Nudging – the Tool of Choice to Steer Consumer Behavior? Or What?

By Dirk Helbing (ETH Zurich/TU Delft/Complexity Science Hub Vienna)

Back in 2008, Thaler and Sunstein suggested “nudging” would be a great new way to improve health, wealth and happiness. The method was euphemistically called “liberal paternalism”, i.e. the nudger would be like a caring father, while the nudged one is claimed to have all the freedom to decide as preferred, even though he or she would often not notice he or she was tricked.

People would be helped by companies or the state with subconscious nudges to correct their so-called “misbehaviour”. This earned Richard Thaler the Nobel Prize – but not Cass Sunstein, who had written a critical book in the meantime, entitled “The Ethics of Influence”.

Let me say upfront that I don’t see a problem with putting the ecological energy mix on the top of a choice list or to label it “green energy”. This is pretty harmless. People understand the trick, but they will often anyway agree.

However, nobody ever told us that we would be nudged every day, all the time, with personalized information that is tailored to us with personal data that was collected about us mainly without our knowledge and agreement – effectively by means of mass surveillance.

This “big nudging”, which combines nudging with big (personal) data, must be criticized, as it undermines the very basis of our democracy, self-control, and human dignity.

Let us look back for a moment.

Already in the 60ies, the first climate studies by oil companies pointed out that there is a negative effect of carbon-based energy on climate. But for a long time, it seems nothing was done to change this.

Then, in the early 70ies, the Limits to Growth study warned us that, in a world with limited resources, we would sooner or later run into an economic and population collapse. No matter how the model parameters were changed, the predictions said humanity was doomed.

The Global 2000 study commissioned by then US president Jimmy Carter basically confirmed these predictions. However, it was again assumed that we would not change the system of equations, i.e. the socio-economic system we live in.

Finally, the United Nations established the Agenda 2030, pressing for urgent measures towards a sustainable planet.

So, 50 years after our sustainability problem was diagnosed, is “big nudging” really the best solution to our sustainability problems? Should companies digitally steer the behaviours of the people?

This kind of assumes that companies would be the good guys, who do the right things and should therefore have all conceivable freedoms: in particular, they should develop, produce and sell products as they like. The people, in contrast, would be kind of the bad guys, who show “misbehaviour”, as Richard Thaler would call it, and whose behaviours would therefore have to be corrected and controlled.

What would this mean? Let me give two examples:

• The above approach foresees that producers of sweet lemonades would sell unhealthy products and advertise for more consumption, while our health insurance would give us minus points for buying and drinking lemonades, and charge us higher tariffs. 
• The car industry would go on selling as many cars as they could, but politics or some citizen score would forbid most of us to use them most of the time. The Diesel scandal, which will forbid many car owners to use their cars in central parts of many cities, would be just a glimpse of what is to come.

Does such a model make sense? I am not convinced. Are you?

So, is the proposed solution, which comes under names such as profiling, targeting, neuromarketing, persuasive computing, big nudging, and scoring, really our saviour?

Unfortunately, as advanced as these technologies may be, they tend to be totalitarian in nature.

The Chinese Citizen Score, for example, has been heavily criticized by all major Western media.

But the situation in Western democracies is not so much different. Tristan Harris, who worked in a “control room” at Google, where public discourse was shaped, recently exposed the mind control of billions of people that a few tech companies exert every day.

Moreover, if one traces back the actors and history of the underlying technologies and science, we end up in the 1930ies with their infamous behavioural experiments. This link to fascist times and thinking doesn’t make things better.

How could things come that far?

We are living in a society, which thrives on the combination of two very successful systems: capitalism and democracy.

Unfortunately, this model is not good enough anymore. It hasn’t created a sustainable future, and so, as I have pointed out before, our world is heading for a doomsday scenario, if we don’t change our system.

Unfortunately also, neither the public nor scientists were informed well enough that – in the past 50 years – we should have done nothing else than re-invent society.

Furthermore, unfortunately, democracy and capitalism today do not have aligned goals. Capitalism tries to maximize profit, i.e. a one-dimensional quantity, while democracy should continuously increase human dignity, i.e. strive for multiple goals, including knowledge, health, well-being, empathy, peace, and opportunities to unfold individual talents.

