More Than You Wanted to Know

More Than You Wanted to Know: The Failure of Mandated Disclosure

Omri Ben-Shahar
Carl E. Schneider
Copyright Date: 2014
Pages: 272
https://www.jstor.org/stable/j.ctt5hhrqj
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  • Book Info
    More Than You Wanted to Know
    Book Description:

    Perhaps no kind of regulation is more common or less useful than mandated disclosure-requiring one party to a transaction to give the other information. It is the iTunes terms you assent to, the doctor's consent form you sign, the pile of papers you get with your mortgage. Reading the terms, the form, and the papers is supposed to equip you to choose your purchase, your treatment, and your loan well.More Than You Wanted to Knowsurveys the evidence and finds that mandated disclosure rarely works. But how could it? Who reads these disclosures? Who understands them? Who uses them to make better choices?

    Omri Ben-Shahar and Carl Schneider put the regulatory problem in human terms. Most people find disclosures complex, obscure, and dull. Most people make choices by stripping information away, not layering it on. Most people find they can safely ignore most disclosures and that they lack the literacy to analyze them anyway. And so many disclosures are mandated that nobody could heed them all. Nor can all this be changed by simpler forms in plainer English, since complex things cannot be made simple by better writing. Furthermore, disclosure is a lawmakers' panacea, so they keep issuing new mandates and expanding old ones, often instead of taking on the hard work of writing regulations with bite.

    Timely and provocative,More Than You Wanted to Knowtakes on the form of regulation we encounter daily and asks why we must encounter it at all.

    eISBN: 978-1-4008-5038-9
    Subjects: Law, Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. PREFACE
    (pp. ix-x)
  4. PART I THE UBIQUITY OF MANDATED DISCLOSURE
    • CHAPTER 1 INTRODUCTION
      (pp. 3-13)

      “Mandated disclosure” may be the most common and least successful regulatory technique in American law. It aspires to help people making unfamiliar and complex decisions while dealing with specialists by requiring the latter (disclosers) to give the former (disclosees) information so that disclosees choose sensibly and disclosers do not abuse their position.

      For example: You are mortgaging your new house. Or considering prostate-cancer surgery. Or buying software on line. Or being questioned by the police. You’ve never faced your choice before. It turns on much you do not understand. The specialists you’re dealing with—lenders, doctors, vendors, and police—understand...

    • CHAPTER 2 COMPLEX DECISIONS, COMPLEX DISCLOSURES
      (pp. 14-32)

      Chapter 1 introduced mandated disclosure as a distinctive regulatory technique used in an impressive range of areas. It argued that while some disclosures may sometimes help some people, mandated disclosure poorly serves its goal of leading disclosees to make good decisions about unfamiliar and complex choices in interactions with knowledgeable parties. This chapter describes mandated disclosure. The problem mandated disclosure addresses is both intensive and extensive. It is intensive because decisions are so truly unfamiliar and so greatly complex that considerable learning is needed to understand them. The problem is extensive because these decisions arise so profligately.

      The decisions mandates...

    • CHAPTER 3 THE FAILURE OF MANDATED DISCLOSURE
      (pp. 33-54)

      Chapter 2 revealed mandated disclosure’s magnificent ambition. Thousands of disclosures provide billions of words to help us with millions of decisions, typically unfamiliar and complex, often consequential. If mandated disclosure works, it is truly the wonder its enthusiasts rejoice in. But if decisions are as complex and numerous as chapter 2 suggested, can it work? This chapter begins to answer that question.

      Our evaluation comes in several forms and several stages. This chapter traverses a few. First, we ask a rarely posed question: by what standard should we assess mandated disclosure? We principally use the standard lawmakers and disclosurites set...

  5. PART II WHY DISCLOSURES FAIL
    • [PART II Introduction]
      (pp. 55-58)

      Part I concluded by introducing evidence that mandated disclosure does not achieve the results set for it. Part II has three primary tasks: First, to explainwhy. Second, to present evidence confirming our argument that mandated disclosure doesn’t work. Third, to begin to argue that the reasons it fails are so basic and so many that it is irreparable.

      At the heart of disclosure’s failure is that people want and use it too little. Studies numerously testify that people don’t notice disclosures, don’t read them if they see them, can’t understand them if they try to read them, and can’t...

    • CHAPTER 4 “WHATEVER”: THE PSYCHOLOGY OF MANDATED DISCLOSURE
      (pp. 59-78)

      When one researcher gave her subjects the consent forms that the law mandated, they would say, “Whatever.”¹ That whatever—that verbal rolling of the eyes—captures much in disclosees’ response to disclosures. Why?

      “Whatever” is the first of several obstacles in mandated disclosure’s path, for the attitudes it reflects are inimical to disclosurite assumptions. We begin describing those obstacles with evidence that many disclosees resist making the decisions the disclosures address, make them with incomplete information, and thus skip or scant many disclosures. Such disclosees are unlikely to use disclosures in ways that would make mandates effective.

      We open our...

