Popular in Economics

Central Monetary Authorities

Macroeconomic modelling of CBDC: a critical review

European Central Bank Ulrich Bindseil

Central Monetary Authorities

Financing Private Credit

Federal Reserve Bank of New York Nina Boyarchenko

Economics

Failing Banks

Massachusetts Institute of Technology Emil Verner

Economic History

Golden Fetters

UC Berkeley Barry Eichengreen

Economic Inequalities

Visions of Inequality

City University of New York Branko Milanovic

Economics

School Finance Equalization Increases Intergenerational Mobility

Yale University Barbara Biasi

Economics

Olivier Blanchard on U.S. Pandemic-Era Inflation

Peterson Institute for International Economics Olivier Blanchard

Freedom counts: cross-country empirical evidence

View more insights in Social Sciences - Economics - Behavioral economics

View more figures from University of Southampton

View the page of Joao V. Ferreira

Read the Study

Next in Behavioral economics

Strategic Conformity or Anticonformity to Avoid Punishment and Attract Reward

Urs Fischbacher | University of Konstanz

A Family of Norms: Related Beliefs about Female Labor Force Participation

Elif Incekara Hafalir | University of Technology Sydney

Joao Ferreira discusses how people evaluate different sets of opportunities in terms of welfare and freedom of choice.

Image courtesy of interviewee. May 29, 2024

Log-in or Sign-up to Faculti
Currently viewing this subject insight as a guest. You have insight(s) remaining for this month. Login to view 8000+ figures on the platform.

Generating Workspace...

Export as PDF

The provided text discusses how individuals make choices in various opportunity sets, such as restaurants, hospitals, or schools, which are curated by organizations. It emphasizes the importance of menu design by companies and governments and raises the question of how people evaluate these options. The traditional economic perspective suggests that only the best alternative matters for decision-making, but the authors propose that people might assign intrinsic value to freedom of choice itself, valuing the presence of options even if they do not intend to choose them.

The research presented investigates two main questions: whether people value freedom of choice intrinsically, and how they compare different sets of opportunities in terms of freedom and welfare. The authors employ a novel survey methodology with around 5,000 participants across 10 countries to collect empirical data on these topics.

Findings reveal that over 80% of participants express intrinsic value for freedom at least once, and almost 50% show this value when there’s a conflict between freedom of choice and the best alternative. Most participants also tend to evaluate freedom primarily by the number of options available, rather than the quality of alternatives in those options. Moreover, while evaluating overall welfare, most people focus on the best alternatives available, showcasing varied opinions on what constitutes a good opportunity set.

The results are largely consistent across different cultural backgrounds, indicating that the intrinsic value of freedom is a widespread attitude. The findings have implications for policymakers, suggesting that providing more options can enhance individual satisfaction even if it doesn’t change actual choices made.

Future research directions include expanding the understanding of intrinsic freedom in various contexts, how it relates to incentives, and investigating potential behavioral implications in contexts like voting.

Language:

Export as PDF

Export as PDF
Here are some key quotes and concepts from the video regarding the intrinsic value of freedom of choice and how people evaluate opportunity sets:

1. **Definition of Opportunity Sets**:
- "People often make choices in opportunity sets or menus of options that are designed by companies, governments, or other institutions."

2. **Importance of Menu Design**:
- "Companies, governments, and other institutions have a choice on how to design these menus of options."

3. **Intrinsic Value of Freedom**:
- "There is a large theoretical literature in both economics and philosophy that argues that freedom has intrinsic value."

4. **Freedom as a Developmental Tool**:
- "More freedom of choice is important to develop mental faculties such as judgment and self-control."

5. **Research Goals**:
- "First we look at if people attach intrinsic value to freedom of choice...there is no direct evidence on this issue previously."

6. **Methodology Insights**:
- "We use a novel survey-based controlled methodology to study this question."

7. **Empirical Findings on Freedom**:
- "We find that an overwhelming majority of participants, more than 80%, reveal that they attach intrinsic value to freedom at least once."

8. **Conflict Between Freedom and Quality**:
- "We look at comparisons of menus of hospitals where participants state there is a conflict between freedom of choice and the best alternative."

9. **Evaluation of Menus**:
- "This means that adding alternatives to menus increases freedom of choice even if the added alternatives are bad ones."

10. **Welfare and Alternative Quality**:
- "Most people focus on the quality of alternatives when ranking sets in terms of overall welfare."

11. **Cross-Cultural Consistency**:
- "Our results are strikingly similar across countries in very different social, cultural, and institutional backgrounds."

12. **Policy Implications**:
- "Our results can inform policymakers on how to compare different opportunity sets if they wish to respect people's preferences over menus."

13. **Future Research Directions**:
- "It is relevant to understand to what extent the intrinsic value of freedom holds in different convideos besides the hospital setting."

These quotes summarize the main themes of the video, including the significance of freedom of choice, the intrinsic value assigned to it by individuals, and the implications for policy and further research.

X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.000 --> 00:02.805
People often make choices in opportunity sets

00:02.905 --> 00:06.325
or menus of options that are designed by companies,

00:06.325 --> 00:08.405
governments, or other institutions.

