April 2010

For a new idea, it’s got a lot of names — “new” paternalism, “soft” paternalism, even “libertarian” paternalism.

This month at Cato Unbound we’re discussing a range of policy choices that purport to bring out what individuals themselves would prefer. They propose to do it all by cleverly — and gently — nudging the presentation of choices, the default options, and the costs of noncompliance, thus taking advantage of the cognitive biases within us all, but using them to our own benefit. Soft paternalism doesn’t force anyone to do anything, the argument goes. It merely sets things up so that what we tend to do also tends to coincide with our best interests.

Does it sound too good to be true? Lead essayist Glen Whitman has some doubts. He voices them this month and challenges a select group of behavioral economists and legal scholars to consider that soft paternalism might not be all that it promises. Responding to him will be Richard Thaler of the University of Chicago, Jonathan Klick of the University of Pennsylvania, and Shane Frederick of Yale University.


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Lead Essay

  • 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

  • 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.

  • 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.

  • 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?