Schiedam – S’dam

Net terug van een weekendje weg met Taco naar Schiedam. Of eigenlijk: S’dam.


We zaten in Jeneverlogies en dat was prima. Uitstekend ontbijt ook.


En pal naast het Jenevermuseum.


Als niet-jeneverdrinker vond ik het Nationaal Jenevermuseum toch erg interessant. Zeker de uitleg door de Stoker.


Ook een aardige tentoonstelling met 1001 etiketten:

En een proeverij


Mout voor de miljoenen liters jenever voor de 400 branderijen werd in molens gemalen #nofilter (grauwe dag)


Het Jeneverthema komt overal terug, zoals in de Openbare bibliotheek, gevestigd in de voormalige Korenbeurs


Maar ook in logo van een distilleerderij


Straatbeeld; interessante combinatie…


Zondag naar het Stedelijk museum Schiedam.


How to prove, how to interpret and what to do? Uncertainty experiences of street-level tax officials

January 18th 2018, the VIDE publicatieprijs 2017 will be awarded. My own paper Werkt de wildwestwaarschuwing wel? is one of the nominees. The other nominee is How to prove, how to interpret and what to do? Uncertainty experiences of street-level tax officials by Nadine Raaphorst, published in Public Management Review in 2017 (2016 Impact Factor: 2.293).

Obviously, I can’t really objectively summarize this paper. And the fact that it is qualitative research based on a storytelling method, is also completely opposite to my quantitative bias. However, transcribing 37 stories “about situations they experienced as difficult or complicated” by 17 tax officials, is probably no easy feat and quite some work. And just like my paper, Raaphorst did not study actual behaviour.

This study examines the kind of uncertainties frontline tax officials working with a trust-based inspection approach experience in interacting with citizen-clients. The classical literature on bureaucracy and the street-level bureaucracy literature suggest frontline officials face two kinds of uncertainties: information and interpretation problems. Analysing stories of Dutch frontline tax officials collected through in-depth interviews, this article shows that these two kinds of uncertainty only explain a part of the uncertainties experienced. Respondents also face action problems requiring improvisational judgements. The study furthermore finds that different sources underlie these uncertainties, pointing to possible explanations.

Raaphorst studied Dutch tax officials (Belastingdienst) that have dealings with citizen-clients/entrepeneurs, and who have to implement a trust-based inspection approach (“horizontaal toezicht”, aimed at “collaboration and trust” and “rules and legislation that are vaguer“).

A trade-off is: “such policies may yield more responsive law enforcement and service provision, [but] they could also compromise consistent and fair decision-making, especially when certain types of citizen-clients have better negotiation and communication skills to take control in bureaucratic interactions.”

The paper seeks to solve “the lack of understanding of the kinds, conditions, and consequences of uncertainty at play in frontline work.” This is all the more important in a more uncertain bureaucratic process where “bureaucrats’ actions are increasingly made dependent on their perceptions of citizens in interactions, and to a lesser extent prescribed by formal rules, this leads to a more uncertain bureaucratic process.”

Three types of uncertainty

Apparently, there are two types of uncertainty inexisting literature (information and interpretation) and this study adds a new type; action uncertainty:

These findings underline the importance of social interactions to bureaucratic work and hence to understanding the role of uncertainty in bureaucracy. Whereas public administration literature has pointed to the existence of information uncertainties and interpretation uncertainties this study adds a third kind: action uncertainties.

Because “objective rationality (…) did not reflect organizational reality” as described below, there is a information problem with ‘unknowns’.

[In] the traditional model of bureaucracy (…) bureaucracies are seen as rational organizations that should limit individual bureaucrats’ discretionary powers by setting strict rules and procedures. Technocratic knowledge, embodied in rules, procedures, and policies, is put at the heart of bureaucratic organizations.

On uncertainty as an interpretation problem: “bureaucrats’ discretionary practices are not only informed by organizational classification systems and rules but also by personal judgements regarding clients’ worthiness or deservingness, based on cultural schemes, moral beliefs and values, or certain stereotypes.” So “‘instances'” need to be interpreted, to see “what ‘is really happening’“.