00:08.785 --> 00:11.805
For example, think of when you choose dish in a restaurant

00:11.945 --> 00:14.045
or when you choose between different hospitals

00:14.045 --> 00:16.885
to undertake care, or when you choose a school for your kids

00:16.945 --> 00:19.205
or even a pension scheme in your company.

00:19.985 --> 00:22.525
All these choices are made in menus of options

00:23.075 --> 00:24.445
that have been selected for you.

00:24.545 --> 00:26.205
So the restaurant selects the dish,

00:26.345 --> 00:28.565
the government selects one option, one hospital,

00:28.705 --> 00:29.965
or several hospitals

00:30.035 --> 00:33.445
that you can take under undertake care on and so forth.

00:34.035 --> 00:36.165
Therefore, companies, governments,

00:36.165 --> 00:39.445
and other institutions have a choice on how

00:39.445 --> 00:41.765
to design these menus of options.

00:42.545 --> 00:44.005
It follows that if governments

00:44.005 --> 00:48.285
and companies want to tailor the design of these menus,

00:48.285 --> 00:51.125
taking into consideration what people want,

00:51.465 --> 00:53.205
or in other words, taking the wheel

00:53.205 --> 00:56.445
of the people into consideration in their policy decisions,

00:57.185 --> 00:58.685
it becomes an important question.

00:59.425 --> 01:01.965
How people evaluate different opportunity sets,

01:02.225 --> 01:04.285
or putting it into simpler terms.

01:04.875 --> 01:06.885
What makes an opportunity set a good one

01:06.885 --> 01:08.085
or a bad one for people?

01:09.225 --> 01:11.965
And in economics, the standard view has been

01:11.965 --> 01:15.805
and continues to be that what only matters is the quality

01:15.865 --> 01:18.205
of the best alternative for the person choosing.

01:18.745 --> 01:20.965
So think of the example of the restaurant.

01:21.825 --> 01:23.725
As long as your favorite dish is available,

01:24.095 --> 01:26.205
other options in the menu are not important.

01:26.785 --> 01:29.845
So this means that in an important respect for our study,

01:30.195 --> 01:32.205
that having more freedom of choice in terms

01:32.205 --> 01:35.445
of having more options available is not important

01:35.665 --> 01:38.805
unless it brings, a better option, right?

01:38.825 --> 01:40.645
So in, in the example of the restaurant,

01:41.025 --> 01:44.605
unless having more options will bring a, a, a dish

01:44.605 --> 01:47.205
that you prefer, it doesn't matter.

01:47.585 --> 01:50.165
So this is the dominant, view in economics,

01:50.165 --> 01:52.725
but of course, there are other perspectives on

01:52.725 --> 01:54.685
how we should evaluate menus of options.

01:55.225 --> 01:58.325
For example, there is a large theoretical literature in both

01:58.645 --> 02:02.405
economics and philosophy that argues that freedom

02:02.705 --> 02:03.885
as intrinsic value.

02:04.065 --> 02:05.085
So what does that mean?

02:05.155 --> 02:08.125
Well, it means that having more options in a menu can be

02:08.685 --> 02:10.125
valuable even if these,

02:10.125 --> 02:12.485
those options are not going to be chosen.

02:13.035 --> 02:15.765
Well, we might be asking why would people value

02:15.765 --> 02:16.845
freedom intrinsically?

02:17.275 --> 02:20.485
Well, potential reasons for it is that more freedom

02:20.545 --> 02:23.805
of choice is important to develop mental faculties such

02:23.805 --> 02:25.325
as judgment and self-control.

02:25.465 --> 02:28.245
And this was an argument already made, long ago

02:28.265 --> 02:29.605
by John Stewart Mill.

02:29.665 --> 02:32.645
So the idea is that having more options available,

02:33.185 --> 02:34.805
you might be able to to,

02:34.945 --> 02:37.285
to develop those mental faculties more easily.

02:37.865 --> 02:40.525
So another reason would be that having more freedom

02:40.625 --> 02:43.805
of choice might be directly beneficial for your wellbeing.

02:43.805 --> 02:45.885
So people might care about having more options

02:45.885 --> 02:47.125
for its own sake.

02:47.425 --> 02:50.685
And this was an argument more recently made by a Marti san.

02:51.625 --> 02:53.885
And not importantly that both these reasons

02:54.465 --> 02:56.565
do not necessarily depend on

02:56.565 --> 02:58.845
what is ultimately chosen. So that's the

02:58.845 --> 03:01.485
Idea of the intrinsic value.

03:01.985 --> 03:05.925
In this research project, co-author with Noki Fabric,

03:06.755 --> 03:08.765
Eric Kar and Beit Tahu,

03:09.105 --> 03:11.445
we tackle two important empirical questions.

03:11.665 --> 03:14.765
So first we look at if people attach intrinsic value

03:14.765 --> 03:17.885
to freedom of choice to the best of our knowledge,

03:18.015 --> 03:20.925
there is no direct evidence on this issue previously.

03:21.385 --> 03:24.525
And one of the reasons for this is that it's very difficult

03:24.525 --> 03:26.245
to isolate the intrinsic value

03:26.245 --> 03:29.565
of freedom in obs in observational field data.

03:29.785 --> 03:33.605
So in a field setting, people may value having more freedom

03:33.785 --> 03:37.245
for the benefits it brings in terms of the chosen option.

03:37.245 --> 03:39.405
So having more freedom may bring an option that

03:39.405 --> 03:40.445
that, that you prefer.

