Società Italiana di Diritto ed Economia, SIDE - ISLE 2015 - 11TH ANNUAL CONFERENCE

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Do cognitive sciences insights strengthen the proportionality of regulatory intervention?
nicoletta rangone, Fabiana Di Porto

Last modified: 2015-12-15


The proportionality principle, understood as the need for any measure to be suitable, necessary and reasonable to achieve a public target, is a milestone in the regulation life-cycle, and is one of the principles encompassing the administrative action.
As far as the regulation literature is concerned, proportionality is unanimously recognised as a guiding principle to select the best suited regulatory option, to establish the right width of the data gathering phase, as well the most effective, necessary and least costly data gathering tool (e.g. notice and comment or focus groups); the optimal level of participation, the selection of cases where a specific ex ante economic analysis should be performed, etc. Therefore in this realm proportionality can be understood as a means to orientate regulators towards rational and efficient action.
The paper addresses the question of whether insights from cognitive sciences (coming from social psychology, neurosciences, behavioural economics, etc.) can strengthen the proportionality principle as applied to regulatory intervention. Our content is that insights on the behaviour of regulatees can provide regulators with a useful tool to address nearly all the steps of the regulatory life-cycle, thus providing the proportionality principle with a further dimension: that of responsiveness to the real people.
Especially, when deciding whether to change or not an existing regulation, these insights on regulatees' reactions might prove fundamental, because eventually empirical evidence may suggest that a regulatory failure occurred due to widely diffused biases among the population (e.g. information overload or time discount may explain the failure of mandated disclosure regulations in many fields). Moreover, when designing the data gathering phase, regulators need to decide not only the width (i.e. how many people to consult), but also how deep and thick they need the information to be. So for instance, in designing surveys, cognitive scientists may help drafting the questionnaires (e.g. by adding pictures, using simple and plain language, considering the impact of social norms, of overconfidence biases, etc.). Cognitive experiments (both lab and field) may also be conducted to gather insights on the perspective behaviour of regulatees, thus reducing the risk of regulatory failure. Where empirical evidence shows different reactions to a given rule, a group-specific or differentiated regulation should be justified according to the proportionality principle (e.g. smart consumers may be addressed lighter or no rules, unlike vulnerable ones, while "responsible" consumers might need additional and more sophisticated information). Finally, a cognitive-based enforcement could help increasing compliance. For instance, evidence of an ‘echo effect' (i.e. the increased compliance by start-ups where inspections are performed at the very beginning of their lives) may be helpful in setting the inspection planning, thus initiating or suggesting a positive behaviour without putting an excessive burden on the administration. In the same vein, the communication of the results of inspections performed might be cognitive-based, meaning that it can help people overcoming inertia bias. For instance, as the cognitive literature teaches us, ratings or compliance certifications are more effective than other framing options in helping regulatees change their "self-reference point".
All those cited are some of the possible examples of how insights from cognitive sciences may contribute to the construction of a thicker idea of proportionality. To sum up, cognitive insights help to improve the effectiveness of regulation while ensuring a greater protection of the public target, without unjustified costs for both end-users and regulators but, especially, though a greater consideration of real people.

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