A paragraph on Uncertainty of social interactions rightly states: “Discretion at the frontlines ‘is necessary to respond to the unexpected and to ensure that services are responsive to individual need’” And in the public administration literature apparently “The uncertainty that is inherent to discretion is treated as given.” I don’t know the PA-literature, but this strikes me as strange (see this related discussion Toezichthouders moeten zelf initiatief nemen in discussie over buitenwettelijk toezicht).

Summarizing table

The paper has three tables (one in the appendix), that I tried to integrate into one table. I felt they overlapped a lot and differences were more in lay-out than content. That didn’t help me understand the structure of the paper. The different order in the text on action uncertainty from the tables also confused me a bit.

Table 2 Description of the kinds of uncertainty at play in frontline tax officials’ work, slightly adapted and enriched:

Problem of Proof Standards Control
Contexts in which they occur Lack of evidence to support one’s interpretation [4] Vague rules and legislation [8]

Conflicting norms, values, feelings [4]

Impact of citizen-clients’ private lives and emotions [10]

Negotiations with citizen-clients [3]

Deviations from normality [8]

Difficulties experienced Vague stories of citizen- clients |
Conflicting informational cues |Comprehensibility of account is not clear-cut affair |
Finding proof requires effort and time
Law insufficient as backing |Potential inconsistent decision-making | Far-reaching consequences for citizen-clients On-the-spot reaction | Consequentiality of official’s immediate reaction|Change of inspection approach | Dependence on citizen- client

Numbers in brackets: number of stories (total N=37).

As I understood it, rows with problem and Context are nearly identical to Tabel 1 and Table A1 from the Appendix.

For Interpretation uncertainty, what is called “Vague rules and legislation” in Table 2 is “Determining right decision” in Table 1 (and sometimes “grey area interpretation” or “absence of clear standards about what is right in these instances” in the text).

And “Conflicting norms, values, feelings” in Table 2 is called “Experiencing dilemmas” in Table 1 (or “tension between what one ought to do as a tax official and one’s personal values or ideas about what is appropriate, or one’s feelings of empathy.” in the text). Another nice description of this construct is “this leeway or ‘freedom to struggle’ involves dilemmas between following the law on the one hand and feelings of empathy on the other hand.

The “Impact of citizen-clients’ private lives and emotion” under Action uncertainty is described in the text as “emotional labour” and “when ‘private life’ leaks into the encounter“.

The story illustrating “Negotiations with citizen-clients” where one tax official felt “he has been too open and has given away too much already early in the negotiation” was the most salient and best at describing a construct for me.


Are We Smart Enough to Know How Smart Animals Are?

Humans are not so special as we ourselves think, argues Frans De Waal convincingly in this book. “Less anthropocentric orientation (…) animals should be given a chance to express their natural behavior” (p275) and “proponents of human uniqueness (…) can’t stand the notion of humans as modified apes”. (P268).

De Waal favors the cognition for animals camp above the behaviorists (eg Pavlovian training, skinner boxes).

Many experiments comparing humans to apes are flawed. Young children sit in their mothers lap, whilst apes are separated in cages. Especially hard to correctly test social interactions.

Also, initially, gibbons were considered least intelligent because they performed bad on certain tests. Turned out, they lack fully opposable thumb and had hard time picking up things from flat surface “Only when their hand morphology was taken into account did gibbons pass certian intelligence tests” (p14). And another experimental mistake: “premature denials of mirror self-recognition in elephants based on their reaction to an undersize mirror”. (P157). With elephant-sized mirrors elephants do recognize themselves.

Good blend of anecdotes and hard research; “Subjective feelings won’t get us there. Science goes by hard evidence.” (P234). The painstaking field experiments by biologists/ethologists, observing animal behavior in the wild, is a testament that it is possible but very hard. Humanities should take note, especially Gloria Wekker-like, subjective approaches to “science” (check @RealPeerReview on Twitter for some examples).

P208 Nice story on hiding something for chimps. Similar experiment five years (!) with another chimp, made Socko look at exactly the hiding place from 5 years ago.

P228 Work by Sarah Boysen; chimp Sheba gets to choose between two cups with different amounts of candy. The one Sheba points to is given to another chimp. “Yet unable to overcome her desire for the fuller cup, she never learned to do so [point at smaller cup]”. If cups were rep,sced by numbers, she did choose correctly, consistently pointing to the lower number.