03:40.785 --> 03:42.885
And this will come be a confound

03:43.225 --> 03:45.565
to identifying the intrinsic value of freedom.

03:46.185 --> 03:48.165
And so that, that's one of the reasons why,

03:48.305 --> 03:50.205
as I will explain, in a second,

03:50.345 --> 03:53.845
we use a novel survey-based controlled methodology

03:54.505 --> 03:55.725
to study this question.

03:56.985 --> 03:59.525
Now, investigating this question contributes

03:59.525 --> 04:02.285
to several literatures in economics, studying topics

04:02.305 --> 04:04.845
around freedom, opportunities and paternalism.

04:04.945 --> 04:06.365
For example, as I alluded

04:06.385 --> 04:09.605
before, finding that people attach intrinsic value

04:09.605 --> 04:12.765
to freedom would go against the standard view,

04:12.765 --> 04:15.645
and economics are now to evaluate sets of opportunities.

04:16.425 --> 04:19.725
It would also bring supportive evidence for the views,

04:19.955 --> 04:22.165
also several in the, in the literature

04:22.165 --> 04:24.085
that we should take this intrinsic value

04:24.345 --> 04:26.605
of freedom into consideration when

04:26.605 --> 04:28.125
designing menus of options.

04:29.195 --> 04:30.645
Then the second and

04:30.665 --> 04:34.765
and related question we addressed in this study is

04:34.905 --> 04:36.765
how people compare different sets

04:36.765 --> 04:39.005
of opportunities in terms of freedom and welfare.

04:39.665 --> 04:42.565
In particular, we look at what theoretical rules

04:42.875 --> 04:46.165
that researchers have advocated in the literature people

04:46.725 --> 04:48.885
implicitly employ when they are asked

04:48.885 --> 04:50.845
to compare different opportunity sets.

04:51.385 --> 04:55.365
For example, when evaluating the overall welfare of menus,

04:55.985 --> 04:58.925
are people only looking at the best option in the menus

04:58.925 --> 05:00.485
as standard economics suggest?

05:00.545 --> 05:02.045
Or are they looking at the quality

05:02.105 --> 05:03.245
of all options in the menu,

05:03.345 --> 05:04.965
or are they still looking at other things?

05:05.795 --> 05:09.365
Well, in this sense, we, with this question,

05:09.375 --> 05:11.685
we're looking at what people care about when

05:11.685 --> 05:13.285
evaluating menus of options.

05:14.555 --> 05:17.845
Well, in our study, we do this the second analysis

05:17.845 --> 05:20.525
or the second question for when people are asked

05:20.525 --> 05:23.165
to compare opportunity sets in terms of freedom of choice.

05:23.425 --> 05:26.645
So which menu offers more freedom of choice in our opinion,

05:27.465 --> 05:28.885
but also when people are asked

05:28.885 --> 05:31.445
to compare opportunity sets in terms of overall welfare.

05:31.665 --> 05:35.525
So taking everything into consideration which menu is better

05:35.715 --> 05:37.125
overall in your opinion.

05:38.315 --> 05:40.685
Then the previous literature,

05:40.745 --> 05:42.445
on this topic is mostly theoretical.

05:42.505 --> 05:46.285
So the literature will inform our methodology as, as I,

05:46.365 --> 05:48.205
I I will explain, and,

05:48.225 --> 05:50.605
but we contribute with novel empirical evidence.

05:50.705 --> 05:52.205
And one of the things we can do

05:52.205 --> 05:55.245
with this is showing which theoretical rules

05:55.355 --> 05:56.845
that researchers have put

05:56.845 --> 05:59.325
Forward in the literature find most

05:59.355 --> 06:00.685
support in the population.

06:00.705 --> 06:03.885
So what are most democratically supported, if you wish,

06:05.015 --> 06:06.465
from an empirical perspective?

06:07.055 --> 06:09.505
Most related previous studies have looked at

06:09.525 --> 06:12.505
how people choose among menus of consumption options.

06:13.285 --> 06:16.665
And as I will explain next, we differ from these studies

06:16.885 --> 06:20.545
as we use a survey methodology in a policy relevant context

06:21.245 --> 06:23.545
to study people's preferences in a position

06:23.545 --> 06:25.025
similar to policy making.

06:25.485 --> 06:29.345
So in this sense, we bring new evidence from a perspective

06:29.375 --> 06:31.745
that has not been previously studied in the literature.

06:32.405 --> 06:35.305
We run a novel survey based design with a total

06:35.365 --> 06:38.945
of almost 5,000 participants across 10 different countries

06:38.945 --> 06:41.705
such as the us, uk, China, Brazil,

06:41.705 --> 06:43.065
France, Japan, and Turkey.

06:43.975 --> 06:48.225
Each participant in our study faces 15 comparisons of sets

06:48.225 --> 06:51.905
of opportunities that we create specifically for this study

06:51.965 --> 06:54.025
to investigate our research questions.

06:54.725 --> 06:57.745
In particular, they're asked to compare menus

06:57.745 --> 07:01.225
of hospitals available to two identical individuals

07:01.325 --> 07:02.545
to to undertake care.

