“Nudge” Theory and the Gerken Disclosure Proposal

September 24, 2014
posted by Bob Bauer

At this time, we have going several distinctive programs for addressing contemporary campaign finance questions:

(1) Reliance on strengthened “command and control” measures—that is, more reform to counter “circumvention” of the 1970s-era regulatory framework and rebuild it on a more secure footing;

(2) Public financing proposals;

(3) Deregulation;

(4) Constitutional change, either through

(a) an amendment; or

(b) a change in the Court and its jurisprudence (pressing for the Court to adopt doctrinal changes, whether by expanding the corruption rationale or adding in another like political equality).

And then there is a fifth category, “soft regulation,” the leading example of which is Heather Gerken’s proposal that organizations that do not disclose their donors be required to affix a notice to that effect in their advertising.

This last is entirely new stuff, which is welcome in a field featuring, most of the time, more of the same.  It challenges critics to consider whether there is an alternative to the  command and control regulatory technique that has proven divisive and undependable.  And it does so through a variant of “nudge” theory at a time when its application to other fields of social policy is drawing considerable attention.  See, e.g., Cass R. Sunstein, Why Nudge?: The Politics of Libertarian Paternalism (2014); Jeremy Waldron, It’s All for Your Own Good, The New York Review of Books (Oct. 9, 2014) (book review), available at http://www.nybooks.com/articles/archives/2014/oct/09/cass-sunstein-its-all-your-own-good/.  So it can be expected that Gerken’s creative proposal to reconceive campaign finance regulation in these terms will generate, as it should, lively discussion.

The Gerken disclosure proposal relies on nudges in two directions. The audience for the advertising is alerted to the advertisers’ policy or practice of not disclosing its financial sources.  The nudge is toward a skeptical evaluation of the ad: the viewers or listeners are encouraged to discount the message if the sponsor won’t reveal who is paying for it.  The organization, faced with the loss of credibility, is nudged toward a reconsideration of its policy or practice, but it is not required to do anything.

A chief aim of the proposal is to end the game of “whack-a-mole” that ensues as organizational forms evolve and regulation tries to catch up.  The no-disclosure disclosure applies to the ad, not the organization, relieving regulators of having to refashion rules as political committees become unregistered “527s” and then are reborn as 501(c) organizations or taxable non-profits, and thereafter whatever else comes next.  Another virtue it claims is that it nudges only toward results that the legislature could engineer by direct regulation, within existing constitutional authority, and yet it is only a nudge, the gentlest possible application of that authority.

Under this nudge proposal, the government is both supplying a fact and then suggesting what inference the voters should draw. In directing that voters be informed that the organization does not disclose donors, the government is favoring the inference that the information should have been provided and that the message should be evaluated in light of the failure to have done so.  Yet the organization is not violating any law in declining to supply the information, and may have very good reasons that voters have never considered as to why it does not offer this disclosure.

Of course, every system reflects architecture—we don’t begin from neutral—and here the government builds in a feature that promotes both disclosure and the voters’ awareness of its usefulness in evaluating a political message. But the government may be seen to be doing  more than that, namely, effectively weighing in on the credibility of a political message.

Is there a material difference between the government mandating disclosure of facts, and the government inviting inferences in the absence of facts, in the First Amendment realm—particularly where the government is doing indirectly what it could, if it chose to do so, accomplish more directly by legislative mandate?

It is useful in considering the question to imagine applications other than the one Professor Gerken has developed for disclosure, such as a requirement that candidates disclose certain data about contributions: the average contribution and the geographic concentration of the giving. The required notice might read: “X has received as of [date] an average contribution of Y, Z% of which has been received from contributors within her state.”  Here the government is inviting another set of inferences—that the smaller the average donation, the better, and that fundraising concentrated within the candidate’s electoral jurisdiction is superior to fundraising outside of it.  But the judgments behind these favored inferences are topics of active dispute.  Justice Stevens and Sean McCutcheon, for example, don’t see eye to eye on the question of whether candidates should be funded only by their state or district residents, and the Supreme Court by a one-vote margin is sympathetic to McCutcheon.  It is not clear on what claim the government would inject itself into these public arguments with a position of its own, advocated via a nudge.

A nudge like this one is different from a move like the much-discussed default rule that provides for automatic enrollment in a benefits plan and requires the enrollee who does not want the benefit to specifically opt out. It is a softer form of paternalism, some might say: “just disclosure.” Even on nudge theory’s own terms, however, this disclosure does not escape a challenge to its content and its purpose. The proposed content does not merely inform; it is meant to be persuasive, at a minimum to flash a warning. And the persuasive message forces front and center the issue of “impermissible motivation,” which in this instance is the issue of the government’s role in guiding judgment about the value or credibility of a political message.  See generally Sunstein at 159-161. (“The Problem of Impermissible Motivation”).  This is far from a case like the default rule, where the government is at least performing an accepted function: determining how best to advertise and disseminate the benefits of social programs that it is charged with administering.

Jeremy Waldron insists that nudge theorists are substituting elite judgments for choices that rightly should vary individual by individual, and that they have overlooked or slighted the cost to dignity and autonomy.  Sunstein disagrees.  Whatever the merits of these arguments, they concern the political implications of a course of public administration, whereas the introduction of nudge into campaign finance brings the government into the thick of political debates over the question of how voters are to sort out which messages to believe or how much they should trust them.   Is the notice proposed by Gerken a nudge, or is it a nose under the tent, positioning the government as an active participant in political debates?

The novel Gerken proposal has the considerable merit of raising this and other questions. She has succeeded brilliantly in recasting other election law debates, as she did with her proposal of a Democracy Index, which then sped to full-fledged implementation and is a major contribution to election administration.   With her nudge proposal, Heather Gerken is asking whether there is another, new way to think about disclosure, and any new way proposed for campaign finance is well worth thinking about.

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