Could better usability save the economy?

Okay, maybe that headline is an overstatement, but I'd say usability is an overlooked component in saving the economy. Like any American who pays attention to current events, the economic downturn is at the forefront of my mind right now. And there is one area that has troubled me quite a bit -- the whole mortgage meltdown.

There are kind of two sides to the mortgage problem (ignoring for a moment the whole "credit swaps" thing -- which is a pretty big piece to ignore but just roll with me here): there are the individuals who bought homes they could not afford, and there are the lenders who signed off on mortgages they likely knew the buyer could not afford to repay.

Much has been made of the "predatory lenders" -- the system is set up such that a lot of the places granting the initial mortgages get a few years of high (or all) interest payments before passing the mortgage off to some larger firm for the remainder and letting them deal with the fallout of potential foreclosure. Ultimately, the initial lenders don't really care about whether or not the lendee can pay it all back -- they just want that initial burst of nearly pure-profit payments.

But what bothers me about this attack on "predatory lenders" is that pretty much any business out there seeks to increase profit, so why pick on lenders? It seems to be to be attaching some moral expectation to something that is amoral (not immoral, mind you). Paying for goods and services is a mutual exchange where each side gets something they want.

The consumer-minded side says this is unfair, but I think it's risky to remove any responsibility from the individual. If you sign a contract that requires you to pay a certain amount of money, it's ultimately your own fault if you end up unable to hold up your end of the bargain. Really, a foreclosure is the fault of the homeowner, not the lender -- even if the lender suspected you wouldn't be able to pay it back, if you have stated that you can and will pay things back, you're the one who's made the promise you can't keep.

Where this all breaks down is that not every lender is going to be explicit in terms of costs, not every homeowner is going to know to check all the fine print, and those two problems can feed off each other into a pretty dangerous spiral.

This is where usability comes into play. One of the tenets of good usability is that you don't blame the "user" if they have a problem. Even if everything to accomplish a task is there, if your users are failing to do it, then you have a problem with the presentation. You don't just say your users are stupid (because then you're both insulting your customers and losing business), you try to adjust things to make it clearer and easier to understand.

I am not familiar with the rules and regulations around signing a mortgage, but I am virtually certain the amount of paperwork involved would be confusing to even the savviest person. From a usability perspective, it's a nightmare. I have no doubt that people have signed contracts not realizing that the initial $800 a month payment is going to balloon to $2000, or that the total they pay for a $300,000 home is actually going to be something like a million dollars.

Imagine for a moment that regulations required that all major contracts have a one-page cover sheet that included clearly the monthly payment, how the monthly payment may change over time, the breakdown of interest and principal, and the total amount to be eventually paid. All of this in nice big fonts with a clear layout that is easy to read.

I fear getting too political in this blog, but I can't help but think that so many of the problems in our current economic crisis boil down to people making decisions without knowing all the information. And while many people think that the problem was a lack of regulating the kinds of decisions that could be made, I would say that the greater problem was not requiring full disclosure and clarity be provided before anyone makes any major transaction. Whether that is a potential homeowner or a potential investor, if there was a requirement of a crystal clear one-sheet explanation of the pending transaction in layman's terms, you may find fewer questionable decisions being made in the first place.

As an analogy, New York City recently began requiring chain restaurants to print calorie information next to meals. The caloric totals shocked people (some salads have more calories than a burger and fries!?), but those trying to eat healthy had full information at their disposal rather than uninformed guessing. Compare this regulation to some alternative legislation that may have required that restaurants stop serving high calorie dishes altogether. The former regulation puts the onus on the individual, but provides them with full disclosure in a clear manner. The other is the government deciding what's good for you, expecting that you won't make the good decision for yourself and taking options off the table. I'm sure some people would still prefer the latter, but I really think that letting people make their own choice, for good or bad, is better than trying to make it for them -- just make sure they know the consequences of their choices.

Usability is ultimately about providng clear information. If we can manage that, and let people make fully informed decisions, we can encourage responsibility without removing choice.