Regulation
The title of this webpage was inspired by my reading of an article of the same name by Oxford University's Christopher Hood published in Public Management Review in 2007. In that article, Professor Hood argues that the pervasive prescription of transparency and accountability as a universal prescription for good governance might lead to highly undesirable consequences when accompanied by blame avoidance by regulators and others in the public eye. The conventional assumption is that the management of political and reputational risk involves an 'upside' of acquiring credit and a 'downside' of attracting blame. But he and other academics are beginning to believe that there is a a strong 'negativity bias' - so that fear of attracting blame way outweighs the attractions of bold and effective political or regulatory decision making.
The proposition, in more detail, is that negativity bias encourages regulators to avoid making contestable or appealable judgements that create obvious losers. Negativity bias also encourages regulators to develop policies and bureaucratic routines that minimise the risk of institutional or individual liability and blame. And they introduce protocols and automaticity which minimise the exercise of individual discretion by both staff and senior officeholders. Readers can probably think of their own examples of this behaviour and, if so, I would be glad to hear from you. But worldwide financial regulation in the run up to the credit crunch strikes me as one obvious candidate. I will add other examples as this webpage is developed over the coming months.
Martin Stanley
Last updated January 2010