07:03.165 --> 07:04.545
So in this sense, we are

07:04.545 --> 07:05.985
therefore focusing on

07:06.655 --> 07:11.105
this particular policy relevant context of hospital choice,

07:11.725 --> 07:13.905
and participants are in a similar position

07:14.125 --> 07:15.265
to a policy maker.

07:15.405 --> 07:18.425
We evaluates opportunity sets for others, so think about

07:18.445 --> 07:22.345
of a government that provides ospi, hospital choices

07:22.645 --> 07:26.025
for, for the population to, undertake care on.

07:26.365 --> 07:30.025
So they are, when they are deciding the how

07:30.025 --> 07:33.585
to design those menus, they're looking at,

07:34.195 --> 07:36.345
evaluating those menus for for others.

07:37.485 --> 07:40.465
So for each comparison of two menus of hospitals,

07:40.645 --> 07:41.785
we ask the participants

07:41.805 --> 07:44.905
to evaluate which opportunity set provides more freedom

07:44.905 --> 07:48.385
of choice, and which opportunity set is best overall.

07:49.365 --> 07:51.025
So we have a question about freedom

07:51.245 --> 07:53.105
and a question about overall welfare.

07:53.365 --> 07:55.305
And participants respond to these questions

07:55.365 --> 07:56.985
for the 15 comparisons

07:57.605 --> 08:00.105
and for each comparison of opportunity sets or

08:00.125 --> 08:02.505
or menus of hospitals, we also ask them

08:02.535 --> 08:06.265
what they think is the best hospital present in the menus.

08:07.785 --> 08:12.275
Then to investigate whether people attach intrinsic value

08:12.455 --> 08:16.235
to freedom, we look at comparisons of manys of hospitals

08:16.365 --> 08:19.315
where respond, where participants respond

08:19.345 --> 08:22.235
that there is a conflict between freedom of choice

08:22.495 --> 08:23.515
and the best hospital.

08:24.095 --> 08:27.515
For example, think of a participant that thinks

08:27.515 --> 08:30.035
that menu A has more freedom of choice,

08:30.775 --> 08:32.075
but the best alternative,

08:32.135 --> 08:35.115
the best hospital is in menu B, right?

08:35.945 --> 08:40.555
Then if a participant states that menu A is best overall,

08:41.455 --> 08:43.635
we say that this participant revealed

08:43.745 --> 08:45.315
through these three answers

08:46.415 --> 08:48.275
giving intrinsic value to freedom.

08:49.095 --> 08:52.755
So why? Because it states that

08:53.435 --> 08:54.715
A has more freedom of choice,

08:55.225 --> 08:56.845
But b as the best option.

08:57.505 --> 09:00.165
But a is the menu that is best overall.

09:00.745 --> 09:03.725
So it cannot be the best option determining

09:04.355 --> 09:06.085
what is the best menu overall.

09:06.705 --> 09:08.965
And we interpret if our interpretation is correct.

09:09.385 --> 09:13.525
It seems that it is freedom that is driving, the,

09:13.905 --> 09:17.325
the evaluation of overall overall welfare in this example.

09:17.905 --> 09:21.125
So this is a revelation of intrinsic value of freedom.

09:22.345 --> 09:24.245
So this is how we tackle the first question.

09:24.705 --> 09:28.485
So to, to investigate our second question about which rules

09:28.545 --> 09:31.525
people implicitly use in their evaluations.

09:32.465 --> 09:35.125
We draw on the, on the large theoretical literature,

09:35.265 --> 09:39.205
and we identify 23 plausible theoretical rules

09:39.755 --> 09:43.805
that can be used to rank sets of opportunities in terms

09:43.805 --> 09:45.645
of freedom of choice and overall welfare.

09:46.595 --> 09:48.245
Importantly, each

09:48.265 --> 09:51.525
of these rules implies a distinctive theoretical

09:52.045 --> 09:54.885
response pattern for the 15 comparisons of menus

09:54.885 --> 09:56.285
of hospitals in our study.

09:56.825 --> 09:59.725
In other words, they give us, so this, each

09:59.725 --> 10:02.565
of these theoretical rules give us a pattern of choice

10:02.565 --> 10:05.685
that participants should select if they were implicitly

10:05.685 --> 10:07.045
using that specific rule.

10:07.425 --> 10:11.485
So take the example of the standard view in economics that,

10:11.705 --> 10:15.245
the, in terms of overall welfare, the menu,

10:15.785 --> 10:18.885
the best menu is the menu that has the best alternative.

10:19.435 --> 10:21.885
Well, to compare sets, we just need

10:21.885 --> 10:23.245
to look at the best alternative

10:23.245 --> 10:26.605
and that give us a pattern that participants should follow

10:27.465 --> 10:30.045
if they are implicitly using a following

10:30.045 --> 10:31.805
that standard view in economics.

10:32.945 --> 10:35.645
Now, we then what we can do is compare the,

10:35.645 --> 10:38.445
this theoretical response pattern, so this predicted pattern

10:38.545 --> 10:39.685
of the theoretical rules

10:40.185 --> 10:42.325
to the actual responses of participants.

10:42.385 --> 10:45.685
And we do this using a Bay Asian classification procedure

10:45.795 --> 10:47.365
that is known in the literature.

10:48.035 --> 10:51.245
What this allows us to do is to assign participants

10:51.705 --> 10:52.885
to the theoretical rule

10:52.885 --> 10:55.445
that ma best matches their responses,

10:55.585 --> 10:58.045
taking potential errors into account.