Everyone should have understood that, if we did not manage to align the goals of both systems, one system would sooner or later crush the other system. It recently often appears it is democracy that would be crushed.

Let me shortly talk about the new kind of data-driven society that was created:

We now have a new monetary system, which is based on data. Data is the new oil. This data is mined by what we call “surveillance capitalism”, where people are the product.

We also live in a new kind of economy: the attention economy. People are flooded with information. Attention became a rare good, which is marketed among companies. This allows them to influence people’s consumption, opinions, emotions, decisions and behaviours.

We further have a new legal system: “code is law”. Algorithms decide what we can do and what we can’t. They are the new “laws of our society”. “Precrime” programs are just one example for this. The algorithmic laws, however, are usually not passed by our parliaments.

Altogether, this has also lead to a new political system: where companies such as Cambridge Analytica, Facebook and Google manipulate the choices of voters, and thereby undermine democracies and the free, unbiased competition of ideas.  

A digital sceptre, enabled by the combination of big data and nudging, would now allow to steer society and correct the claimed misbehaviours of people, as it is currently tested in China.

This “brave new world” was created without asking the people. It hasn’t been passed by parliament – at least not openly. While these developments have gone on for more than 15 years now, probably for decades, the public media have not informed us well and in advance.

We have been sleep-walking – and for a long time, we have not noticed the silent coup that was going on. But now we are discussing these developments, and that’s why democracy will win.

What do we need to do?

We must build “democratic capitalism”. This means to democratically upgrade capitalism and to digitally upgrade democracy.

We need information platforms and technologies, which have our constitutional, societal, cultural and ecological values in-built. We call this approach “design for values”.

And it’s coming. The IEEE, the biggest international association of engineers, is already working on standards for ethically aligned design.

What does design for values mean for our society? That the democratic principles, i.e. the lessons that we have learned over hundreds of years in terrible wars and bloody revolutions, would have to be built into our technologies.

This includes: human rights and human dignity, freedom and self-determination, pluralism and protection of minorities, the division of power, checks and balances, participatory opportunities, transparency, fairness, justice, legitimacy, anonymous and equal votes, as well as privacy in the sense of protection from misuse and exposure, and a right to be left alone.

How to enable informational self-determination in a big data world? Assume every one of us would have a personal data mailbox, where all the data created about us would have to be sent. The principle to be legally and technologically established would be that, in the future, we decide who is allowed to use what data for what purpose, period of time, and price. An AI-based digital assistant would help us administer our data according to our privacy and other preferences. Uses of personal data, also statistics created for science and for politics, would have to be transparently reported to the data mailbox.

With this approach, all personalized products and services would be possible, but companies would have to ask in advance and gain the trust of the people. This would create a competition for trust and eventually a trust-based digital society, in which we all want to live in.

Furthermore, we would have to upgrade our financial system towards a multi-dimensional real-time feedback system, as it can now be built by means of the Internet of Things and Blockchain Technology. Such a multi-dimensional incentive and coordination system is needed to manage complex systems more successfully and also to enable self-organizing, self-regulating systems.

So, assume we would measure – on separate scales – the externalities of our behaviour on the environment and other people, for example, noise, CO2 and waste produced, or knowledge, health, and the re-use of waste created. Suppose also that people would give these externalities a value or price in a subsidiary decision-process. (Some people would call this a tokenization of our world.) Then we could build our value system into our future financial system. I call this system the socio-ecological finance and coordination system (or finance system 4.0+).

People could then earn money with recycling. Companies could earn money for environmental-friendly or socially responsible production. In this way, new market forces would be unleashed that would let a circular and sharing economy emerge over time.

Personally, I don’t think there are not enough resources for everyone in the world. We don’t have an over-population problem. Our problem is rather that the organization of our economy is outdated.

I think we are living in a time, where we have to fundamentally re-organize our society and economy in the spirit of democratic capitalism, based on the values of our society.

I am also convinced that energy won’t be the bottleneck. But we will have to take new avenues. In the past, the focus was often on big solutions, which would produce energy for a lot of people. I propose that we should focus more on solutions, which are oriented at decentralized, local and more democratic energy production.

Modern physics knows that our universe is full of energy. In fact, it is totally made up from energy. It wouldn’t be plausible to assume we could not learn to use it.

