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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

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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.

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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.

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

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People often make choices in opportunity sets

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or menus of options that are designed by companies,

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governments, or other institutions.

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For example, think of when you choose dish in a restaurant

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or when you choose between different hospitals

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to undertake care, or when you choose a school for your kids

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or even a pension scheme in your company.

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All these choices are made in menus of options

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that have been selected for you.

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So the restaurant selects the dish,

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the government selects one option, one hospital,

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or several hospitals

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that you can take under undertake care on and so forth.

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Therefore, companies, governments,

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and other institutions have a choice on how

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to design these menus of options.

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It follows that if governments

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and companies want to tailor the design of these menus,

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taking into consideration what people want,

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or in other words, taking the wheel

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of the people into consideration in their policy decisions,

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it becomes an important question.

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How people evaluate different opportunity sets,

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or putting it into simpler terms.

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What makes an opportunity set a good one

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or a bad one for people?

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And in economics, the standard view has been

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and continues to be that what only matters is the quality

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of the best alternative for the person choosing.

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So think of the example of the restaurant.

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As long as your favorite dish is available,

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other options in the menu are not important.

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So this means that in an important respect for our study,

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that having more freedom of choice in terms

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of having more options available is not important

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unless it brings, a better option, right?

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So in, in the example of the restaurant,

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unless having more options will bring a, a, a dish

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that you prefer, it doesn't matter.

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So this is the dominant, view in economics,

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but of course, there are other perspectives on

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how we should evaluate menus of options.

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For example, there is a large theoretical literature in both

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economics and philosophy that argues that freedom

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as intrinsic value.

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So what does that mean?

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Well, it means that having more options in a menu can be

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valuable even if these,

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those options are not going to be chosen.

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Well, we might be asking why would people value

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freedom intrinsically?

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Well, potential reasons for it is that more freedom

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of choice is important to develop mental faculties such

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as judgment and self-control.

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And this was an argument already made, long ago

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by John Stewart Mill.

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So the idea is that having more options available,

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you might be able to to,

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to develop those mental faculties more easily.

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So another reason would be that having more freedom

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of choice might be directly beneficial for your wellbeing.

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So people might care about having more options

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for its own sake.

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And this was an argument more recently made by a Marti san.

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And not importantly that both these reasons

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do not necessarily depend on

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what is ultimately chosen. So that's the

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Idea of the intrinsic value.

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In this research project, co-author with Noki Fabric,

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Eric Kar and Beit Tahu,

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we tackle two important empirical questions.

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So first we look at if people attach intrinsic value

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to freedom of choice to the best of our knowledge,

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there is no direct evidence on this issue previously.

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And one of the reasons for this is that it's very difficult

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to isolate the intrinsic value

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of freedom in obs in observational field data.

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So in a field setting, people may value having more freedom

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for the benefits it brings in terms of the chosen option.

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So having more freedom may bring an option that

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that, that you prefer.

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And this will come be a confound

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to identifying the intrinsic value of freedom.

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And so that, that's one of the reasons why,

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as I will explain, in a second,

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we use a novel survey-based controlled methodology

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to study this question.

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Now, investigating this question contributes

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to several literatures in economics, studying topics

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around freedom, opportunities and paternalism.

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For example, as I alluded

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before, finding that people attach intrinsic value

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to freedom would go against the standard view,

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and economics are now to evaluate sets of opportunities.

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It would also bring supportive evidence for the views,

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also several in the, in the literature

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that we should take this intrinsic value

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of freedom into consideration when

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designing menus of options.

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Then the second and

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and related question we addressed in this study is

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how people compare different sets

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of opportunities in terms of freedom and welfare.

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In particular, we look at what theoretical rules

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that researchers have advocated in the literature people

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implicitly employ when they are asked

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to compare different opportunity sets.

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For example, when evaluating the overall welfare of menus,

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are people only looking at the best option in the menus

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as standard economics suggest?

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Or are they looking at the quality

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of all options in the menu,

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or are they still looking at other things?

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Well, in this sense, we, with this question,

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we're looking at what people care about when

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evaluating menus of options.

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Well, in our study, we do this the second analysis

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or the second question for when people are asked

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to compare opportunity sets in terms of freedom of choice.

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So which menu offers more freedom of choice in our opinion,

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but also when people are asked

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to compare opportunity sets in terms of overall welfare.

