New Paternalism: Odds & Ends

May 5, 2010

by Glen Whitman

The Cato Unbound discussion on new paternalism has come to a close, but I want to address a few loose ends that came up during the exchange.

The Demand for Evidence

Richard Thaler has demanded empirical evidence that the new paternalism has led to slippery slopes. Given that the new paternalism is a relatively new phenomenon, I certainly don’t claim that the slope has already occurred.

I do claim that slippery slopes are real, that slopes are most likely when certain features are present, and the new paternalism has many of those dangerous features.

Historically, there can be little doubt as to the existence of slippery slopes. Examples that came up during the Cato Unbound forum included the run-up to Prohibition, the escalation of the drug war, and the gradual encroachment of smoking restrictions. I believe an honest examination of other, non-paternalist domains yields similar conclusions. For instance, after passage of the 16th Amendment, the vast majority of people paid no income tax at all, and the top marginal tax rate was only 7%. We all know how that turned out. A much more complex story could be told about early interventions in healthcare that laid the groundwork for more extensive intervention later.

For examples more closely related to the new paternalism, consider two stories David D. Friedman relates on his blog. Both involve a college whose supposedly optional contributions to certain causes (a fund for environmental projects and one of Ralph Nader’s PIRGs) became, in the process of implementation, de facto mandates. I don’t know whether the college in question is private, but since there is competition among colleges both public and private, I’m not overly concerned about things getting far out of hand. Nevertheless, the process Friedman describes is illustrative:

But the people constructing the choice architecture know what result they want to get, they believe they are doing good and so not constrained by what they themselves would consider proper principles of morality and honesty in a commercial context, so it is very easy to make the ‘wrong’ choice more and more difficult and obscure until what is optional in theory becomes mandatory in practice.

Put that process in a political context, and there’s good reason to be worried after all.

Other Goals

New paternalist techniques can be used for purposes other than helping people “by their own standards.” Thaler offers the example of organ donation: by defaulting people into donor registration, or at least forcing them to choose explicitly one way or the other, it may be possible to increase organ donations. Other examples, such as inducing lower energy usage, appear frequently in Nudge.

During the Cato Unbound discussion, I largely ignored these examples because I considered them off-topic. Paternalism is about changing your behavior for your own good, not the good of others, right? But now I see the connection. The process starts with the (possibly correct) assumption that some people already want to help some good cause, and all they need is a little nudge to do it. Ostensibly, then, the goal is still making people better off by their own standards. From there, the slide is quick and almost unnoticeable. Is the new policy’s goal to help people better satisfy their own preferences, which might happen to include supporting a good cause? Or is the goal simply to advance that cause?

In the comments to a previous post on Agoraphilia, Gil Milbauer reports that his Washington state driver’s license renewal includes “a $5 ‘donation’ to state parks that I have to deduct from the total in order to avoid paying.” I have to agree with Gil’s assessment: “This opt out gimmick was not a reasonable attempt to help people satisfy their actual preferences. It’s a way to scam them out of money, and that’s how I expect most uses of these techniques to be used.”

The concern, then, is that new paternalism will provide justificatory cover for a panoply of interventions that eventually take on a life of their own, fully unmoored from the “by their own standards” goal.

A Silver Lining for Liberty?

In the wider blogosphere, some libertarians ask whether the new paternalism has the potential to improve liberty in some domains by rolling back harder paternalism. (Julian Sanchez expresses this hope more positively, Bryan Caplan more negatively.)

In Nudge, Thaler and Sunstein do, in fact, support a handful of liberty-improving proposals, and for this they should be lauded. Nevertheless, if you consider the new paternalist literature as a whole, you’ll find the balance is heavily on the side of greater intervention. Most new paternalist authors simply don’t acknowledge liberty-improving possibilities at all. Even in Nudge, Sunstein & Thaler don’t go as far as (say) pushing to repeal the prohibition of drugs or prostitution and replace it with knowing-and-voluntary waivers. Their liberty-improving proposals are more modest: privatizing marriage, allowing school choice, and (maybe) privatizing Social Security.

I think the reasons for the imbalance in libertarian paternalism are clear enough. When it comes to liberty-improving policy changes, it’s the “libertarian” that does most of the work. When it comes to liberty-diminishing policy changes, it’s the “paternalism” that does the work.

To put it another way, what self-described libertarian ever needed paternalism (or behavioral economics) to think of liberty-improving proposals? Libertarians have supported school choice and Social Security privatization for literally decades. David Boaz called for privatizing marriage at least 13 years ago (and I remember discussing the idea with him years earlier). Libertarians have long sought ways to weaken the drug war short of full-blown legalization, such as ending mandatory minimum sentences and legalizing marijuana for medical use.

The motivation behind such proposals has, in general, been to assuage the fears of those who think a sudden leap to laissez-faire would result in a hard, painful landing. People unaccustomed to a certain kind of liberty may lack the personal and social tools to cope with it (a result of the “unlearning” effect that is one argument against paternalist laws), so some hand-holding may be required. Now behavioral economists are offering us a new set of tools that may help us better craft these intermediate policies.

That’s great. But unfortunately, their liberty-improving suggestions have been offered up as a package deal. That package includes an awful lot of unnecessary, and I think damaging, baggage. When the rubber of new paternalism hits the road of real politics — where numerous processes support expanding intervention while few support rollback — I predict the balance liberty-diminishing to liberty-improving policies will become increasingly lopsided.