10:58.065 --> 10:59.525
So potential decision errors

10:59.795 --> 11:02.525
that are common in survey methods, for instance.

11:03.185 --> 11:06.765
And in our study, we will do this for the freedom question.

11:06.985 --> 11:09.125
So we will assign participants to the rule.

11:09.555 --> 11:11.685
They explicitly are implicitly employed

11:11.685 --> 11:14.445
to rank opportunity sets in terms of freedom of choice,

11:15.105 --> 11:17.405
and we also do these for the welfare question.

11:17.505 --> 11:20.645
So assign participants to the rule they explicitly

11:20.665 --> 11:23.885
or implicitly employ to rank opportunity sets.

11:23.905 --> 11:26.965
In terms of overall welfare, we find

11:26.965 --> 11:29.525
that an overwhelming majority of participants,

11:29.715 --> 11:33.925
more than 80% reveal that they attach intrinsic value

11:34.305 --> 11:35.925
to freedom at least once.

11:36.465 --> 11:38.005
And in addition, we also find

11:38.005 --> 11:40.365
that participants attach intrinsic value

11:40.365 --> 11:43.805
to freedom in almost 50% of the relevant cases.

11:43.945 --> 11:47.365
So the cases that where they state there is a conflict

11:47.365 --> 11:49.125
between freedom of choice

11:49.585 --> 11:52.765
and, the best alternative. So in a man

11:52.825 --> 11:55.405
Has more freedom and the other menu has a,

11:55.525 --> 11:56.525
a best alternative,

11:56.745 --> 11:59.085
or the best alternative is in both menus.

11:59.475 --> 12:01.285
Well, in 50% of those cases,

12:01.605 --> 12:04.085
participants attach intrinsic value to freedom.

12:04.345 --> 12:07.805
So for us, the strongest suggested people think freedom

12:07.865 --> 12:11.485
of choice is valuable in a menu of options, even if

12:11.725 --> 12:13.845
that freedom does not change

12:13.955 --> 12:16.365
what is ultimately chosen from that menu.

12:17.425 --> 12:20.485
Now, regarding our second question, we find

12:20.485 --> 12:24.005
that the overwhelming majority of participants respond

12:24.185 --> 12:28.725
as if they rely on rules that count the number of options

12:29.105 --> 12:31.885
to rank opportunity sets in terms of freedom of choice.

12:32.505 --> 12:33.565
So what does this mean?

12:33.635 --> 12:36.805
Well, this means that most people think that menus

12:36.805 --> 12:40.085
with the same number of alternatives have the same freedom

12:40.145 --> 12:42.165
of choice, even if one menu

12:42.745 --> 12:44.845
has better alternatives than another, right?

12:45.265 --> 12:49.925
So if most people think that if you are comparing two menus

12:49.925 --> 12:53.285
of options with two hospitals each,

12:53.425 --> 12:55.685
it doesn't matter the quality of the hospitals,

12:55.715 --> 12:58.445
they both give provide the same freedom of choice.

12:59.435 --> 13:01.885
This also means that most people think

13:01.885 --> 13:04.805
that adding alternatives to menus increases freedom

13:04.805 --> 13:09.045
of choice even if the added alternative are bad ones, right?

13:09.105 --> 13:12.045
So they think that adding an option to a, to an option,

13:12.265 --> 13:14.525
to a, to a menu will increase the freedom

13:14.585 --> 13:18.205
of choice available even if, the hospital is bad.

13:18.385 --> 13:21.245
And of course, this, there is some heterogeneity,

13:21.245 --> 13:23.565
some some differences in, in responses.

13:23.985 --> 13:26.685
And, and, and this is not the only view possible,

13:26.905 --> 13:29.965
but this is what we find that an overwhelming majority of,

13:30.065 --> 13:34.005
of participants, implicitly, use

13:34.465 --> 13:36.685
to in, in their, in their rankings.

13:37.515 --> 13:39.885
What about welfare? Well, we find

13:39.885 --> 13:42.805
that when ranking sets in terms of overall welfare,

13:43.355 --> 13:46.045
most people focus on the quality of alternatives.

13:46.045 --> 13:47.445
So it's not surprising, right?

13:47.825 --> 13:50.525
But there is considerable heterogeneity in the rules

13:50.715 --> 13:52.845
that participants implicitly employ.

13:53.225 --> 13:56.765
In other words, people have very different views on how

13:56.765 --> 14:00.005
to evaluate what is a good or a bad set of opportunities.

14:00.635 --> 14:03.565
Well, they, these means that only looking at the best

14:03.595 --> 14:07.005
alternative in a set a standard economic suggests

14:07.635 --> 14:11.085
will often disregard what people care about in sets

14:11.085 --> 14:12.125
of opportunities, right?

14:12.145 --> 14:13.485
So people have different views

14:13.545 --> 14:16.565
and have often have a kind of a multidimensional

14:17.115 --> 14:21.445
perspective over what matters in, opportunity set.

14:21.445 --> 14:24.445
So they will not only care about the best

14:24.595 --> 14:25.885
alternative in the set.

