Transparency is a fundamental component of democratic government.
It concerns the right of citizens to know about the activities of
their government. Transparency policies have expanded to protect
against institutional corruption, a notion that underlies Louis
Brandeiss famous
quote: Sunlight is said to be the best of disinfectants.
Recently, transparency policy has evolved into what my colleagues
Archon Fung, Mary Graham, and I call in our research targeted
transparency.
Targeted transparency is the use of publicly required disclosure of
specific
information in a standardized format to achieve a clear public
policy
purpose. It therefore goes beyond the disclosure of information as
an end in
itself. Targeted transparency represents a new regulatory approach,
but it also
provides critical lessons to those seeking to build public trust in
government
through information disclosure.
Over the last few decades, policymakers at the federal,
state, and even international levels have addressed
major public crises, not by regulatory responses, but instead
by a decision to require information disclosure. For
example, hundreds of people died annually as a result
of sport utility vehicle (SUV) rollovers in 2000 and beyond.
Historically, the federal government would have
responded to this crisis through standards-based regulation.
Instead, Congress chose to require auto companies
to report the National Highway Traffic Safety Administrations
assessment of the probability of a rollover, which
was then translated into a simple rating for consumers.
Instead of telling Ford or General Motors to change
their SUV designs, the government developed a five-star
rating that shows consumers the probability that a given
SUV would roll over during different kinds of maneuvering
a radically different approach to improving auto
safety. This is just one example: counting conservatively,
we found 135 major federal regulations that used this
type of regulatory transparency in the last ten years.
When Does It Work?
Most people support the general idea of transparency
because, as noted, it is basic to democracy. However,
targeted transparency gives rise to new questions. When
does it work? What factors link disclosure to changes in
behavior that achieve public objectives? After reviewing
eighteen major transparency policies, our conclusion is
that more often than not they do not work. They sometimes
do not work because they are political compromises
that were never intended to work. More often,
they dont work because they havent been designed
terribly well, and the policymakers havent really considered
what they want to accomplish through transparency.
Two examples suggest what makes transparency
work or not work as a means of regulation.
Clarity or Opacity
Many people use the nutritional labels on food and
drink in deciding what to consume. They represent specific
federal transparency policy for nutritional labeling
that is dictated down to font size. These simple labels are
the result of a lengthy, involved policy process that included
legislative debate on such minutiae as that font size.
In contrast, there is federally mandated disclosure
on drinking water in local communities, which not
many realize they have the right to. That legislation was
passed in response to a major public health problem in
Milwaukee, which resulted in the death of a number of
citizens because of drinking water contamination. Most
people dont even know there is such a law. The quarterly
disclosure report from the local water authority is
totally unfathomable. My wife is an environmental risk
assessor, who spends much of her time considering the
impact of exposures to low-grade toxins on health, and
she cant make heads or tails of this thing; most other
people who read it cant either.
These examples illustrate the promise of and problem
with transparency policies. These policies only
work if they give users the information they need, when
they need it, and in the form they need for making
an effective decision. If those conditions arent met, the
transparency policy fails. Lets look at another example,
where transparency policy has had a major impact.
Southern Californias Restaurant
Transparency Law
They say you never want to look at what happens
in a sausage factory; you probably dont want to know
what goes on in a restaurant kitchen either. In Los Angeles
in 1997, a film crew decided to find out, taking a hidden
camera into several restaurants and filming atrocious
things: rats in storage areas, failure to refrigerate food,
waiters reserving food from one customer to another, and
other appalling practices. This led to a big outcry, and the
Los Angeles County Board of Supervisors quickly passed
a transparency law that requires every restaurant in southern
California to post a letter grade (A, B, or C) based on
public health inspections. The size and shape of the sign
are mandated, and it has to be in the front window right
next to the menu: A, B, or C. If a restaurant doesnt get a
C, the county public health department shuts it down.
In short order, this system has had a phenomenal impact
on public health, as documented in a number of careful
studies comparing restaurants with bad grades with
those with good ones. The Cs lost significant revenue,
while the As business improved. More important, hospitalizations
related to food poisonings greatly decreased.
The details of the policy make senses: the best time to
give people information about a restaurant is when they
are walking in the door. If you look at the menu and see a
C staring you in the face, you spin around and go somewhere
else; in fact, this is what happened.
This is in stark contrast to the drinking water standard,
which disseminates highly complex information.
Its a quarterly report that arrives by mail, along with all
the other junk mail. Consequently, people throw it away
most of the time. It contains incredibly detailed, difficult
scientific data. If thats not bad enough, the information
is a year old, so it says nothing about the current quality
of drinking water. Not surprisingly, studies of this policy
show that its had very little effect. It offers the wrong
information, in the wrong form, on something about
which people have little choice.
As shown in these examples, to fashion policies that
work, policymakers need to understand how information
affects the decisions of users and how, in turn, changes
in user behavior affect the actions of disclosers. The Los
Angeles County restaurant grading system works because
consumers changed their behavior, and in response, restaurant
operators perceived or anticipated those changes,
which incentivized them to clean up their act. In contrast,
the drinking water measure failed because the information
was too opaque to get users attention and gave no
one incentive to change the system.
Data Citizens Need
Consequently, in thinking about the challenge of
using transparency policy to reduce corruption and
build public trust, we must understand how citizens
and other parties can assimilate and utilize the information
provided. Dumping tons and tons of data on the
Web doesnt accomplish much. We need to know the
data citizens need, whether they are financial, outcome
based, or other. We can only find this out by reaching
out to the communities, not only the individual citizens,
but also civic groups, the media, and the people whose
behavior might affect the public trust.
We need to go beyond posting downloadable information
on the Web, to taking advantage of cuttingedge
information technologies. This includes tapping
the potential of social networking technologieslike
FaceBook and Twitter, the way the new generation communicates
which allow interaction among citizens and
between them and policymakers. Transparency policy
can enhance citizen engagement, interaction, and ultimately
trust in the democratic process, but we must learn
from the current systems, building policies based on how
people use information in making their decisions.