Charles E. Phelps - Making Better Choices: Design, Decisions, and Democracy

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Oxford University Press 2021

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Library of Congress Cataloging-in-Publication Data

Names: Phelps, Charles E., author. | Madhavan, Guru, author.

Title: Making better choices : design, decisions, and democracy /

Charles E. Phelps, Guru Madhavan.

Description: New York : Oxford University Press, 2021. |

Includes bibliographical references and index.

Identifiers: LCCN 2020047136 (print) | LCCN 2020047137 (ebook) |

ISBN 9780190871147 (hardback) | ISBN 9780190871161 (epub) |

ISBN 9780190871178

Subjects: LCSH: Decision making. | Social choice.

Classification: LCC BF448.M345 2021 (print) | LCC BF448 (ebook) |

DDC 153.8/3dc23

LC record available at https://lccn.loc.gov/2020047136

LC ebook record available at https://lccn.loc.gov/2020047137

DOI: 10.1093/oso/9780190871147.001.0001

In memory of

Kenneth Arrow and Michel Balinski

This is a book about how we collectively make decisions and about the tools we use to reach those decisions. The tools we use may be as important as the decisions themselves.

We make joint decisions out of necessity because the choices we make affect each other. Each decision we take has a consequencesometimes perhaps very little, as in a private decision on what to have for breakfast, or perhaps a bit more, on whether to exercise or not. Some decisions involve jointly planning for dinner or vacation, or entering into a business partnership. Some decisions follow rules, laws, and constitutions. These decisions involve and affect large groups of people and organizations. The consequences are also greater and could last longer.

The problem of converting preferences of individuals into a collective decision has been pursued by a small academic field. The so-called social choice analysis tracks back at least to the 13th century, perhaps much earlier. The topic gained prominence in the late 18th century as the French Academy of Sciences sought reliable methods to elect its new members. Imagine such a debate between some famous people in science and public affairs: Laplace, Borda, Condorcet, and Napoleon Bonaparte.

Social choice analysis, though, mainly looks at what effects voting rules can have when used properly and manipulatively. This has implications in all sorts of scenarios in life. Consider the following: social clubs and professional groups electing new members; ranking of research proposals to be funded by taxpayer money; choosing space and telescope missions; exploring sites for major science and engineering projects such as the Large Hadron Collider in Europe; homeowners associations choosing their directors and setting their annual fees and property rules; publicly traded corporations selecting their boards of directors with annual votes; and flying and sailing clubs voting about their fleet composition. And of course, we hold local, state, and national elections. Similarly, papal elections for the Church of Rome have become international events, as people wait for the telltale white smoke signaling a successful vote at the Vatican. In another context, in places like California, certain water districts give their members voting power in proportion to the acreage of land they own. In concept, one large landowner can control the vote to impose a tax on everybody living in the area to support the water supply. Making the most prudent decision remains a challenge throughout our lives.

Social choice analyses are also very limited in scope. They study how groups can choose among a given set of options. The menu is set. Groups are given a list of options. Groups vote. End of story. The issue of how the menu is set is not addressed.

Setting the menu is the realm of systems analyses, an approach most commonly associated with engineering design. While appreciated in concept and practice throughout the history of civilization, systems analyses came to prominence during the height of the 20th century war efforts when much more seemed to be at stake, including military superiority, space missions, and Cold War competition. Systems analyses is common in urban planning, waste management, environmental considerations, supply chain, and logistics, and it should ideally be even more common given the consequences of our work and how we are frequently unableand unwillingto track them. In simplest terms, systems analyses enable us to deliberately and consciously bring together factors that can and do matter in a situation. Its about recognizing that any decision has multiple criteria to satisfyits never one thing to vote on, and its never one single answer. However, that is exactly how we have designed our commonly used voting systems to be: to come to a single conclusion without any consideration of expression, experience, and enjoyment. Engineers are well versed in certain aspects of design on how to integrate these key dimensions of life into the products and services they are building.

But until now, the task of systems design and the task of choice analysis within a system have been largely separated, particularly in settings where groups need to make decisions. In our decade-long collaboration, we have studied many decision-making processes. We have come to realize, from our perspectives as an economist and an engineer respectively, that the rules influencing how decisions are made seldom receive sufficient attention. But we have also learned in this project that organizational bylaws are imponderably vagueperhaps deliberately opaqueon some key steps in the decision processes. Further, these rules often give certain individuals vast power to control the process through designation of key groups and their own process rules. Thus, we were convinced that much work needs to be done on shaping the rulesor at least in making people aware of themthat guide social decisions. These rules are, in effect, the shadow decisions behind the real decisions.

We hope that this book will reinforce why we need better systems design and analyses given the consequences of our decisions. It is also about carefully thinking about the values of the choices we make, whether they be in a small meeting of individuals in your local association or community or in a national election. It will illuminate the differences between sincere voting and strategic behavior to defeat an opponent in voting, the latter being quite common. The book will also review different voting systems, what their original intents were, and what their deficits are. In trying to bring all these topics together and more, we realized that the book is in essence an outcome of the arranged marriage between social choice and systems engineering. The more one begins to explore the aspects of social choice and systems engineering, the more one realizes how much they have in common, and how much more they can offer if unified.