But Agarwal and his co-authors are unable to find any such effects. They do find a modest increase in annual fees for cardholders, but that increase amounts to less than 10 percent of the $20.8 billion total. In their words, “the CARD Act brought about an across-the-board reduction in borrowing costs.”
Needless to say, the U.S. is in a period in which ambitious reform proposals tend to run into serious political obstacles. But in countless domains, small initiatives, often taking the form of mere nudges, can have stunningly large effects. Both public and private institutions need to pay careful attention to evidence and data — and to draw inspiration from recent success stories.
— Cass R. Sunstein, the Robert Walmsley University professor at Harvard Law School, is a Bloomberg View columnist. He is the former administrator of the White House Office of Information and Regulatory Affairs, the co-author of “Nudge” and author of “Simpler: The Future of Government.”