Written on 14 Jun 2021 by Prof Lucia Reisch

Can ignorance be bliss?

What information would people like to have? What information would they prefer to avoid? How does the provision of information bear on welfare? Lucia Reisch, El Erian Professor of Behavioural Economics and Policy, discusses her research findings and the implications for food policy.

The information paradigm is a cornerstone of consumer economics and policy. It posits that, on principle, more information is better for consumers (and patients) and that transparency increases people’s welfare because it leads to being better informed. Indeed, with the rise of large data sets, the growing numbers of apps, and new regulatory disclosure mandates, it is increasingly possible for people to obtain information that might be useful to their lives. That information might enable people to make better choices; it might also make them happy or miserable and lead them to feel safer or more at risk. For instance, everyday, people make choices about food that might profoundly affect their health, farm animals and the environment.

Consumers are increasingly able to obtain information that influences their choices. They might, for example, learn the calorie content of chocolate bars; the amount of sugar in soft drinks; whether a food contains GMOs; how to reduce their carbon footprint; and how any animal content in food was  raised. For both public and private institutions, an important question is on the welfare effects of such information. Does it make people better or worse off? How much are they willing to pay for it? Are people willing to pay not to receive specific information and thus remain ‘blissfully’ ignorant? The latter can be measured.

On principle, at least. The willingness to pay criterion, as a standard approach in consumer economics, has severe limitations. People might not want information because of a lack of knowledge (this is called the “Arrow Paradox”). They may not know enough to know whether they want it, let alone how much to pay to obtain it. And there is a different problem. Behavioural economics reminds policymakers that people are subject to systematic biases. Such behavioural biases can lead people to avoid information from which they would greatly benefit or to seek information that would make them worse off.

For example, present bias might lead people to focus on the short-term cost of receiving food-related information while neglecting the long-term benefits. Unrealistic optimism about future life events might make people unwilling to search for potentially valuable information. Confirmation bias might lead people either to seek or to avoid information, and to update their beliefs selectively with self-serving interpretations, depending on whether the information supports or contradicts their prior beliefs. Also, concerns for upholding one’s self-image, a desire to avoid interpersonal tradeoffs and bad news, as well as laziness, inattention, and confusion have been found to motivate people to avoid information in experimental settings.

Taken together, a lack of knowledge, behavioural biases, and other motivations might lead people to show an unduly low, or an unreasonably high, willingness to pay for information. Nonetheless, people’s desire to receive information, or not receive it, provides relevant clues about the welfare effects. It also provides relevant clues about whether information is useful. If people don’t want to learn about something, they may try to avoid the information even after it is made available. If they can’t easily avoid it (for example, because it is highly visibly on a restaurant menu), their lack of interest may suggest that they don’t wish to take it into account or they feel they won’t benefit from it. In democracies, whether people want to learn something is also relevant for purposes of policy. If people do or don’t want to receive information, public officials could be interested in their preferences in deciding whether to mandate or otherwise support its provision.

Prior recent research has established that information avoidance is widespread. In a current paper Food Policy, my co-authors Cass Sunstein (Harvard University) and Micha Kaiser (Copenhagen Business School) and I empirically derive some estimates of the scope of “blissful ignorance”. Focusing on individual welfare effects and estimating welfare effects for countries, we report on the results of a large-scale study of people’s stated preferences with respect to whether to obtain information, whether and how much they would be willing to pay for receiving it or, to the contrary, how much they would be willing to pay not to receive it.

More specifically, we report on nationally representative online surveys in eleven democratic nations, including the United Kingdom. We ask twenty questions, organised into three thematic clusters: health and food, sustainable development, and consumer protection. We also ask about people’s willingness to both pay for information, if they want to receive it, and their willingness to pay not to receive it, if they want to avoid it. Because of the sheer number of nations and issues, we are able to provide a general partial map of people’s views concerning information-seeking and information-avoidance.

What did we find?

Confirming prior research, we firstly find that large percentages of people don't want to receive information, even though it would seem highly relevant to their lives. The percentages varied from topic to topic (and between nations): Aggregating responses, we find that the lowest rates of people would like to know the year of their death (about 25 per cent), followed by the global temperature in approximately 2100 (about 32 per cent). In contrast, the highest percentages of people want to know who uses their online private data for commercial or political goals (62 per cent) and about the personal prices they pay compared to prices others pay for various goods and services (60 per cent). Overall, in all nations, at least one-third of people, and often more than one-half, have no interest in receiving information that might seem to have some value.

Secondly, across nations and issues, those who want to receive information of various sorts are often willing to pay for it. In general, the amounts are relatively modest, but this might suggest that a provision of information would generate monetized benefits across large populations. Concerning the particular questions we ask, those benefits are higher for health-related information than for sustainability and consumer information. Because we are dealing with a survey rather than with actual behaviour, and with willingness to pay figures, the specific numbers are speculative. But the overall trends are noteworthy.

Thirdly, those who do not wish to receive information are sometimes willing to pay not to receive it, suggesting, again across large populations, substantial monetized costs from providing (or not providing) information. But in all of the issue areas, a willingness to pay to receive information that is wanted, is far higher than the willingness to pay not to receive information that is not wanted. A provision of information can hence be expected to produce sizeable aggregate welfare benefits, at least according to standard economic measures. But a more targeted policy, giving information only to people who want it, would appear to be far more efficient. A personalized disclosure would ensure higher net benefits. Of course, the big question is how to do this in practice.

Read paper: What do people want to know? Information avoidance and food policy implications

  • About the author

    Prof Lucia Reisch

    Prof. Dr. Lucia Reisch is the newly appointed El Erian Professor of Behavioural Economics and Policy, in the Department of Politics and International Studies (POLIS), University of Cambridge. Her appointment, with effect from 1 September 2021, sees her join from the Department of Management, Society and Communication at the Copenhagen Business School. A graduate of the University of Hohenheim, she holds the award of the highest Medal of the State of Baden-Württemberg, for “social and scientific engagement for sustainable development and policy” and is also the honorary “Leibniz Chair” at the Leibniz Institute for Prevention Research and Epidemiology. She is an elected Member of the German Academy of Technical Sciences and has been chairing several high-level political commissions consulting the German government.