P231: Both macaques (Robert Hampton 2004) and rats (Foote and Crystal 2007) volunteer for tests only when they feel confident, suggesting that they know their own knowledge.

Other cool references:

Sorge 2014 Olfactory exposure to males, including men, causes stress and related analgesia in rodents

Capucin monkeys reject unequal pay

Redonan Bshary on cooperation in fish

Default neglect in attempts at social influence (PNAS)

Zlatev, J. J., Daniels, D. P., Kim, H., & Neale, M. A. (2017). Default neglect in attempts at social influence. Proceedings of the National Academy of Sciences, 114(52), 13643-13648. [pdf | supplemental information] And the link on Open Science Framework (OSF):


Current theories suggest that people understand how to exploit common biases to influence others. However, these predictions have received little empirical attention. We consider a widely studied bias with special policy relevance: the default effect, which is the tendency to choose whichever option is the status quo. We asked participants (including managers, law/business/medical students, and US adults) to nudge others toward selecting a target option by choosing whether to present that target option as the default. In contrast to theoretical predictions, we find that people often fail to understand and/or use defaults to influence others, i.e., they show “default neglect.” First, in one-shot default-setting games, we find that only 50.8% of participants set the target option as the default across 11 samples (n = 2,844), consistent with people not systematically using defaults at all. Second, when participants have multiple opportunities for experience and feedback, they still do not systematically use defaults. Third, we investigate beliefs related to the default effect. People seem to anticipate some mechanisms that drive default effects, yet most people do not believe in the default effect on average, even in cases where they do use defaults. We discuss implications of default neglect for decision making, social influence, and evidence-based policy

Key question in this study was: do people actually understand default nudges
enough to use them strategically?

Experts think so (spoiler alert: they were wrong): In an email survey of members of the Society for Judgment and Decision Making (n =133), the overwhelming majority of experts—90.1%—predicted that people would successfully use defaults to influence others in desired directions. Only 2.3% of experts predicted that people would fail to use defaults altogether.

In the experiments, defaults did work: CMs [Choice Maker] demonstrated a default treatment effect of 25.2 percentage points. That is, the CMs were 25.2 percentage points more likely to choose an option when it was the default than when it was not the default.

3 studies

The authors did three studies:
Yet we find that people acting as CAs [Choice Architects] frequently fail to understand and/or use defaults strategically when trying to influence others’ choices, even when doing so is in their best interest.

  • In study 1, in contrast to both theoretical and expert predictions, we found that only 50.8% of people set the target option as the default, across 11 samples totaling 2,844 participants.
  • In study 2, we found that this default neglect in CA decisions persisted even when people were given multiple opportunities for experience and feedback.
  • In study 3, most CAs revealed incorrect beliefs about how setting a default is likely to affect a CM. Even in cases where CAs were good at systematically using defaults (i.e., in the preselect default game), these decisions did not comport at all with CAs’ beliefs.

Study 1 finds that managers, law/business/medical students, and US adults often fail to understand and/or use defaults, but professionals do score above chance (59%)


Study 2: learning/repeated experiments did not improve the optimal use of defaults

In round 1 (the first round), 33% of CAs used default nudges optimally, which was significantly worse than random chance [2(1)=16:01; p <0:001]. This was qualitatively similar to some of the CA decisions in study 1. In round 20 (the final round), 54% of CAs used default nudges optimally, which was significantly better than round 1 behavior (z =3:89; p <0:001) but not significantly different from random chance [2(1)=0:81; p =0:37].


Study 3: Choice Architect (CA) beliefs about the default effect are far from accurate,

we asked CAs to predict what percentage of CMs would choose each option when it was and was not the default. The difference between these two predictions reveals CAs’ beliefs about the effect of setting a default. (…)

Overall, only 39.6% of CAs had directionally correct beliefs about the default effect (i.e., predicted that more CMs would choose an option if it was the default) (…)

Overall, there was a small but significant positive correlation between whether CAs demonstrated correct beliefs and whether they presented the optimal default (r =0:10; p =0:01).


The fact that many CAs do not even believe that the default effect exists makes it less likely that they would seek out help in their decisions about how to use available tactics.

