The Disclosure Crisis

By M. Ryan Calo

Posted on March 5, 2013


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The Washington Law Review hosted a symposium Thursday entitled “The Disclosure Crisis,” which covered everything from privacy policies to restaurant hygiene grades. The gist of the conference, on my view, was that the only thing piling up faster than examples of mandated disclosure as a regulatory strategy is the evidence it does not work. Time and time again, officials choose to intervene in a given area by requiring companies and others to reveal information so that individuals can protect themselves and police the market. And time and time again, disclosure ends up helping few if any consumers or citizens actually make better decisions.


I have been thinking about notice for some time and so was delighted to discuss with Carl Schneider his and Omri Ben-Shahar’s new book More Than You Wanted To Know: The Failure of Mandated Disclosure—a kind of culmination of notice skepticism. I would encourage anyone interested in the topic to pick up the book when it comes out from Princeton in a few months, even if you have read the article upon which it is based. The manuscript I read was full of examples and nuance that could not fit into a single paper.


Equally interesting was Richard Craswell’s response, forthcoming in Washington Law Review. Craswell argues that we cannot know whether notice has failed unless we know what success looks like. His draft draws a distinction between “static” disclosures, which aim to assist decision-making by consumers, and “dynamic” disclosures, which aim to improve the options that are available in the market. Craswell furnishes several criteria for static and dynamic success and shows how each may permit better cost-benefit analysis of whether mandating disclosure is a good way to tackle a given problem. Again, I hope you read Craswell’s work when it appears in print later this year.


The extent of agreement between Schneider and Craswell—that (1) notice is popular, (2) notice seldom works as advertised, and (3) more cost-benefit analysis with respect to mandated disclosure is warranted—should hardly surprise. These are longstanding and careful students of information policy bringing to bear similar tool kits on the problem. What surprised me—not just on our panel, but throughout the day—was the seeming agreement among many participants about just what notice or disclosure actually is.


Because I think this is a really hard question. Take, for instance, the graphic warnings the Food and Drug Administration wants to put on cigarettes. Rather than tell you the nation’s top doctor thinks cigarettes are bad for you, graphic warnings contain images calculated to shock. One warning depicts a woman crying uncontrollably; another shows a dead body lying in a morgue. On one read, graphic warnings are just that: warnings. They convey information to the consumer about the dangers of smoking, albeit in a highly visceral format. This was the view of the U.S. Court of Appeals for the Sixth Circuit, for instance, which recently upheld the warnings as mere “information” as against a First Amendment coerced speech challenge by big tobacco.


But another view is that graphic warnings are really about making it harder, psychologically, to smoke. They are really a “nudge,” to borrow a word from Richard Thaler and Cass Sunstein, or “psychic tax” to crib from George Loewenstein. After all, as the D.C. Circuit found in recently striking down the very same warnings as coerced speech, the FDA’s own reasons for adopting the warnings included the effect similar warnings had in reducing smoking in Europe. Sure, you can make a company convey true facts about its product, but purposefully forcing a company to turn off its own customers on the product is a horse of a different color. Given the disagreement and its import, the issue seems likely to end up in the Supreme Court.


In my remarks on Thursday at the symposium, and in a new essay entitled Code, Nudge, or Notice?, I explore just how hard it can be to sort regulatory interventions into neat categories like notice, and why this matters. Thoughts warmly welcome. But for now, I just wanted to say how much I enjoyed the event at my home institution on Thursday and the comments of Schneider, Craswell, Concurring Opinions’ own Deven Desai, Woodrow Hartzog, Zahr Said, Jeremy Sheff, and others. I hope readers of this blog get a chance to watch the proceedings on YouTube and read the symposium book when it comes out.


The preceding is re-published on TAP with permission by its author, Ryan Calo, Assistant Professor of Law at the University of Washington. “The Disclosure Crisis” was originally published on Concurring Opinions on March 2, 2013.

 



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