And what do you do when you want to get people to spend rather than save, as both Presidents George W. Bush and Obama did when they struggled to stimulate economic recovery with tax rebates? The rebates by themselves would put more money in people's pockets, but that wouldn't help unless they spent it. When people got rebates under Bush, they got them in lump-sum checks, and estimates are that about 50 percent of that money was spent. When people got the Obama rebates, they came as small additions to each paycheck. A substantially higher proportion of the money was spent, making for a more effective stimulus, even as (or perhaps because) people were less aware they were getting more money back.
Again, knowledge of the psychology of economic decision-making leads you to expect just such an effect. Indeed, the Obama rebates were delivered in the way they were for just this reason; he had people with psychological sophistication whispering in his ear.
When it comes to public policy, economics sits atop the social sciences. Since virtually any policy you can think of involves spending money, the advice of economists is always solicited. But if they don't do an adequate job advising about the economy itself, you can be sure that they fall short advising on other matters.
TEACHING TO THE TEST VS. TEACHING CHARACTER
There has been much justified hand wringing about the state of American education. We have clearly lost our privileged position in the world. Improving education will require recruiting and retaining excellent teachers and finding ways to motivate students. How can this worthy goal be achieved? At the moment, we're pointing in the direction of school choice and competition to produce better schools, higher pay to produce better teachers, big tests to monitor student performance, and financial incentives to motivate students. A bunch of carrots and sticks.
Will these kinds of measures be enough? A recent National Research Council review of efforts throughout the U.S. to incentivize school performance concluded that the effects have been small or nonexistent, even when the incentives were substantial. And when big-test accountability does produce improvement in test scores, it is often as a result of teaching to the test or outright cheating. Research in psychology suggests that more important than pay (as long as it is adequate) are working conditions that allow teachers to be flexible, autonomous, and creative in their work with students, that provide them with mentoring, and that give teachers a sense that they are working in a community that has a common purpose.
From this perspective, the regimentation of instruction ushered in by big-test accountability is actually counterproductive. There is also growing evidence, some of it provided by psychologists Carol Dweck and Angela Duckworth, that the focus on beefing up the cognitive components of education that has dominated reform for the last 30 years may be misplaced. More important may be efforts to cultivate motivation and character (Paul Tough's remarkable new book, How Children Succeed, provides a vivid summary of this work). The importance of character and motivation suggests that the drill-and-test model of education that has become so common may actually be not just ineffective, but counterproductive.
A Council of Psychological Advisers could help inform the design of environments that will encourage students and teachers alike.
RISING HEALTH CARE COSTS, THANKS TO CHRONIC DISEASES
Everyone should have health insurance. This is a necessary, but not sufficient, goal for the maintenance of the health of the nation. But the cost of health care must also come down, lest it bankrupt the country. Computerized medical records that produce coordination of care will help bring down costs, but we also need to help patients (and their doctors) understand how to think about the efficacy and the risks involved in various medical procedures. There is plentiful evidence that patients make serious mistakes in thinking about risks and efficacy, and that their doctors make the very same mistakes, leading to costly but unnecessary procedures. Moreover, most medical care in a developed country like the U.S. involves management of chronic conditions (hypertension, heart disease, diabetes, asthma) rather than cure of acute diseases.
Managing these conditions effectively demands that patients be partners; they need to make lifestyle changes (e.g., diet, smoking, and exercise) that are often difficult to adhere to. A Council of Psychological Advisers can help in designing formats for presenting evidence about the efficacy and risks of various treatments that will reduce misunderstanding and thus reduce unnecessary procedures. And it can help develop interventions that will make patients health care partners more effective.