Blame the Victim, Inc.

The views presented here do not necessarily represent those of Advisor Perspectives.

Thirty years ago, I had a front-row seat for the dawn of the opioid epidemic, as ever more patients taking large amounts of OxyContin for chronic spine pain began showing up in my neurology practice.

The source of this alarming phenomenon was obvious: the legion of well-dressed, attractive young Purdue Pharma representatives flooding the waiting rooms of my family practice colleagues, whom the company had identified as the target “franchise” of its marketing campaign, a strategy the company had pioneered.

Why family doctors, and not the specialists — orthopedists, neurologists, neurosurgeons, and anesthesiologists — who most frequently treat such patients? Because these four specialties, by both training and experience, were aware of the often deadly dangers of prescribing chronic narcotics for patients with non-malignant pain syndromes, and whose practitioners greeted with disbelief the Purdue representatives’ assurances that only one percent of such patients would become addicted.

In the following quarter century, over 800,000 Americans would die of narcotic overdose, at first from OxyContin itself, then from illicit narcotics — especially fentanyl — sought by OxyContin users after the FDA forced the company to reformulate the drug to be less addictive.

Purdue blamed the victims; said Richard Sackler, the company’s head, “We have to hammer the abusers . . . They are the culprits and the problem. They are reckless criminals.”

A Problem of Framing

In It’s on You: How Corporations and Behavioral Scientists Have Convinced Us That We're to Blame for Society's Deepest Problems, behavioralists Nick Chater and George Loewenstein, characterize Sackler’s outrageous moral dodge as a classic “i-frame/s-frame”¹ sleight of hand. Here, a patent failure of the system (s-frame: in this case, negligent FDA oversight) is spun by the perpetrators as a failure of individuals (i-frame: in this case, the patients Purdue had addicted).

As the authors point out, the i-frame seeks behavioral change within an unquestioned, fixed s-frame. Alas, while system change can be challenging, human nature change proves yet more difficult. Though gimmicky i-frame interventions often initially generate enthusiasm, their long-run benefits usually disappoint.

And while it’s easy to blame corporate villains like Sackler, Chater and Loewenstein caution the reader to avoid the “fundamental attribution error”: the assignment of primary causation to the evil nature of individual actors, and not to the environmental forces that motivate them. Yes, Sackler was a bad actor, but he was driven by a combination of economic imperatives and absence of regulatory brakes that made the opioid epidemic all but inevitable. Had he not orchestrated it, then someone else would have, due to how the system was set up.

It’s curious that the authors did not cite Arendt’s “banality of evil.” Assessed individually, the overwhelming majority of the Auschwitz staff were little different from today’s corporate participants who, in pursuit of their company’s goals, convince each other that they are doing God’s work. In the case of Purdue Pharma, alleviating pain was the goal, and in the case of Auschwitz, it was ridding humanity of “vermin.”

The Manipulation of Public Perception

Chater and Loewenstein find i-frame/s-frame misdirection at the root of many societal ills. Do you work for a fossil fuel company that is slowly cooking the planet? Then, at all costs, avoid effective s-frame approaches such as profit-reducing carbon taxes and fuel-efficiency standards.

Instead, spend millions on marketing campaigns like BP’s “Beyond Petroleum,” a slick popularization of the personal carbon footprint that proclaimed “Beyond fear there is courage; beyond darkness there is light.” Typical of such i-frame fixes, the ad campaign carried no consumer incentive and was thus doomed to fail.

Are you the executive of a hospital chain, pharmaceutical manufacturer, or benefits manager that thrives in a health care system that consumes a far higher percentage of GDP and produces worse health-care outcomes than in any other developed nation? Then, by all means, eschew the s-frame solutions that produce cheaper and better outcomes everywhere else (especially universal health insurance backed by an individual mandate) and push i-frame fixes such as tax incentives and exhorting a healthy lifestyle.

The authors see the recent pop psychology fascination with the salutary effects of “grit” on childhood success as another i-frame dodge of the fact that U.S. social mobility is among the lowest in the developed world: On average, the dumb, rich American child grows up to outearn the smart, poor one. The i-frame solution? Buckle down, work harder, and expect no help from society at large.

Some of Chater and Lowenstein’s case studies are more persuasive than others. Over the past generation, the U.S. obesity rate, for example, has more than tripled to about 40%. One does not need an epidemiology PhD to understand that this worldwide epidemic is not the result of a sudden and catastrophic collapse of worldwide dietary willpower among the billions of the world’s newly overweight. Rather, it is manifestly the natural result of the calculated development and marketing of inexpensive, addictive, energy-dense industrially produced foods — well illustrated in a memorably titled chapter from Eric Schlosser’s Fast Food Nation, “Why the Fries Taste So Good.”

Once again, rather than focus on the s-frame solutions that have proven effective in other developed nations — sugar taxes and the prohibition of fast-food advertising to children, to name but a few — the food industry deploys doomed-to-fail i-frame nostrums that encourage individual behavioral changes such as smaller plate sizes and mindfulness of healthy eating habits.

