Introducing a “foreign language shield” into a decision-making process is a proven way of making better decisions, according to Cass Sunstein, the Robert Walmsey University Professor at Harvard Law School.
“If you’re an adviser, get the cost/benefit figures, the risk/return figures, the algorithms, up and running. It’s a great safeguard,” he said.
The term “foreign language shield” comes from the behavioural finance finding that speaking a foreign language has been shown to turn off the part of the brain that makes quick, intuitive and generally error-prone decisions.
The demand for rigorous cost/benefit analysis is “in President Obama’s 2011 Executive Order, which says you have to quantify everything and make sure the benefits justify the cost”.
“I found this was a fantastic safeguard – sometimes resisted, and not always in the regulatory areas I imagine that you work with, honoured – but extremely helpful,” he said.
Sunstein said OIRA had veto power, subject to the President’s override.
“So if it says no…that’s the end of it, really, unless the President comes in,” Sunstein said.
“And he’s a pretty busy guy.”