Long-term incentive structures (…) may help explain why marketing professionals (who are incentivized to influence people toward specific target options) seem to use defaults more than bureaucrats who help develop public policy (who may simply want to give people options that are easy to understand or widely beneficial, without necessarily wanting to influence them toward a specific target option).

Blogs op over digitale marketing

Eind 2017 zijn mijn collega Lars van de Ven en ik begonnen met bloggen over digitale marketing en wat we als toezichthouder daar mee aan moeten.

AFM’ers Lars van de Ven en Wilte Zijlstra houden zich bezig met de impact van digitale marketing op de financiële wereld en het toezicht van de AFM. Lars is werkzaam voor het programmateam Innovatie & Fintech en Wilte werkt bij het Expertisecentrum. In een serie blogs geven zij hun visie op de ontwikkelingen in dit kader.

We hebben nu drie blogs geschreven:

We hebben aardig wat reacties gekregen (meer is altijd welkom! Mail me op wilte.zijlstra [a] In 2018 gaan we onverminderd door, iedere maand een blogpost.

En op twitter mooie reacties van mensen die ik hoog heb zitten.



The Birds and the Bees – What behavioural science and biology teach us about risk

A lecture advertised as Behavioural science and biology have much to teach us about risk obviously gets my attention.

Below my main take aways on this FCA Insights Lecture (FCA = Financial Conduct Authority in the UK, similar to the AFM in the Netherlands, where I work). Read the full Insight Lecture delivered by Chairman of Oxford Risk, Lord Krebs on 22 November, 2017.

Talk in three parts:

  1.  The biology of risk and decision making.
  2.  The role of regulation versus informed choice
  3. How we might use insights from behavioural science to help consumers of financial products to make better choices. Key point in this final section will be that behavioural science has not displaced classical economic models, but has the potential to enrich our understanding of human decision-making.

So what do biologists have to say about risk?

Biological models derive optimality functions from Darwinian fitness, or a proxy for fitness such as food intake, growth rate, or reproductive success. It can be argued that normative economic models, because they have no external reference point equivalent to Darwinian fitness, have an element of circularity: utility is that which is maximised.

‘Expected energy budget rule

Imagine a choice between two food sources, a ‘safe’ option and a ‘risky’ option. Which one is it better for the organism to choose? The theoretical answer depends on the organism’s internal state. (…) You may not think of peas as being very clever, but they have been equipped by natural selection with mechanisms for detecting nutrient concentration in the soil, a valuable survival device. When a seedling germinates, the young roots grow towards parts of the soil that are rich in nutrients.

Dener, E., Kacelnik, A., & Shemesh, H. (2016). Pea plants show risk sensitivity. Current Biology, 26(13), 1763-1767.

I want to make two general comments about this experiment.

First, the fact that pea plants follow the predictions of a normative evolutionary model of risk underscores the point that a brain, or conscious thought, isn’t needed to make the right decisions. Instead, the species we study rely on rules of thumb that have evolved because they yield the right answer, or at least an approximation to it.

Second, understanding these rules of thumb not only helps to gain insight into differences between the optimal solution and observed behaviour, but could also provide a general theory of decision making that complements and enriches the normative optimality models. There’s a parallel here with the difference between normative economic models and the rules that people actually use to make decisions (what Gerd Gigerenzer calls ‘fast and frugal heuristics’).

It’s easy to see how this finding, if applicable to humans, could be used to manipulate people’s choice of investment portfolios. But also “for good”, an example (from Knoef & Brügen, 2017):

Omdat hun default voor de meeste mensen de beste keuze is, heeft NEST de low risk-optie ‘NEST lower growth fund’ genoemd (in plaats van low risk), terwijl de high risk-optie ‘NEST higher risk fund’ heet (in plaats van high return).

The role of the regulator

If the construction of options for investment can be used to steer people’s decisions, should they be regulated, or is it a case of caveat emptor?

[W]hy regulators may not want to ban things. If you have objective criteria and apply them consistently, you may come up with some unintended consequences. Be careful of what you wish for.

My question, for discussion, is whether or not similar externalities of poor financial decisions by consumers could cause “indirect harms” and therefore justify regulation

labelling is not a panacea for the problem of dietary ill health. Again, I pose a question for discussion: are there parallels here for the labelling and marketing of financial products?

I very much agree with this last remark; warnings, disclosure and more inforamtion are (too) often hailed as the solution to everything.