I expect that a more democratic production and use of energy, goods and services will lead our society to an entirely new level. It is high time to focus on this transition, and how we can accomplish it together.

The instrument of City Olympics, i.e. of competitions of cities for sustainable and resilient open-source solutions to the world’s pressing problems could help us find the way.

A new, global fascism, based on mass surveillance is on the rise

By Dirk Helbing
 

Last weekend, I spoke to business leaders at the Petersberger Dialogue in the Villa Hammerschmidt. I warned that a new, global fascism, based on mass surveillance, appears to be on the rise.

The German talk can be viewed here

 

Petersburger Dialogue

A similar, English video can be found here

Recently, an increasing number of experts and intellectuals have warned of an emerging technological totalitarianism, enabled by what some people call “surveillance capitalism.” 

A recent, much discussed contribution in Scientific American raised the question “Will democracy survive Big Data and Artificial Intelligence”, pointed to the dangers of new kinds of behavioural manipulation. Even Cass Sunstein, one of the fathers of “Nudging”, has recently issued grave words of warning.

Today, secret services and Big Data companies possess much more data about us than were needed to run totalitarian states in the past. It is unlikely that such power will not be misused at some point in time. 

Moreover, it becomes increasingly evident that all the features of fascism have been implemented digitally or are currently being implemented. They could be used on a society-wide scale at any time. 

This includes:

• mass surveillance, 
• unethical experiments with humans,  
• social engineering,  
• forced conformity (“Gleichschaltung”),
•  propaganda and censorship,  
• “benevolent” dictatorship,
•  (predictive) policing,  
• different valuation of people,  
• relativity of human rights,  
• and, it seems, even euthanasia for the expected times of crisis in our unsustainable world.
  

The signs are clear. We are faced with the emergence of a new kind of totalitarianism of global dimensions that must be stopped immediately. “An emergency operation is inevitable, if we want to save democracy, freedom, and human dignity,” I warned. “Arguments such as terrorism, cyber threats and climate change have been used to undermine our privacy, our rights, and our democracy.”

The emergence of mass surveillance after 9/11, enabled by the Patriot Act and other laws, has led to the incremental erosion of liberties and human rights. Since the Snowden revelations, we know that there is mass surveillance of billions of people around the world. But most of us still have no idea how pervasive it is, and how it may influence their lives in future. 

Billions of dollars have been spent on mass surveillance tools of secret services to hack our computers, smartphones, smart TVs and smart cars. The estimated amount of data collected about us every day ranges from millions of numbers to Gigabytes of data. As a result, we have ended up with the digital tools for a data-driven, AI-based so-called “benevolent” dictatorship, where big businesses and the state determine “what is best for us.” Moreover, we have seen that democracies in Hungary, Poland, Turkey, and elsewhere have already undergone transformations towards more autocratic regimes.

Citizens are being targeted, their data collected and consolidated. This is used to create a near complete profile of each person, their nature, habits and preferences. Each profile can contain thousands of specifiers. These digital doubles can be used to make thousands of computer experiments with our virtual self to find out how our thinking and behaviour can be manipulated.

More specifically, in today’s attention economy, our personal data is being applied to customize information such that it will influence our attention, emotions, opinions, decisions, and behaviours – often subconsciously – by a technique called big nudging or neuro-marketing. This ranges from steering our consumption behaviour to manipulating voting behaviour in elections.

In the wrong hands, the misuse of surveillance-based personal data will have catastrophic consequences for us and for society. In an explicitly or implicitly totalitarian state, this kind of information could be used to predict and identify those people who don’t agree with certain government policies and sanction them even before they can exercise their democratic rights.

The British secret service, for example, runs a program called Karma Police, which shows where our societies are heading. This Citizen Score, which is currently also tested in China, may be used to run an entirely new kind of autocratic society, or even police state. According to plans, the Citizen Score would determine the level of access to facilities, products and services. We would be scored or penalised according to our behaviours. Reading critical news or having the “wrong” kinds of social ties, for example, would get you minus points.

