Politicians seem to know this. As many analysts have pointed out, the current frenzy of budget cutting in Congress—House Republicans have proposed more than $60 billion in discretionary spending cuts, while President Obama has declared a five-year freeze on parts of the federal budget—is a mere blip in the larger context of entitlement reform. Every president since Reagan has tried to fix Medicare, Medicaid and Social Security, but no politician has succeeded in instituting any meaningful change.

The difficulty of fixing entitlements returns us to the power of loss aversion. Numerous experiments have demonstrated that, once people are endowed with something—that is, given some kind of “property right” to it—that thing dramatically increases in value. In one classic experiment, subjects who had been given a certain coffee mug believed it was nearly twice as valuable as subjects who assessed it without having an ownership stake. As a result, losing that possession becomes even more painful: The mug might be ugly, but at least it’s ours! The challenge of entitlement reform is that voters have been paying into these social programs for much of their working lives. They feel entitled to their entitlements, which is why even the smallest proposed changes pack a big emotional wallop.

There is no easy way around loss aversion. Although the public knows that losses are necessary—the status quo is unsustainable—these losses will still hurt to an irrational degree. What we need now are politicians willing to make us angry.

Continue Reading

Jonah Lehrer is the author of How We Decide and Proust Was a Neuroscientist.