The best sentence of the day

Czech politics edition. A mistress of current prime minister* has some bodyguards and a car with a driver, paid by Czech taxpayers. She does not have a right to have them, so it has a special category. When asked why she has these benefit when she does not deserve them, a boss of security at the Government (Bureau of G?) replied

"Jde o prevenci. Lidé by ji na ulici pořád obtěžovali s různými otázkami," řekl MF DNES ředitel ochranné služby policie Lubomír Kvíčala.

which could probably be translated to

"It's a measure for prevention (precautionary). People would bother her with questions on the streets." told MF DNES a boss ...

Yeah baby, if you are a politician, people might ask you something on the street. Surely this is the reason why we pay a couple of thousand dollars a months to protect you.

P.S. A mistress adds to your political weight in Czech Republic, so at some point, president, prime minister and the boss of main opposition party had one. It did not help much.

Richard Thaler on Libertarian Paternalism

Richard Thaler introduced at UCSD his new book on Libertarian Paternalism. This seems to be a strange title for a Chicago guy (and he gets some heat from his colleagues) and maybe even an oxymoron (which it's not). The talk was, in short, fascinating. The basic idea is that people are not perfectly rational in every single decision they make (which may sound suspicious to economists, but seems trivial for people), and thus they make mistakes. They even make mistakes in a predictable way. They regret these mistakes. The most frequently used example is 401(k) plan: usually, these are opt-in plans - you get in, save money, your employer gives some more money and life is beautiful. Except that people don't opt-in for some reason. Presumably, they face tough choice (easily 80 different hedge funds), they don't have time to thing and decide etc.They end up not only losing possible returns on their own savings, but also employer's contribution. But if they have the opt-out choice, they stay in and save. The designer (government, employer) who has interest of such people in mind might find useful to use opt-out instead of opt-in system. Everybody is free to go (libertarian), if they want to, but if they don't do anything, they are in (paternalism).
The idea of a design of a system that does something for you if you choose not to do anything, but allows you to leave whenever you go will hopefully get more attention in the future. It does not restrict your freedom (costs of saying "no" are negligible), yet it makes the choice for many people easier and they end up satisfied with this decision.
The idea is not limited to 401(k) plans. Among other fascinating examples, I like the one that saves lives and not money. It's the organ donation status. In some countries (Austria, Belgium, Denmark, Finland, France, Italy, Luxemburg, Norway, Singapore, Slovenia, and Spain), everybody is presumed to be willing to donate his/her organs in case of death - opt out is easy. In other countries (USA), one has to opt-in to be considered a donor.So what?

The result is that in “presumed consent” nations over
90 percent of people make their organs available for donation, whereas in the United
States, the corresponding number is below 20 percent.

( (Cass R. Sunstein and Richard H. Thaler)
Simple policy, simple decision and huge impact.

Example like allow me to hope that libertarian paternalism is a future of applied economics. Previously, government simply regulated (enforced, restricted, forbid or taxed) a behavior. We are at the point in which we understand subtler errors of human behavior. And we can use this knowledge to design existing (or even new) regulations better for everybody, especially if some choice about the design needs to be done. The nice libertarian touch is that nobody is forced to do anything, as long as costs of saying "no" are trivial, which they should.

Anyway, if you have an hour to spare, you can listen to Richard Thaler himself at a very similar talk at EconTalk.org

Designing an information system

[This is not a San Diego related post, even though I was inspired by the comparison of information systems at UCSD, CERGE-EI, and MUNI.]

Governments collect information about everything they can. You have no way to know what they have about it in their databases. Moreover, they sometimes loose some of this information.
The trouble with a loss of information in the USA (or West in general) is bigger than in Czech Republic, because what you need in the US to do things is just the information, but in the Czech Republic, you need papers.
Yet, it is clear that the future is in the databases. Government need and (unfortunately) will need information, it is easy to get and cheap to store... The question is how to manage it so that the people do not object too much. The design of such governmental information is an interesting, though purely hypothetical question, for now.
One has to consider how information is generated, how it is stored and how is it accessed (by whom etc.)
Such system would contain basically the same information that governments already collect
1. Name, birth, info about parents and children, address
2. Driving license, car, insurance...
3. Property (houses, land,...)
4. As a plug in, one might have access to information about health insurance and expenses
5. Social security (benefits), pension.
6. Taxes,
7. Personal ID and passport renewal
8. Education achieved
9. Criminal record

The best selling point of such database would be (online) access to such information. Not only each citizen could access and verify such information, but it is very easy to get rid of most stamps and bureaucracy. Any "official" transcript could be easily printed (with some ID code that would allow verification).

Making such system secure would not be easy. I would like to see password (changing portion of it would be required during login), finger print or iris scan, which would authenticate user against the system.

From the governmental perspective, users should have access using separate (dedicated) network (i.e. not from computers on internet), physically only from their offices. Each officer would have access only to a portion of information relevant for his job. Each access would be logged and will be accessible to the person in question.

[Many small things would need to be done about security...]

Even though such system would simplify access to governmental service, it will take a long time before it could be the only access. Thus, people still would need to able to have physical access. Yet, I would be great to have such system. And it would be fun to develop details of such system...