To counter this danger of a digital totalitarian state, I strongly suggest that we should:

• ensure a democratic framework of use for powerful cyberinfrastructures, 
• ensure scientific use by interdisciplinary teams, considering multiple perspectives,  
• ensure ethical use considering human rights and human dignity,  
• ensure transparency,  
• ensure cyber-security (by decentralization etc.),
•  prevent misuse (by effective laws/remedies and in-built self-destruction mechanisms in case of serious misuse, malfunction, or political power grabs),  
• ensure informational self-determination (e.g. with a Personal Data Store),  
• ensure informational self-determination by giving citizens the right to opt-out,  
• turn war rooms into peace rooms, as described in a recent proposal by myself and Peter Seele.
  

The purpose of these video message is to create and spread public awareness of the insidious extent that individual personal data is being used today.

The door is wide open for global fascism to take hold, unless we take action now.

I hope that you will pay attention to these well-founded concerns regarding the rise of a technological totalitarianism, potentially on a global scale. My presentation offers much evidence. 

If this is a topic of interest that you would like to investigate further, you are kindly invited to contact me at dhelbing@ethz.ch. 

An alternative vision of a better, participatory, digital future that everyone can benefit from, is offered here: A Digital World to Thrive in and here: and here: https://www.theglobalist.com/author/dirk-helbing/

Thank you for reading.

Democracy is not a Luxury

by Heinrich Nax

"Does democracy cause growth, or is it a luxury enjoyed by wealthy countries that slows growth down?“ This is a question that one frequently hears these days.

The Austrian economist Joseph Schumpeter was first to address this question in his book "Capitalism, Socialism, and Democracy" in 1942, at a time when Austria had fallen into the hands of Nazi Germany, after having been one of the most important countries in the world before. This question continues to be of central concern, not only for political economists and development economists. Over the past decades, stirred by the disagreement of prominent scientists such as Milton Friedman (1962) and Seymour Martin Lipset (1959) over the corrent answer, this issue has been looked at time and again.

Famously, the American macroeconomist Robert Barro (1996) found that "the net effect of democracy on growth performance cross-nationally over the last five decades is negative or null" (Gerring, Bond, Barndt and Moreno 2005, p.323). Analyses of this kind have fueled arguments for the position that democracy is a luxury enjoyed by wealthy countries, which creates obstacles for economic development. Other scientists have disagreed with this finding (for example, Gerring et al. 2005). Their findings indicate that only sustained democracy has the virtue of facilitating the accumulation of physical, human, social and political capitals, which in turn leads to growth.

Again, one is left with two conflicting sets of evidence. However, there are two recent breakthroughs, which show that democracy is indeed no luxury. Acemoglu, Naidu, Restrepo and Robinson (2015) show that `regime transitions' and their precise timing are crucial. Democratization has a large positive effect on growth: "by estimating the effects on growth of the unprecedented spread of democracy around the world in the last 50 years [...] estimates imply that a country that transitions from non-democracy to democracy achieves about 20 percent higher GDP per capita in the next 25 years" (Acemoglu et al. 2015, p. 1).

However, the question whether established democracies have incentives to de-democratize remained unsolved. Precisely this question was now addressed by Nax and Schorr (2015). Their data-driven study using high-performance computers reveals "short-run economic incentives to de-democratization for the most economically and democratically developed nations. [However,] These short-run boosts come with intermediate-run reductions of political capitals and with long-run reductions in growth" (Nax and Schorr 2015). Therefore, democracy is more than a luxury. Giving up on it would be a terrible mistake.

Further information can be found in

H.H. Nax and A.B. Schorr, Democracy-Growth Dynamics for Richer and Poorer Countries,see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2698287

References:
- D. Acemoglu, S. Naidu, P. Restrepo, and J. A. Robinson. Democracy does cause growth. NBER Working Paper, pages 323-64, 2015.
- R.J. Barro. Democracy and growth. Journal of Economic Growth, 1(1):1-27, 1996.
 - M. Friedman. Capitalism and freedom. University of Chicago Press, 1962.
 - J. Gerring, P. Bond, W.T. Barndt, and C. Moreno. Democracy and economic growth: A historical perspective. World Politics, 57:323-64, 2005.
- S. M. Lipset. Some social requisites of democracy: Economic development and political legitimacy. The American Political Science Review, 53(1):pp. 69-105,
1959.

- H. H. Nax, A. B. Schorr. Democracy-growth dynamics for richer and poorer
Countries. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2698287 , 2015.
 
- J. Schumpeter. Capitalism, socialism and democracy. Harper, New
York/London, 1942.