How “Paperwork Sludge” Keeps Americans From Enjoying Fundamental Rights

Every year, Americans spend 9.78 billion hours filling out federal paperwork. These administrative burdens can make it difficult or impossible for people to vote or to speak freely.

 

 

Photo by Camilo Rueda López, via Flickr [CC BY-ND 2.0]

 

The idea of “deregulation” is usually taken to refer to the elimination or reduction of the kinds of burdens imposed through notice-and-comment rulemaking, as with repeal of rules on the books. Elimination or reduction of paperwork is not generally understood as deregulation. But in view of its costs, material and otherwise, paperwork reduction should be considered a high priority.

 

Over the last decades, the United States has experienced a cost-benefit revolution, in which the benefits of regulations are generally required to justify their costs. To a significant extent, the revolution has bypassed paperwork burdens. This is a major omission. Whenever the government imposes such burdens, it should ask the cost-benefit question. Crucially, it should ask distributional questions as well. Who is helped by paperwork burdens? Who is hurt? The disabled? The poor? The elderly? By how much? As we shall see, the most plausible answers are instructive.

 

There is an additional point. In recent years, behavioral science has played a significant role in thinking about regulation, leading not merely to academic pleas for behaviorally informed initiatives of various kinds but also to actual initiatives in multiple domains, often producing large benefits at low cost. But if we put a spotlight on sludge, we will be interested in something different and insufficiently explored: behaviorally informed deregulation. To be sure, fully rational people, unaffected by behavioral biases, might be, and are, adversely affected by sludge. Behavioral biases of various sorts make sludge especially harmful and sometimes devastating.

 

Even in a highly polarized time, it should be possible to obtain a working consensus for many forms of sludge reduction, which can be sought and enthusiastically approved by people with diverse political convictions. Whatever one’s convictions, one might support sludge reduction for small businesses and startups, in the health care system, in transportation, in education, in occupational licensing, and in many other domains. To be sure, political differences might break out in some contexts—involving, for example, abortion and divorce—where differing moral judgments may lead to radically different evaluations of sludge. But in many contexts, sludge reduction ought to have broad appeal. And even when disagreements do break out, an improved understanding of the importance of sludge, and its concrete effects, can help people to understand where they differ, and exactly why.

 

The 1979 Paperwork Reduction Act (PRA) requires the Office of Management and Budget (“OMB”) to produce an annual report, called the Information Collection Budget of the United States Government (“ICB”). The ICB quantifies the annual paperwork burden that the US government imposes on its citizens. The most recent official report finds that in 2015, Americans spent 9.78 billion hours on federal paperwork.

 

In early 2019, an official running count had the number at 11.25 billion hours; that number is almost certainly more accurate than the 2015 figure, but because it has not been subject to the same level of internal and external scrutiny, I will rely on the 9.78-billion-hour figure here. In spite of significant shifts, the burden has been high for a long time:

 

 

It is worth pausing over those 9.78 billion hours. Suppose that we assembled every resident of Chicago and insisted that for the entirety of 2019, each one must work 40 hours a week engaged in just one task: filling out federal forms. By the end of 2019, the 2.7 million citizens of Chicago will not have come within four billion hours of the annual paperwork burden placed on Americans.

 

The 9.78 billion hours take a significant toll. The Office of Information and Regulatory Affairs (“OIRA”) has not attempted to monetize those hours, though in 2010, it asked for public comments on whether and how to do so. If we value an hour of work at $20, 9.78 billion hours is the equivalent of $195.6 billion—more than double the budget of the Department of State and the Department of Transportation, about triple the budget of the Department of Education, and about eight times the budget of the Department of Energy.

 

The monetary figures greatly understate the problem. Administrative burdens can make it difficult or impossible for people to enjoy fundamental rights (such as the right to vote and the right to free speech), to obtain licenses and permits, to obtain life-changing benefits, or to avoid crushing hardship.

 

“The monetary figures greatly understate the problem. Administrative burdens can make it difficult or impossible for people to enjoy fundamental rights.” 

With respect to the right to choose abortion, such burdens can be decisive impediments. They can also make it difficult for people to receive the Earned Income Tax Credit, which is one of the nation’s most beneficial anti-poverty programs. In short, paperwork burdens have massive negative effects on people’s lives.