    • CHAPTER 5 READING DISCLOSURES
      (pp. 79-93)

      Chapter 4 identified a principal reason mandated disclosure fails: it rests on false assumptions about how people think, act, and live. People tend to be averse to making many unfamiliar and complex decisions, so they are inclined to avoid making (or at least to postpone) choices about them and tend to make them with less information and care than disclosurites desire. This reduces people’s incentives to read, study, and use disclosures. Those incentives are further diminished by the conclusion many disclosees reach—at varying degrees of awareness—that the costs of using disclosures often exceed the benefits. People are confirmed...

    • CHAPTER 6 THE QUANTITY QUESTION
      (pp. 94-106)

      Chapter 4 identified a principal obstacle to mandated disclosure: its false assumptions about what people think, do, and want. Disclosurism imagineshomo arbitergratefully using disclosures to make well-considered decisions. Yet people tend to be decision averse—to resist making the kinds of decisions mandates address and to resist making them in the informed ways disclosurites desire. So disclosures go unstudied and even unread. Chapter 5 continued by arguing that the gap between the literacy it would take to understand disclosures and the literacy disclosees have can make the learning from disclosures too wispy to justify the trouble.

      Chapter 6...

    • CHAPTER 7 FROM DISCLOSURE TO DECISION
      (pp. 107-118)

      We have now asked what disclosees want, perceive, accept, understand, and remember. Failure at any step can defeat disclosures, and at each step failure is common. Decision aversion can make audiences inattentive and reluctant. Illiteracy renders many disclosures useless. And the overload and accumulation problems discourage and stop many disclosees. But there is more. We have concentrated on cognitive problems with information. But solve them and other barriers to better decisions remain.

      First, people making decisions often need information about themselves that mandated disclosure cannot provide. Second, disclosure’s usefulness is limited by problems other than ignorance. People err because they...

  6. PART III CAN MANDATED DISCLOSURE BE SAVED?
    • CHAPTER 8 MAKE IT SIMPLE?
      (pp. 121-137)

      If disclosure is defeated by complexity, can simplicity save it? For disclosurites,faites simpleis almost as axiomatic as full disclosure, for it seems to respond so directly to so much of the critique of disclosure. If words are polysyllabic, be monosyllabic. If writing is jargon ridden, free it. If presentations are muddled, standardize them. If documents are long, shorten them. If disclosures describe too much, describe less. Unfortunately, simplification is a complex business, not readily mastered. And simplification is in tension with the full disclosure principle.

      Put differently, simplification does not respond to many of our criticisms. Even a...

    • [Illustrations]
      (pp. None)
    • CHAPTER 9 THE POLITICS OF DISCLOSURE
      (pp. 138-150)

      Parts I and II analyzed mandated disclosure’s failure to achieve its goals. Part III is asking whether it can be rescued. Chapter 8 found simplification unsuited to the task. This chapter argues that even if simplification could be achieved, it would often be defeated by the irrepressible expansionism of mandates. That expansionism has two forms. First, ever more social problems are regulated through mandated disclosure. Second, once mandated, disclosures tend to grow to cover more aspects of an issue in more detail. The politics of lawmaking, then, helps explain whyfaites simplefails. The remedy for failed disclosure is more...

    • CHAPTER 10 PRODUCING DISCLOSURES
      (pp. 151-168)

      In part III we have been asking whether mandated disclosure can be saved from the evidence of failure in part I and from the reasons for its failure in part II. Chapter 8 concluded that, whatever its occasional merits, simplification could not rescue mandated disclosure as a regulatory method, largely because the complex isnotsimple and can rarely be made so well. In chapter 9 we saw simplification undercut by lawmakers that create new mandates and expand old ones.

      Part II primarily discussed disclosees’ problems with disclosures, and chapters 8 and 9 asked whether simplification could diminish them. But...

    • CHAPTER 11 AT WORST, HARMLESS?
      (pp. 169-182)

      Hillman and O’Rourke recite a common and consequential idea about mandated disclosure—the harmlessness hypothesis. Justice Breyer thinks disclosure is popular despite frequent ineffectiveness because “at worst, too much information, or the wrong information, has been called for.”¹ The harmlessness hypothesis goes without substantiating evidence; underlying it is probably both the more-information-is-better mantra and a rough judgment that disclosure’s burden is so negligible that even slight and spotty benefits would outweigh it.

      Mandated disclosure is not harmless if its costs outweigh its benefits. This chapter argues that mandates have costs, sometimes big ones. Mandates can do harm, harm that is...

    • CHAPTER 12 CONCLUSION: BEYOND DISCLOSURISM
      (pp. 183-196)

      We end as we began: If mandated disclosure is everywhere, if it fails widely, if it cannot be fixed, and if it can do harm, lawmakers should stop using it, commentators should stop proposing it, and interest groups should stop advocating it unless they can convincingly show that this time itreallyis different. Disclosure is not always useless. Information can be vital. Mandates may sometimes help. But mandated disclosure is so indiscriminately used with such unrealistic expectations and such unhappy results that it should be presumptively barred. This would spare the world much pointless regulation and might help drive...

  7. NOTES
    (pp. 197-224)
  8. INDEX
    (pp. 225-229)