Unrealistic Nostalgia Detracts From the Argument

The authors’ liberal political bias does occasionally get the better of them, as when they rhapsodize over the glories of the late, great defined benefit (DB) pension. They’re particularly envious of their government employee friends with DB pensions, oblivious to the fact that most of these are woefully underfunded and will eventually require a taxpayer bailout.

Although Loewenstein is best known for his prodigious behavioral finance output, he is also a Yale economics Ph.D. whose early work focused on time preference. It is disappointing that he didn’t perform the elementary calculations that show that, at any reasonable level of risk and return, the employer wishing to fund a traditional defined-benefit pension for today’s long-lived retirees must salt away approximately 30% of salary in combined employer/employee contributions, something that precious few of today’s employers can afford.

Loewenstein and Chater would like to bring back DB pensions, and who wouldn’t like to have one! The authors ignore the history of why they’ve gone the way of bellbottoms and dial-up modems. First, as already noted, they’re expensive. When Studebaker-Packard’s plan disastrously defaulted in 1963, leaving many employees with a pittance or nothing, Congress passed the ERISA legislation demanding that companies both adequately fund and insure their plans.

In a classic example of the law of unintended consequences, the act’s rigorous funding requirements, designed to protect DB plans, instead rendered them prohibitively expensive. As a result, companies simply dropped them in favor of the now-ubiquitous 401(k) defined-contribution (DC) structure.

The public sector DB plans that Chater and Loewenstein so admire survive mainly because they are guided the Governmental Accounting Standards Board (GASB), a non-profit organization which emphasizes transparency, not funding adequacy: The GASB’s guidelines allow optimistic returns assumptions that will eventually lead to massive underfunding.

The authors are not wrong to condemn DC plans’ glaring flaws, with their asset leakage, often-expensive fund choices, and pitiful median pre-retirement asset balances. At a more basic level, they also recognize that it is no more logical to expect the typical employee to manage their own pension fund than it is to expect them to fly their own airliner or to diagnose and remove their child’s appendix. But DC plans do turn out to be the one field where i-frame fixes, most prominently defaults for target-date funds and escalating contributions — Thaler and Sunstein’s most famous “nudges” — have achieved at least modest success.

When Ease Overrides Efficacy

This gets to the book’s most controversial assertion, that i-frame “nudges” deflect attention from and “crowd out” more effective s-frame ones. The authors further posit that their behavioralist colleagues find i-frame fixes seductively easy to test with randomized lab and field trials. In contrast, s-frame fixes, by their very nature, are almost impossible to study in this way.

Cass Sunstein, Thaler’s nudge colleague, takes vigorous exception to the crowding-out hypothesis. When Chater and Loewenstein published this theory in Behavioral and Brain Sciences, Sunstein, in a riposte entitled “Conspiracy theory,” seized on their reference to “the active and coordinated efforts to block s-frame reforms by concentrated commercial interests who benefit from the status quo.”

However, there can be no doubt this is true, a point that Chater and Loewenstein actually underplay. Nearly 150 years ago, the National Association of Manufacturers (NAM), in a shameful and coordinated effort, opposed laws restricting child labor. A half century after that, the nation’s electrical utilities, aghast that Ontario’s publicly operated power companies supplied Canadians at much lower prices, formed the National Electric-Light Association (NELA) to execute a highly organized but generally futile effort to oppose U.S. public power projects such as the Tennessee Valley Authority.

Of current political interest is the fact that the NAM helped rescue the career of a failed academic — one Ludwig von Mises — with an endowed NYU chair, paid for the immigration of economist and philosopher Friedrich von Hayek, and financially supported economists George Stigler and Milton Friedman. Free to choose indeed — especially the freedom of American corporations to afflict the rest of the population with negative externalities like child labor, a polluted environment, and addictive pharmaceuticals.

Conspiracy theory? Many would not find that an unfair description of the NELA and NAM campaigns. If one is to fault It’s on You in this regard, it’s for not developing this seamy story in more detail.

Messaging Makes a Difference

The authors do a superb job, though, of dissecting just how well the political right out-messages the left. Raise estate taxes to reduce U.S. wealth inequality? No! “Death taxes!” What’s wrong with a carbon tax to address global warming? It’s a “tax.” (The authors helpfully suggest rebranding “carbon tax” as “polluters pay.”)

Sunstein is on even thinner ground when he states that “Having worked in the US government for many years . . . I am unaware of any case in which i-frame interventions operated to deter or stop s-frame intervention.” This beggars credulity. Is he really suggesting that the billions of dollars spent on i-frame propaganda over the years by the tobacco industry, Big Food, the petroleum industry, and the medical-industrial complex have not served to retard — and in some cases completely block — badly needed s-frame reform in these areas? Do any of this venue’s readers doubt that the vast amounts recently spent by the crypto industry on their i-frame campaign for the “democratization” of their product space have not paid off handsomely, both to their benefit and to the potential future detriment of retail investors?

You don’t have to agree with Chater and Loewenstein’s “crowding-out” hypothesis or their policy prescriptions to benefit from It’s on You, which will, at a minimum, allow the reader to identify and deconstruct i-frame PR when they come across it.

Endnote

¹ Chater and Loewenstein have been partly responsible for a shift in behavioral science research towards change at the systemic level (s-frame) rather than at the level of the individual (i-frame). Under the current administration, they have affected government policy less.