14:26.475 --> 14:30.045
Finally, in terms of country comparison, since we have 10,

14:30.305 --> 14:32.685
countries, we find

14:32.685 --> 14:36.285
that our results are strikingly similar across countries in

14:36.285 --> 14:37.925
very different social, cultural

14:38.065 --> 14:39.365
and institutional backgrounds.

14:39.985 --> 14:43.405
And this is an important finding since it suggested the

14:43.405 --> 14:44.485
intrinsic value of freedom

14:44.665 --> 14:48.645
and how people evaluate opportunity sets is seems

14:48.645 --> 14:52.325
to be a robust cross-cultural attitude that, that,

14:52.325 --> 14:56.405
that people hold, irrespective of their,

14:56.505 --> 14:57.645
of, of their background.

14:57.915 --> 14:59.165
From a policy perspective,

14:59.505 --> 15:02.565
our results can inform policy makers on how

15:02.565 --> 15:05.245
to compare different opportunity sets if they wish

15:05.425 --> 15:08.085
to respect people's preferences over menus.

15:08.585 --> 15:12.245
For example, our results point out that people value freedom

15:12.265 --> 15:14.005
of choice for its own sake, right?

15:14.005 --> 15:15.485
The intrinsic value of freedom.

15:16.665 --> 15:19.845
Now, we used small sets of opportunities in our study.

15:20.025 --> 15:22.245
So our study is mostly,

15:22.305 --> 15:24.845
or directly linked to to those type of settings.

15:24.945 --> 15:28.445
So we then, what we show is that it is important

15:28.705 --> 15:30.925
to enlarge small opportunity sets,

15:31.235 --> 15:34.005
even if this does not lead to different choices.

15:35.195 --> 15:37.965
Well, this finding supports policy reforms

15:37.965 --> 15:40.525
that provide greater choice in small sets

15:41.025 --> 15:44.725
as these reforms can be beneficial for people, even if

15:45.235 --> 15:47.205
they will not change their behavior.

15:47.945 --> 15:50.005
An example is found on the National Health

15:50.005 --> 15:51.205
Service in the uk.

15:51.225 --> 15:54.125
So the NHS, which has changed over the years.

15:54.545 --> 15:58.085
How many hospitals from one to five patients can choose

15:58.085 --> 15:59.125
to receive treatment?

15:59.305 --> 16:03.485
And the most recent change was by the UK government in 2023.

16:04.145 --> 16:07.885
And our study brings another reason to give more options

16:07.945 --> 16:09.805
to people in these settings, right?

16:09.875 --> 16:13.285
It's an additional, reason supporting reforms

16:13.285 --> 16:17.125
that provide more freedom of choice In terms

16:17.345 --> 16:18.485
of future research.

16:18.745 --> 16:20.565
It is relevant to understand to

16:20.565 --> 16:22.205
what extent is intrinsic value

16:22.205 --> 16:24.325
of freedom holds in different contexts

16:24.325 --> 16:25.765
besides the hospital setting.

16:26.385 --> 16:30.285
We believe that our design, can inform other settings,

16:30.585 --> 16:33.925
but of course, this, this should be, tested further.

16:35.265 --> 16:37.125
Now, it is also relevant

16:37.125 --> 16:40.205
to understand if these phenomenon holds when monetary stakes

16:40.265 --> 16:41.925
or incentives are at play, right?

16:42.065 --> 16:43.605
We use the survey methodology,

16:43.825 --> 16:46.765
but using other methods that involve monetary stakes

16:46.765 --> 16:49.205
or incentives would be an important step

16:49.385 --> 16:51.125
to better understand these attitudes.

16:51.915 --> 16:54.725
Well, future research should also expand the number

16:54.745 --> 16:57.125
of options within each set in order

16:57.125 --> 17:00.365
to investigate the relationship between freedom of choice

17:00.585 --> 17:02.645
and people's well-documented difficulty

17:03.105 --> 17:06.245
of making choices when presented with very large sets,

17:07.095 --> 17:10.885
which is something that some is sometimes referred to

17:10.985 --> 17:12.445
as the paradox of choice.

17:13.225 --> 17:16.085
And finally, it would be interesting to learn if

17:16.085 --> 17:19.365
and how people's rankings of opportunity sets relate

17:19.485 --> 17:22.885
to other, other attitudes such as paternalistic attitudes

17:23.345 --> 17:26.605
or if these rankings affect behavior in other contexts

17:26.605 --> 17:27.685
such as voting behavior.

17:28.345 --> 17:31.125
All these are important goals for future research.

"Evaluating Freedom of Choice: The Intrinsic Value of Options in Decision-Making"