 

Professor Richard H. Thaler has coined a helpful term for such burdens: sludge. The term should be taken to refer to the kind of friction, large or small, that people face when they want to go in one or another direction. For their own reasons, whether self-interested for altruistic, private and public institutions might impose or increase sludge. 

 

In the private sector, companies can use sludge to increase profits. For example, people might want to cancel a subscription to a magazine in which they no longer have the slightest interest, but to do that, they might have to wade through a great deal of sludge. In the public sector, sludge may be an accident, but it might also be a political choice. People might want to sign their child up for some beneficial program, such as free transportation or free school meals, but the sludge might defeat them.

 

To obtain financial aid for college, students are required to fill out the Free Application for Federal Student Aid (“FAFSA”). It is long and complicated, and it requires young people to provide information that they might not have (some of it is on their parents’ tax returns). Many students give up. The right to vote may be the most fundamental of all, but a sludge-filled registration process may disenfranchise many millions of people. A sludge-reduction initiative would be a Voting Rights Act.

 

A great deal of evidence establishes that reducing administrative burdens can have a large impact on people’s lives. Millions of people are now benefiting from the Global Entry Program, which reduces time, trouble, and stress in security lines at airports. For free school meals, the US Department of Agriculture has adopted a “Direct Certification“ program, which means that parents do not have to take the trouble to enroll their children at all. If the school district has enough information to know that they are eligible, they are automatically enrolled. In the 2014–15 school year, more than 11 million children benefited from the program (about 91 percent of the eligible population).

 

Simplification of FAFSA dramatically increases the likelihood that low-income people will apply for aid and eventually enroll in college. A number of states have adopted automatic voter registration, which means that if eligible citizens interact with a state agency (say, by receiving a driver’s license), they are registered as voters. In less than a year, Oregon’s automatic registration program produced more than 250,000 new voters, and almost 100,000 of them actually voted.

 

The private sector can do a great deal more to reduce sludge—to help workers choose from among health care plans, to make life easier for consumers and employees with ideas or complaints, and to help people avoid serious risks.

 

The idea of deregulation is usually understood as the removal of formal regulations—those governing the environment, food safety, and motor vehicles, for example. But administrative burdens are regulatory in their own way, and they impose a kind of tax. If they require nearly 10 billion hours of paperwork annually, they are imposing, at a minimum, a cost equivalent to about $200 billion. For both rational actors and those who display behavioral biases (such as inertia and present bias), administrative burdens can impose excessive costs, frustrate enjoyment of rights, and prevent access to important benefits of multiple sorts. 

 

In these circumstances, there is a strong argument for a behaviorally informed deregulatory effort, aimed particularly at paperwork burdens. Such an effort would call for reductions at the level of program design, including radical simplification of existing requirements and (even better) use of default options to cut learning and compliance costs. Automatic enrollment can drive administrative burdens down to zero and have very large effects for that reason.

 

Where automatic enrollment is not possible, officials might use an assortment of tools: frequent reminders; simplification and plain language; online, telephone, or in-person help; and welcoming messages to reduce psychological costs. What is necessary is a heavily empirical approach to administrative burdens, including an effort to weigh their benefits against their costs and a careful assessment of their distributional effects. Are they really helping to reduce fraud? By how much? What are the take-up rates, and how do they vary across populations, including the most vulnerable? What are the compliance costs, in terms of time and money?

 

To be sure, the answers to these questions will not always be self-evident. If sludge discourages the exercise of the abortion right, people will disagree about whether that is a benefit or a cost. To know whether sludge causes losses or gains, we will sometimes run into intense disagreements about values. But in many cases, such disagreements are uninteresting and irrelevant, and acquisition of the relevant information will demonstrate that sludge is not worth the candle. 

 

In the future, it should be a high priority for deregulation and deregulators, for one simple reason: its benefits cannot possibly justify its costs. Time is the most precious commodity that human beings have. Public officials should find ways to give them more of it.

 

Editor’s note: This article is an excerpt from “Sludge and Ordeals, by Cass Sunstein, originally published in the Duke Law JournalCass R. Sunstein is currently the Robert Walmsley University Professor at Harvard. From 2009 to 2012, he was Administrator of the White House Office of Information and Regulatory Affairs. He is the founder and director of the Program on Behavioral Economics and Public Policy at Harvard Law School.

 

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