(Cross-posted at Agoraphilia.)

11 Responses to “New Paternalism: Odds & Ends”

  1. Jayson Virissimo Says:

    Mr. Whitman, Herbert Spencer talked about, what he called, “political momentum”. It seems to me that your slippery slope argument against New Paternalism bares a striking resemblance to Spencer’s “political momentum” argument against Old Paternalism. I think you may find it worthwhile to review Spencer’s work in order to improve your own thoughts on the issue.

  2. Mario Rizzo Says:

    If I might answer as the coauthor of the journal articles on which this post and the Cato Unbound posts are based: We are thoroughly familiar with Herbert Spencer. See my http://works.bepress.com/mario_rizzo/3/

    Spencer was an inspiration for our joint article on slippery slopes:

    http://works.bepress.com/mario_rizzo/21/

    We improved on Spencer.

  3. Troy Camplin Says:

    It seems to me that the supporters of the New Paternalism don’t understand that with true liberty you get people acting much more responsibly and, thus, they don’t need nudges to do what it right for both them and their communities.

  4. j r Says:

    i read the Cato Unbound with great interest. i am skeptical of sunstein and thaler’s claims, but i wanted to give them the benefit of the doubt. even though thaler came off as quite defensive and dismissive, he seems really convinced that his ideas are more libertarian than paternalist.

    the problem arises when you take these ideas and release them into the wild. look at this excerpt from a small book review that i saw on the Dep’t of Labor’s employee web site:

    …the author’s goal for Nudge is to reshape public policy by providing insight as to how government can guide (nudge) citizens into making better decisions so that they live healthier and more successful lives. An example: Are Americans saving enough?

    read the whole thing here; it’s short. there’s no mention of making people better off by their own standards, only of making them better off. and this was written by the dep’t of labor’s chief economist.

  5. Mario Rizzo Says:

    I don’t know whether Glen agrees with me on all of this or not. However, I believe: (1) The more standardly-libertarian aspect of Thaler’s paternalism in Nudge is the result of the many criticisms he and Sunstein received of the more tradionally paternalist aspects of their thinking before the book was written. Thus, it is an intellectual retreat;

    (2) More cynically, Nudge is a way to make more acceptable the statist policies that are CONSISTENT with their basic framework — part of the slippery slope from privatize “aspects” of Social Security to many other things;

    (3) In today’s political atmosphere there is very little chance that the philosophy of making people better off as they really, really, really see it will move things in a more libertarian direction. If we want to do this then we need a more honest framework that extols liberty, not paternalism.

    (BTW, as to the further point that Thaler makes — he never really endorsed the more statist policies; he just mentioned them — I don’t believe him. Why? He could have easily said that he did not advocate them in his articles.)

  6. Glen Says:

    I hesitate to speculate too much about what Thaler was “really thinking.” But I’m increasingly of the opinion that the quasi-endorsement of statist policies in Sunstein & Thaler’s articles was a compromise between coauthors who didn’t completely agree. Sunstein actually favored those policies; Thaler mostly did not; so as a compromise, they said those policies were “consistent” with libertarian paternalism without explicitly endorsing them.

  7. Jim Rose Says:

    The new paternalists often lapse into the other people are stupid fallacy.

    They are happy to say others make systematic mistakes, but they are less willing to admit they are so error prone too, if cross-examined.

    These same error prone masses are also allowed to vote and drive cars.

    The new paternalism is just as easily an attack on democracy and the capacity of ill-informed and error prone governments to do any better than private action.

    It is not surprising that the advocates of state intervention, new and old, must make dewy eyed assumptions about the information processing and gathering capacities of their pre-chosen alternative, which is government intervention.

    As Buchanan said, compare the market, warts and all, with government intervention, warts and all. Also, Hayek defended liberty as the best way of adapting to ignorance and unpredictability quickly at local level as it happened, not a much later, when further important new changes have already happened.

  8. Troy Camplin Says:

    Glen,

    If you’re not willing to posit what someone is “really thinking” or what they “really thought,” then any sort of humanities scholarship — philosophy, literary studies, etc — is impossible, as that’s exactly what such scholars do.

  9. Richard Schulman Says:

    Troy Camplin:

    It’s not true that positing what someone “really thought” is a universally respectable practice in literary, legal, and other humanities scholarship. The best scholars distinguish “original meaning” from “original intent” — and base their scholarship on the former, which has falsifiability, versus the latter, which doesn’t.

  10. Troy Camplin Says:

    I’m not sure you can separate meaning and intent so easily as that. If I’m writing about something Nietzsche, for example, wrote, I am saying, “This is what this means,” which is the same as saying, “This is what Nietzsche meant,” which is the same as saying, “This is what Nietzsche intended to say.” A consensus might be reached, but that’s hardly the same as falsifiability.


  11. [...] Mr. Sunstein emphasized the need to pay attention to the costs and benefits of regulation. As a legal scholar, he argued for paternalism with a light touch, the subtle “nudge” approach to get people to do what you want them to do. Mario Rizzo has shown the logical issues with this  new paternalism, in particular the knowledge problem embodied in it.  See also Glen Whitman’s discussion of the topic. [...]


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