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So taking everything into consideration which menu is better

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overall in your opinion.

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Then the previous literature,

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on this topic is mostly theoretical.

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So the literature will inform our methodology as, as I,

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I I will explain, and,

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but we contribute with novel empirical evidence.

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And one of the things we can do

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with this is showing which theoretical rules

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that researchers have put

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Forward in the literature find most

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support in the population.

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So what are most democratically supported, if you wish,

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from an empirical perspective?

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Most related previous studies have looked at

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how people choose among menus of consumption options.

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And as I will explain next, we differ from these studies

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as we use a survey methodology in a policy relevant context

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to study people's preferences in a position

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similar to policy making.

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So in this sense, we bring new evidence from a perspective

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that has not been previously studied in the literature.

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We run a novel survey based design with a total

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of almost 5,000 participants across 10 different countries

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such as the us, uk, China, Brazil,

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France, Japan, and Turkey.

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Each participant in our study faces 15 comparisons of sets

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of opportunities that we create specifically for this study

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to investigate our research questions.

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In particular, they're asked to compare menus

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of hospitals available to two identical individuals

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to to undertake care.

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So in this sense, we are

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therefore focusing on

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this particular policy relevant context of hospital choice,

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and participants are in a similar position

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to a policy maker.

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We evaluates opportunity sets for others, so think about

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of a government that provides ospi, hospital choices

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for, for the population to, undertake care on.

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So they are, when they are deciding the how

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to design those menus, they're looking at,

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evaluating those menus for for others.

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So for each comparison of two menus of hospitals,

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we ask the participants

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to evaluate which opportunity set provides more freedom

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of choice, and which opportunity set is best overall.

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So we have a question about freedom

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and a question about overall welfare.

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And participants respond to these questions

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for the 15 comparisons

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and for each comparison of opportunity sets or

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or menus of hospitals, we also ask them

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what they think is the best hospital present in the menus.

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Then to investigate whether people attach intrinsic value

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to freedom, we look at comparisons of manys of hospitals

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where respond, where participants respond

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that there is a conflict between freedom of choice

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and the best hospital.

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For example, think of a participant that thinks

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that menu A has more freedom of choice,

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but the best alternative,

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the best hospital is in menu B, right?

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Then if a participant states that menu A is best overall,

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we say that this participant revealed

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through these three answers

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giving intrinsic value to freedom.

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So why? Because it states that

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A has more freedom of choice,

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But b as the best option.

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But a is the menu that is best overall.

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So it cannot be the best option determining

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what is the best menu overall.

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And we interpret if our interpretation is correct.

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It seems that it is freedom that is driving, the,

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the evaluation of overall overall welfare in this example.

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So this is a revelation of intrinsic value of freedom.

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So this is how we tackle the first question.

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So to, to investigate our second question about which rules

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people implicitly use in their evaluations.

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We draw on the, on the large theoretical literature,

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and we identify 23 plausible theoretical rules

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that can be used to rank sets of opportunities in terms

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of freedom of choice and overall welfare.

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Importantly, each

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of these rules implies a distinctive theoretical

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response pattern for the 15 comparisons of menus

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of hospitals in our study.

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In other words, they give us, so this, each

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of these theoretical rules give us a pattern of choice

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that participants should select if they were implicitly

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using that specific rule.

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So take the example of the standard view in economics that,

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the, in terms of overall welfare, the menu,

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the best menu is the menu that has the best alternative.

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Well, to compare sets, we just need

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to look at the best alternative

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and that give us a pattern that participants should follow

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if they are implicitly using a following

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that standard view in economics.

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Now, we then what we can do is compare the,

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this theoretical response pattern, so this predicted pattern

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of the theoretical rules

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to the actual responses of participants.

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And we do this using a Bay Asian classification procedure

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that is known in the literature.

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What this allows us to do is to assign participants

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to the theoretical rule

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that ma best matches their responses,

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taking potential errors into account.

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So potential decision errors

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that are common in survey methods, for instance.

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And in our study, we will do this for the freedom question.

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So we will assign participants to the rule.

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They explicitly are implicitly employed

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to rank opportunity sets in terms of freedom of choice,

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and we also do these for the welfare question.

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So assign participants to the rule they explicitly

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or implicitly employ to rank opportunity sets.