00:00:00 - People often make choices in opportunity sets or menus of options that are designed by companies, governments, or other institutions. For example, think of when you choose dish in a restaurant or when you choose between different hospitals to undertake care, or when you choose a school for your kids or even a pension scheme in your company. All these choices are made in menus of options that have been selected for you. So the restaurant selects the dish, the government selects one option, one hospital, or several hospitals that you can take under undertake care on and so forth. Therefore, companies, governments, and other institutions have a choice on how to design these menus of options. It follows that if governments
00:00:48 - taking into consideration what people want, or in other words, taking the wheel of the people into consideration in their policy decisions, it becomes an important question. How people evaluate different opportunity sets, or putting it into simpler terms. What makes an opportunity set a good one or a bad one for people? And in economics, the standard view has been and continues to be that what only matters is the quality of the best alternative for the person choosing. So think of the example of the restaurant. As long as your favorite dish is available,
00:01:26 - So this means that in an important respect for our study, that having more freedom of choice in terms of having more options available is not important unless it brings, a better option, right? So in, in the example of the restaurant, unless having more options will bring a, a, a dish that you prefer, it doesn't matter. So this is the dominant, view in economics, but of course, there are other perspectives on how we should evaluate menus of options. For example, there is a large theoretical literature in both economics and philosophy that argues that freedom as intrinsic value. So what does that mean?
00:02:08 - valuable even if these, those options are not going to be chosen. Well, we might be asking why would people value freedom intrinsically? Well, potential reasons for it is that more freedom of choice is important to develop mental faculties such as judgment and self-control. And this was an argument already made, long ago by John Stewart Mill. So the idea is that having more options available, you might be able to to, to develop those mental faculties more easily. So another reason would be that having more freedom of choice might be directly beneficial for your wellbeing. So people might care about having more options
00:02:47 - And this was an argument more recently made by a Marti san. And not importantly that both these reasons do not necessarily depend on what is ultimately chosen. So that's the Idea of the intrinsic value. In this research project, co-author with Noki Fabric, Eric Kar and Beit Tahu, we tackle two important empirical questions. So first we look at if people attach intrinsic value to freedom of choice to the best of our knowledge, there is no direct evidence on this issue previously. And one of the reasons for this is that it's very difficult to isolate the intrinsic value
00:03:29 - So in a field setting, people may value having more freedom for the benefits it brings in terms of the chosen option. So having more freedom may bring an option that that, that you prefer. And this will come be a confound to identifying the intrinsic value of freedom. And so that, that's one of the reasons why, as I will explain, in a second, we use a novel survey-based controlled methodology to study this question. Now, investigating this question contributes to several literatures in economics, studying topics around freedom, opportunities and paternalism. For example, as I alluded

"Evaluating Freedom and Welfare in Choice: An Empirical Study on Hospital Menu Options"

00:04:09 - to freedom would go against the standard view, and economics are now to evaluate sets of opportunities. It would also bring supportive evidence for the views, also several in the, in the literature that we should take this intrinsic value of freedom into consideration when designing menus of options. Then the second and and related question we addressed in this study is how people compare different sets of opportunities in terms of freedom and welfare. In particular, we look at what theoretical rules that researchers have advocated in the literature people
00:04:48 - to compare different opportunity sets. For example, when evaluating the overall welfare of menus, are people only looking at the best option in the menus as standard economics suggest? Or are they looking at the quality of all options in the menu, or are they still looking at other things? Well, in this sense, we, with this question, we're looking at what people care about when evaluating menus of options. Well, in our study, we do this the second analysis or the second question for when people are asked to compare opportunity sets in terms of freedom of choice. So which menu offers more freedom of choice in our opinion,
00:05:28 - to compare opportunity sets in terms of overall welfare. So taking everything into consideration which menu is better overall in your opinion. Then the previous literature, on this topic is mostly theoretical. So the literature will inform our methodology as, as I, I I will explain, and, but we contribute with novel empirical evidence. And one of the things we can do with this is showing which theoretical rules that researchers have put Forward in the literature find most support in the population. So what are most democratically supported, if you wish, from an empirical perspective? Most related previous studies have looked at
00:06:13 - And as I will explain next, we differ from these studies as we use a survey methodology in a policy relevant context to study people's preferences in a position similar to policy making. So in this sense, we bring new evidence from a perspective that has not been previously studied in the literature. We run a novel survey based design with a total of almost 5,000 participants across 10 different countries such as the us, uk, China, Brazil, France, Japan, and Turkey. Each participant in our study faces 15 comparisons of sets of opportunities that we create specifically for this study
00:06:54 - In particular, they're asked to compare menus of hospitals available to two identical individuals to to undertake care. So in this sense, we are therefore focusing on this particular policy relevant context of hospital choice, and participants are in a similar position to a policy maker. We evaluates opportunity sets for others, so think about of a government that provides ospi, hospital choices for, for the population to, undertake care on. So they are, when they are deciding the how to design those menus, they're looking at,
00:07:37 - So for each comparison of two menus of hospitals, we ask the participants to evaluate which opportunity set provides more freedom of choice, and which opportunity set is best overall. So we have a question about freedom and a question about overall welfare. And participants respond to these questions for the 15 comparisons and for each comparison of opportunity sets or or menus of hospitals, we also ask them what they think is the best hospital present in the menus. Then to investigate whether people attach intrinsic value to freedom, we look at comparisons of manys of hospitals

"Exploring the Intrinsic Value of Freedom in Choices of Healthcare Options"

