The default effect
When I taught college classes, nearly every paper my students turned in was in printed in the same font, Times New Roman. Of course, this was not because they were all serif lovers or because they were actually following the instructions supplied on my syllabus; it was because at the time, that was the default on Microsoft Word, which was the default word processor on the university's computers. (In fact, a paper in a different font was often enough to raise suspicions of plagiarism or, more likely, that the student was gaming the specifications to conceal a skimpy word count. Were I teaching today, I'd assign essays with a word count -- not a useless page count -- and I would ask that the count to be listed in the header with the student's name. Of course, few probably would follow these instructions anyway, so it wouldn't get me very far.)
Why this anecdote? To reinforce the main point I took away from Cass Susstein and Richard Thaler's paper on libertarian paternalism, namely that defaults are extremely sticky. Because of inertia, endowment effects, and the general sense that they are chosen benevolently, defaults tend to shape the behavior of many users, who can't be bothered to change them. Or alternatively, they enjoy the freedom from having to choose. Libertarians worry about this sort of thing, because it means, in many cases, that some bureaucrat in Redmond, Washington, has decided what your documents will look like, not you. In order to see what you really wanted your documents to look like, you'd have to be forced to choose a font every time you create a new document. Then we'd have a purer revealed preference.
But often, the point of defaults is to liberate people from choices, which is why a definition of freedom as choice is a bit problematic (unless you want to get all recursive and contemplate choosing not to choose). People rely on defaults when they are essentially indifferent -- when the effort required to choose isn't sufficiently rewarded by satisfaction in whatever choice is eventually made. No font other than Times New Roman will give enough pleasure to make up for the time wasted picking it (unless you are procrastinating, in which case the pointless font picking has a different sort of utility).
A problem may arise, however, in how your acceptance of the default will be understood. The danger is that it might be seen as an active preference for, in this case, the font itself, rather than for sheer indifference. If the default is widely recognized as a nonchoice, then there's little danger. But if it isn't, then you've lost the ability to be neutral on a subject -- to escape being judged for your aesthetics or style regarding typefaces. And the ability to be neutral, to be above judgment and avoid being judged, is becoming more and more valuable as more and more of everyday life is infected with style, and more and more purely aesthetic decisions are forced on us, say, in Target, with its aestheticized toilet brushes. When we can publicly and unequivocally opt for the default, we can escape this trap, preserve a little privacy for ourselves about our tastes, avoid displaying personality in something inane and conserve it for more important matters, the aspects of life we'd actively choose to invest ourselves in. This desire to be left alone is frustrated when no clear default is supplied, and the anxiety created by default-free scenarios may present a business opportunity so compelling that defaultlessness may itself become a default. (It opens up a whole service industry -- spawning advisers and counselors and image consultants and whatnot -- every time consumers are brought to confront unfamiliar choices that will say something about who they are to the world.) Defaults allow us to evade responsibility for choices we don't want responsibility for, even as commercial interests try to thrust that responsibility on us. It has become very hard to evade signaling opportunities, and at some point signaling fatigue must begin to set in and we get sick of having to project our identity at all times and in all things. There is luxury in feeling like it doesn't matter; that you can be the guy who doesn't worry about dressing up for work or having the coolest gadgets or the most up-to-date and exotic music collection or what have you. Freedom from the onus of signaling seems to promise a return to the freedom to actually experience things, as they are -- to enjoy Times New Roman as Times New Roman, even.
So defaults are potentially a force for good, helping stem fashion's creeping into everything. (Would that I had a default option for my wardrobe.) They are so good, it's easy to imagine it coming to pass that we'd have to customarily pay for the privilege of having defaults set for us, to pay for the permission not to choose. The proliferation of services that do your shopping for you are an intermediate stage toward this, I think. Outsourcing decision making might be the next wave of conspicuous consumption; there just needs to be clear ways to signal that you aren't behind the wheel of your lifestyle. At that point, we will have come full circle, and the desire to wish to avoid signalling will have itself become something that we signal to accrue status.
You don't have to be a postmodernist to realize that some sort of default setup is impossible to avoid. The terms are always already given in some way that shapes the resulting circumstances, so there's no transcendental signified of defaults -- nothing that can stand outside the realm of influence and connotation. There is no neutral way to present things so as to not already embed possibly coercive interpretations or default settings or implications or emphases. Susstein and Thaler are especially clear about this.
If the entitlement-granting rules seem invisible, and to be a simple way of protecting freedom of choice, it is because they appear so sensible and natural that they are not taken to be a legal allocation at all. But this is a mistake. What we add here is that when a default rule affects preferences and behavior, it is having the same effect as employer presumptions about savings plans. This effect is often significant.
So monetizing defaults isn't about withholding them so much as making them as undesirable as possible and charging to make them less undesirable. (Maybe Microsoft could make Comic Sans the default and charge for an explanation of how to change it.) With regard to Susstein and Thaler's concern with opt-in 401(k)'s, that's what employers are already doing. It's no accident that you have to enroll in savings programs in America -- the failure of many employees to do so on account of the default effect means they are leaving money on the table for the employer to keep. The defaults are arranged to benefit employers rather than employees, thus employers will resist any changes to this system and would likely lobby to preserve the status quo. As long as a default effect exists in consumers (and short of radical psychological breakthroughs, it will continue to exist), whoever controls the defaults, controls a source of revenue -- somewhere a long the line they can be rigged to someone's benefit. "Free market" boosters would like to see control of this revenue source remain in the hands of private business -- usually this argument is presented as protecting consumers from "paternalism," from someone making choices for them, which sounds bad only until you think about all the choices you are too lazy to make. (Incidentally, one of the main reasons I am still without a cell phone -- I'm too lazy to figure out the best deal and haven't convinced myself that the benefits outweigh the effort required to get over this hurdle. This may be the true definition of fogeydom. Lots of old-timers out there probably feel the same way about computers and such.) The government could also regulate defaults in more circumstances, beyond the "defaults" of our legal environment, with the idea being it has less reason not to put the public's interest first (by making 401(k)'s opt-out by law, say). But politicians are corruptible, and lousy defaults embedded at the government level may be harder to root out than others.
Exploiting default settings ultimately has to do with capitalizing on how we habitually process information, something advertisers and marketers have been exploiting for years. Since advertisers have staked a claim to these methods, and have honed them through testing them in the battle for market share, it may be harder for the government to use them in the public interest and pass them off as neutral (even though the are just subtle modes of manipulation) or benevolent. Instead, these manipulative techniques -- Vance Packard's "hidden persuaders" -- bear the disreputable stigma of being employed primarily to bilk us and have it be our fault, as it derives from our ill-considered thinking or our lazily accepting things as they are. Rather than adopt these methods itself, the government might more constructively work to educate individuals away from their inherent behavioral tendencies -- but this kind of social cognitive therapy might be the most paternalistic approach of all.