To Tell the Truth

If arguing with me is like walking into Monty Python’s “Argument Clinic,” arguing with Richard Thaler is like playing the 1950s game show “To Tell the Truth.” Will the real Richard Thaler please stand up?

One Richard Thaler is heavily represented in the book Nudge, as well as in this debate. This Thaler has lots of helpful advice for product designers, human resource managers, and life coaches. All he wants is better designed cafeteria layouts, easier to fill out forms, better stovetop arrangements, and so forth. When it comes to government, his emphasis is on liberty-improving proposals like privatizing marriage and allowing school choice (for which I applaud him). When he advocates more government, it’s usually in form of modest warning-labeling requirements. He focuses on default rules with very low costs of opting out. He says my biggest complaints are with policies that I only imagine that he favors: “ones that involve coercion.”

And then there is the other Richard Thaler — the one who co-wrote the article “Libertarian Paternalism Is Not an Oxymoron,” published in Chicago Law Review. This Thaler is far more ambitious about the prospects for paternalism to improve our lives, not just in the private sector, but in the public sphere as well. Rather than repeating myself, because Thaler finds this irritating, I will again encourage readers to check out pp. 1174–1177 and pp. 1184–1190 of that article (and pp. 693–699 of Rizzo’s and my article on the subject). Suffice to say that this Thaler goes far beyond defaults with low costs of opting out. He specifically says that planners — including government planners — could engage in a “more aggressive form of paternalism” by imposing higher procedural burdens on opting out, or impose “substantive constraints” that rule out some opt-outs entirely, or even “reject freedom of choice on the ground that those who reject the default plan will err all or almost all the time” (see pp. 1189–1190). All of these meet with Thaler’s (or should I say this Thaler’s) seeming approval.

To tell the truth, if I had only read Nudge, I would never have gotten exercised about this topic; I would never have written journal articles on the subject; and this debate would probably not be happening. But now we have a two-Thalers problem, and the earlier Thaler’s articles are still out there influencing people.

Is it possible Thaler has changed his mind? It sounds like it. In response to my quoting a passage in his article about libertarian paternalism versus libertarian paternalism, Thaler says that passage was “admittedly tortuous” and that’s why it was left out of his book. Actually, I didn’t find it tortuous; I found it disagreeable but admirably clear. And the same sentiment — that libertarian paternalism encompasses a wide range of policies, some of which are substantially more intrusive — appears repeatedly in the article, so it doesn’t seem like a mistake. How about this passage?

As we have said, there is a thin line between non-libertarian paternalists and libertarian paternalists who impose high costs, procedural and substantive, on those who reject the plan. Almost all of the time, even the non-libertarian paternalist will allow choosers, at some cost, to reject the proposed course of action. Those who are required to wear motorcycle helmets can decide to risk the relevant penalty, and to pay it if need be. Employers and employees might agree to sub-minimum wage work and risk the penalties if they are caught. (pp. 1189–1190)

If Thaler is ready to repudiate all or most of the more intrusive policies discussed in his pre-Nudge days, I’m ready to hear it. Until then, I can only assume he still stands behind them.

But at the end of the day, this isn’t about what Richard Thaler really believes. Why not?

First, because Thaler is just one part of a broader movement. Libertarian paternalism is only one flavor of the new paternalism. Colin Camerer, et al., in their article “Regulation for Conservatives,” advocate a wide range of similar policies, and you won’t find the word ‘liberty’ or ‘libertarian’ anywhere in the article. Meanwhile, people like Matthew Rabin and Ted O’Donoghue, and Jonathan Gruber and Botond Koszegi are pushing both new sin taxes (on fat and other unhealthy foods) and large increases in old ones (cigarettes, booze) — again, with little or no regard for the liberty question.

Second, no matter what the academic paternalists may believe, their ideas will inevitably be transformed by the political process. No matter how much Thaler stresses that he really only wants to make people better off “by their own standards,” he cannot control the evolution of his ideas. The slippery slope argument fundamentally addresses how ideas and policies evolve over time, often far beyond the intentions of initial policymakers. Politicians, voters, bureaucrats, judges, and special interests will all have their chance to misunderstand, misrepresent, misapply, and overextend Thaler’s (and others’) ideas. Of course, this is to some extent unavoidable; as a libertarian, I am all too aware of how libertarian ideas can be misstated and misused by wrongheaded politicians. My claim, however, is that the new paternalism by its very construction is particularly vulnerable to slippage — and that its architects ought to be cognizant of that risk.

I have many other reactions to Thaler’s most recent post, as well as reactions to comments from elsewhere in the blogosphere. But there’s plenty of time left in the month.

Also from This Issue

Lead Essay

  • The Rise of the New Paternalism by Glen Whitman

    In his lead essay, Glen Whitman argues that “soft” or “libertarian” paternalism lends itself to ever more intrusive regulations in a variety of ways. Some of these are due to the very cognitive biases that advocates of soft paternalism have identified in their own research. For example, behavioral economists note that people exhibit extremeness aversion – a phenomenon in which they avoid what appear to be extreme positions. Yet introducing some amount of paternalism will make more paternalism, rather than less, appear to be the plausible middle ground. The dividing line between “soft” and “hard” paternalism is difficult to find, and Whitman offers many reasons why policymakers will tend toward more and more intrusive paternalism over time.

Response Essays

  • Fear of Falling by Richard Thaler

    Richard Thaler argues that libertarian paternalism does not face any of the dangers that Glen Whitman suggests. Given that policymakers and administrators are commonly forced to set up default rules anyway, it only makes sense to set these up in ways that help the governed individuals to realize their true goals. Given that the problem of choice architecture is unavoidable, Thaler argues that this is a reasonable, mainstream solution.

  • The Dangers of Letting Someone Else Decide by Jonathan Klick

    Jonathan Klick argues that not only is the slippery slope real, but a host of other difficulties lie ahead for libertarian paternalists. While we might find academic behavioral economists sensible regulators, in reality regulations are made by lobbyists and Congressional staffers, whose incentives don’t necessarily lie in the direction of good policy. In the long term, too, allowing people to shift the burden of decision to others will habituate people to not deciding – and stunt their abilities.

  • Of Frogs and Men by Shane Frederick

    Shane Frederick explores some of the unanswered questions of soft paternalism. He admits that Whitman is right to doubt whether we can postulate a given preference set as the “true” one for all time, for a given individual, and by implication for a given society. Still, he argues, this doesn’t mean we must refrain from all opinions about the behavior of others. Why not express such opinions in our choice architecture, if they are sincerely held and not terribly hard to opt out of?

The Conversation