00:08:19 - that there is a conflict between freedom of choice and the best hospital. For example, think of a participant that thinks that menu A has more freedom of choice, but the best alternative, the best hospital is in menu B, right? Then if a participant states that menu A is best overall, we say that this participant revealed through these three answers giving intrinsic value to freedom. So why? Because it states that A has more freedom of choice, But b as the best option.
00:09:00 - So it cannot be the best option determining what is the best menu overall. And we interpret if our interpretation is correct. It seems that it is freedom that is driving, the, the evaluation of overall overall welfare in this example. So this is a revelation of intrinsic value of freedom. So this is how we tackle the first question. So to, to investigate our second question about which rules people implicitly use in their evaluations. We draw on the, on the large theoretical literature, and we identify 23 plausible theoretical rules
00:09:43 - of freedom of choice and overall welfare. Importantly, each of these rules implies a distinctive theoretical response pattern for the 15 comparisons of menus of hospitals in our study. In other words, they give us, so this, each of these theoretical rules give us a pattern of choice that participants should select if they were implicitly using that specific rule. So take the example of the standard view in economics that, the, in terms of overall welfare, the menu, the best menu is the menu that has the best alternative. Well, to compare sets, we just need
00:10:23 - and that give us a pattern that participants should follow if they are implicitly using a following that standard view in economics. Now, we then what we can do is compare the, this theoretical response pattern, so this predicted pattern of the theoretical rules to the actual responses of participants. And we do this using a Bay Asian classification procedure that is known in the literature. What this allows us to do is to assign participants to the theoretical rule that ma best matches their responses, taking potential errors into account. So potential decision errors that are common in survey methods, for instance.
00:11:06 - So we will assign participants to the rule. They explicitly are implicitly employed to rank opportunity sets in terms of freedom of choice, and we also do these for the welfare question. So assign participants to the rule they explicitly or implicitly employ to rank opportunity sets. In terms of overall welfare, we find that an overwhelming majority of participants, more than 80% reveal that they attach intrinsic value to freedom at least once. And in addition, we also find that participants attach intrinsic value to freedom in almost 50% of the relevant cases.
00:11:47 - between freedom of choice and, the best alternative. So in a man Has more freedom and the other menu has a, a best alternative, or the best alternative is in both menus. Well, in 50% of those cases, participants attach intrinsic value to freedom. So for us, the strongest suggested people think freedom of choice is valuable in a menu of options, even if that freedom does not change what is ultimately chosen from that menu. Now, regarding our second question, we find that the overwhelming majority of participants respond

"Evaluating Freedom of Choice: Insights from Hospital Menu Preferences"

00:12:29 - to rank opportunity sets in terms of freedom of choice. So what does this mean? Well, this means that most people think that menus with the same number of alternatives have the same freedom of choice, even if one menu has better alternatives than another, right? So if most people think that if you are comparing two menus of options with two hospitals each, it doesn't matter the quality of the hospitals, they both give provide the same freedom of choice. This also means that most people think that adding alternatives to menus increases freedom
00:13:09 - So they think that adding an option to a, to an option, to a, to a menu will increase the freedom of choice available even if, the hospital is bad. And of course, this, there is some heterogeneity, some some differences in, in responses. And, and, and this is not the only view possible, but this is what we find that an overwhelming majority of, of participants, implicitly, use to in, in their, in their rankings. What about welfare? Well, we find that when ranking sets in terms of overall welfare, most people focus on the quality of alternatives.
00:13:47 - But there is considerable heterogeneity in the rules that participants implicitly employ. In other words, people have very different views on how to evaluate what is a good or a bad set of opportunities. Well, they, these means that only looking at the best alternative in a set a standard economic suggests will often disregard what people care about in sets of opportunities, right? So people have different views and have often have a kind of a multidimensional perspective over what matters in, opportunity set. So they will not only care about the best alternative in the set.
00:14:30 - countries, we find that our results are strikingly similar across countries in very different social, cultural and institutional backgrounds. And this is an important finding since it suggested the intrinsic value of freedom and how people evaluate opportunity sets is seems to be a robust cross-cultural attitude that, that, that people hold, irrespective of their, of, of their background. From a policy perspective, our results can inform policy makers on how to compare different opportunity sets if they wish to respect people's preferences over menus.
00:15:12 - of choice for its own sake, right? The intrinsic value of freedom. Now, we used small sets of opportunities in our study. So our study is mostly, or directly linked to to those type of settings. So we then, what we show is that it is important to enlarge small opportunity sets, even if this does not lead to different choices. Well, this finding supports policy reforms that provide greater choice in small sets as these reforms can be beneficial for people, even if they will not change their behavior. An example is found on the National Health
00:15:51 - So the NHS, which has changed over the years. How many hospitals from one to five patients can choose to receive treatment? And the most recent change was by the UK government in 2023. And our study brings another reason to give more options to people in these settings, right? It's an additional, reason supporting reforms that provide more freedom of choice In terms of future research. It is relevant to understand to what extent is intrinsic value of freedom holds in different contexts besides the hospital setting. We believe that our design, can inform other settings,

"Future Research Directions on Freedom of Choice and Decision-Making"

00:16:35 - Now, it is also relevant to understand if these phenomenon holds when monetary stakes or incentives are at play, right? We use the survey methodology, but using other methods that involve monetary stakes or incentives would be an important step to better understand these attitudes. Well, future research should also expand the number of options within each set in order to investigate the relationship between freedom of choice and people's well-documented difficulty of making choices when presented with very large sets, which is something that some is sometimes referred to
00:17:28 - And finally, it would be interesting to learn if and how people's rankings of opportunity sets relate to other, other attitudes such as paternalistic attitudes or if these rankings affect behavior in other contexts such as voting behavior. All these are important goals for future research.

Faculti AI can make mistakes

Research

Policy

Analysis