Helping people to make better financial decisions

Encouraging people to make better choices through nudging, and as an alternative to regulation, has been advocated in recent years for many areas of policy, including financial services. The latest annual report from the Behavioural Insights Team or “Nudge Unit”, published last month, lists their key success stories from field scale trials. (…) On the face of it, these are impressive results, although it remains to be seen how long lasting the effects of nudges are. But even if these success stories are sustained, I think nudging has its limits. (…) nudges are likely to be of limited effect, compared with more interventionist measures such as investment in infrastructure, taxation or regulation. (…) No amount of nudging will compensate for lack of investment in the appropriate infrastructure.

we should not see behavioural science as an alternative to traditional optimisation models. In biology the actual mechanisms by which animals or plants make decisions are seen as complementary to, and not alternatives to, normative optimality models.

awareness of how people actually make decisions must be relevant to the ways in which advice is presented.

Beyond nudge

Our view at Oxford Risk is that the best financial decisions will be made by consumers

  • when they have the relevant knowledge,
  • when they are engaged with the decision and
  • when they feel comfortable about making the decision.

The challenge for the financial services industry is to harness the power of behavioural science to help people to make decisions about their money that

  • will give them what they want,
  • what they need and
  • what they understand.


Afgelopen vrijdag in museum Voorlinden geweest.

Mooi museum in prachtige omgeving. 

Ook mooie rij British Green bankjes om over het landgoed uit te kijken. Kleur was in het echt nog intenser dan op deze foto’s.

Veel fotograferende andere bezoekers, dat leverde ook grappige beelden op.

En ook werk van land-art kunstenaar James Turrell. Had mijn vader me op gewezen en was al eerder naar werk in Kijkduin geweest. In Voorlinden vond ik deze tekeningen het mooist.

Consumers and competition: Delivering more effective consumer power in retail financial markets

Triggered by these tweets, I read a position paper by the FS-CP, the Financial Services Consumer Panel (Don’t rely on consumers to boost competition, pretty much sums up the main conclusion) and a ‘think-piece’ Consumers and competition: Delivering more effective consumer power in retail financial markets.

About the FS-CP: We work to advise and challenge the FCA from the earliest stages of its policy development to ensure they take into account the consumer interest.

The think piece was written by Jonquil Lowe and aims to

  • consider possibilities to deliver more effective ‘consumer power’
  • generate a set of real-world metrics that can measure how well markets work for consumers
  • influence FCA thinking on competition and consumer responsibility

using a consumer survey and a literature review (p2).

Current approach: “competition policy focuses heavily on how to make consumers more engaged and closer to the rational decision-makers that traditional economic theory suggests are a prerequisite for well-functioning markets.” (p6). This focus on timing and framing of information “underplays other potential policy options and overlooks the possibility that some seemingly irrational lack of engagement might in fact be rational

Price discrimination

3.12 With ‘third-degree’ price discrimination, consumers do not self-select. Instead the firm has to be able to distinguish groups of consumers who are willing to pay more. (…)

This type of price discrimination is common in the general insurance market, where customers who stay with the same insurer year after year typically pay higher premiums than new customers. Consumers may view this practice as an unfair penalty on loyalty.

However, a report for the Financial Services Practitioner Panel from Clayton et al (2013) documents industry views that, given existing customers can choose to switch if they want to, this form of price discrimination amounts to consumer choice rather than consumer detriment and: ‘there is an inherent value to customers to not having to shop around and transfer and this should be reflected in the price they pay (i.e they should pay more)’ (p.22)

p.13-15: More on price discrimination:

  • A common price strategy is price obfuscation (…) For example:
    • discontinuous pricing occurs where a small change in the consumer’s circumstances or behaviour triggers additional charges, such as a sudden shift from free-if-in-credit current account banking to steep charges for even a small, short-lived unauthorised overdraft.
    • Exit charges that are triggered if a consumer wants to switch their mortgage or investment-type life insurance product may be downplayed at the time of purchase.
    • Firms may ‘game’ any price disclosure rules or price comparison services by keeping down headline charges, but charging extra for product features that might normally be considered integral to the basic product, for example, some insurers charge a fee for administrative adjustments, such as change of address.
  • Bait and switch
  • Opportunism (taking advantage of an external event or requirement to charge higher prices)