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In terms of overall welfare, we find

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that an overwhelming majority of participants,

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more than 80% reveal that they attach intrinsic value

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to freedom at least once.

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And in addition, we also find

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that participants attach intrinsic value

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to freedom in almost 50% of the relevant cases.

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So the cases that where they state there is a conflict

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between freedom of choice

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and, the best alternative. So in a man

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Has more freedom and the other menu has a,

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a best alternative,

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or the best alternative is in both menus.

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Well, in 50% of those cases,

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participants attach intrinsic value to freedom.

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So for us, the strongest suggested people think freedom

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of choice is valuable in a menu of options, even if

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that freedom does not change

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what is ultimately chosen from that menu.

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Now, regarding our second question, we find

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that the overwhelming majority of participants respond

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as if they rely on rules that count the number of options

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to rank opportunity sets in terms of freedom of choice.

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So what does this mean?

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Well, this means that most people think that menus

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with the same number of alternatives have the same freedom

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of choice, even if one menu

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has better alternatives than another, right?

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So if most people think that if you are comparing two menus

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of options with two hospitals each,

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it doesn't matter the quality of the hospitals,

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they both give provide the same freedom of choice.

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This also means that most people think

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that adding alternatives to menus increases freedom

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of choice even if the added alternative are bad ones, right?

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So they think that adding an option to a, to an option,

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to a, to a menu will increase the freedom

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of choice available even if, the hospital is bad.

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And of course, this, there is some heterogeneity,

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some some differences in, in responses.

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And, and, and this is not the only view possible,

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but this is what we find that an overwhelming majority of,

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of participants, implicitly, use

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to in, in their, in their rankings.

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What about welfare? Well, we find

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that when ranking sets in terms of overall welfare,

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most people focus on the quality of alternatives.

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So it's not surprising, right?

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

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that participants implicitly employ.

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In other words, people have very different views on how

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to evaluate what is a good or a bad set of opportunities.

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Well, they, these means that only looking at the best

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alternative in a set a standard economic suggests

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will often disregard what people care about in sets

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of opportunities, right?

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So people have different views

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and have often have a kind of a multidimensional

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perspective over what matters in, opportunity set.

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So they will not only care about the best

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alternative in the set.

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Finally, in terms of country comparison, since we have 10,

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countries, we find

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that our results are strikingly similar across countries in

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very different social, cultural

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and institutional backgrounds.

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And this is an important finding since it suggested the

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intrinsic value of freedom

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and how people evaluate opportunity sets is seems

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to be a robust cross-cultural attitude that, that,

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that people hold, irrespective of their,

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of, of their background.

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From a policy perspective,

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our results can inform policy makers on how

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to compare different opportunity sets if they wish

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to respect people's preferences over menus.

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For example, our results point out that people value freedom

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of choice for its own sake, right?

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The intrinsic value of freedom.

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Now, we used small sets of opportunities in our study.

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So our study is mostly,

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or directly linked to to those type of settings.

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So we then, what we show is that it is important

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to enlarge small opportunity sets,

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even if this does not lead to different choices.

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Well, this finding supports policy reforms

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that provide greater choice in small sets

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as these reforms can be beneficial for people, even if

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they will not change their behavior.

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An example is found on the National Health

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Service in the uk.

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So the NHS, which has changed over the years.

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How many hospitals from one to five patients can choose

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to receive treatment?

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And the most recent change was by the UK government in 2023.

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And our study brings another reason to give more options

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to people in these settings, right?

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It's an additional, reason supporting reforms

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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

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what extent is intrinsic value

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of freedom holds in different contexts

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besides the hospital setting.

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We believe that our design, can inform other settings,

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but of course, this, this should be, tested further.

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Now, it is also relevant

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to understand if these phenomenon holds when monetary stakes

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or incentives are at play, right?

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We use the survey methodology,

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but using other methods that involve monetary stakes

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or incentives would be an important step

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to better understand these attitudes.

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Well, future research should also expand the number

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of options within each set in order

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to investigate the relationship between freedom of choice

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and people's well-documented difficulty

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of making choices when presented with very large sets,

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which is something that some is sometimes referred to

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as the paradox of choice.

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And finally, it would be interesting to learn if

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and how people's rankings of opportunity sets relate

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to other, other attitudes such as paternalistic attitudes

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or if these rankings affect behavior in other contexts

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such as voting behavior.

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All these are important goals for future research.

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