Product-feature strategies

  • Product bundling and add-ons
  • Product complexity (eg many characteristics or technically complex; many similar but slightly different products)
  • Product differentiation (genuine or spurious); product differentiation may also be used spuriously to create a degree of market power provided consumers are convinced the differences have some meaning and value. (p.15)
  • Brand and advertising
  • ‘Hollowing out’ (reducing core features or services); stripped-back policies’ (…) akin to the ‘shrinking Mars Bar’ (p.16)

Exploit biases

Firms can turn System 1 thinking to their advantage by providing consumers with cues designed to influence heuristic-based decisions. (p.17). A few are mentioned (inertia, framing, present bias, anchors, salience), but I feel this chapter does not provide convincing evidence for the conclusion on p.52: “Consumers are prone to behavioural traits that get in the way of their ability to drive competition and may be deliberately exploited by firms.”

Barriers to competition


“[C]ompetition regulators may be underestimating the extent to which consumers’ decisions to occupy the Repeat-Passive space could be a rational choice rather than the result of behavioural biases that need to be changed or harnessed (…) : the wide nature of search and switching costs; and satisficing. (p.29)

Enhancing consumer power

Building on Grubb’s (2015) policy types, the following policy options are considered:

Simplify choice: This could entail policies to simplify products, information and process.
‘Advice’: Policies that provide or facilitate expert advice to consumers, such as, comparative information from regulators and price comparison websites and requirements for firms to share customer data with these services.
Choose for the consumer: Policies that involve consumers delegating choice decisions to a third party, and
Other policies: These include the type of behaviourally informed measures being deployed by the FCA, such as smarter information that is better framed and more timely, as well as triggers, incentives and financial education. (p.33)


Automated shopping-and-switching

6.24 To summarise, automated shopping-and-switching has three novel aspects:

• It essentially digitises the role of a human broker or adviser, but going further than price comparison websites by taking full account of product and service features other than just price.

• It changes the default from status quo to switch if a consumer gain is identified, and

• It passively gets on with repeating the process as necessary, releasing consumers from the merry-go-round of repeated active engagement across multiple financial and household markets. (p.40)

Meaningful metrics

Switching data is a particularly contentious measure because the rational outcome of shopping around might be not to switch if expected benefits do not outweigh costs. Moreover, as a market approaches the ideal of perfect competition, the necessity for, and pay-off from, switching would decline. (Paradoxically, this would also reduce the incentive for consumers to shop around even though continued shopping around would be required to maintain perfect competition.) (p.49)


8.2 However, the expectations placed on consumers [reliance on rational, active consumers to drive competition by shopping around] look unrealistic because:

  • Perfect competition seldom, if ever, exists in reality. In most retail financial services markets, it is in firms’ interests to create and maintain market power. They do this through strategies, such as price discrimination, price obfuscation, product bundling and complexity and promotion of brands. The result is markets that are overly complicated and products that are difficult or impossible to compare. Even the most financially capable consumers face a battle to find value-for-money in markets like these.
  • Price comparison websites are designed to help consumers make product comparisons, but often focus too heavily on headline price, ignoring other essential factors, such as product features and quality of service. Firms can ‘game’ price comparison sites by ‘hollowing out’ products and using a variety of ancillary charges.
  • Consumers are prone to behavioural traits that get in the way of their ability to drive competition and may be deliberately exploited by firms. Competition regulators have a growing understanding of these traits, treating them as a new type of barrier to competition, and seeking either to alter consumer behaviour or adopt policies that work with the grain of consumers’ actual behaviour. However, the aim of these policies is still to foster more active shopping around and switching.
  • Competition regulators may be misinterpreting widespread consumer decisions not to engage with shopping around as behavioural barriers, when in reality they may be rational choices based on consumers’ preferences about how they wish to spend their time and mental effort.


International Conference Financial Consumer Protection in Kiev (part II)

On September 12th, there was an International Conference on Financial Consumer Protection in Kiev, Ukraine. Organised by DAI as part of their Financial Sector Transformation project, and co-hosted by the National Bank of Ukraine.

[read part I]

My talk on YouTube, with relevant slides (pretty easy to do with Screencast-o-matic)