by Mario J. Rizzo and Glen Whitman

Book description

The burgeoning field of behavioral economics has produced a new set of justifications for paternalism. This book challenges behavioral paternalism on multiple levels, from the abstract and conceptual to the pragmatic and applied.

Behavioral paternalism relies on a needlessly restrictive definition of rational behavior. It neglects nonstandard preferences, experimentation, and self-discovery. It relies on behavioral research that is often incomplete and unreliable. It demands a level of knowledge from policymakers that they cannot reasonably obtain. It assumes a political process largely immune to the effects of ignorance, irrationality, and the influence of special interests and moralists.

Overall, behavioral paternalism underestimates the capacity of people to solve their own problems, while overestimating the ability of experts and policymakers to design beneficial interventions. The authors argue instead for a more inclusive theory of rationality in economic policymaking.



Gerd Gigerenzer (Director of the Harding Center for Risk Literacy, Max-Planck-Institut für Bildungsforschung, Berlin):

Taking issue with the narrow norms of rationality in much of behavioral economics, this remarkable book argues in favor of an inclusive concept of rationality and is one of the first to cover the full range of relevant empirical evidence from psychology. Escaping Paternalism promotes a serious attempt to understand why people do what they do.

Richard Epstein (Laurence A. Tisch Professor of Law, New York University):

Mario J. Rizzo and Glen Whitman have written an incisive yet accessible critique of the dominant strain of behavioral economics associated with Daniel Kahneman, Richard Thaler and Cass Sunstein. Rizzo and Whitman are wise enough to know that human beings, with quirks and practices, are ‘people, not puppets’. Yet they show how classical liberal principles of governance do far better in organizing social arrangements than the various forms of soft paternalism now in vogue with so many behavioral economists.

Robert Sugden (University of East Anglia):

Mario J. Rizzo and Glen Whitman present a powerful and well-documented critique of behavioural economists’ justifications of paternalism. They argue convincingly that these justifications illegitimately presuppose that rational-choice theory is a normative standard. Inspired by the psychology of Gerd Gigerenzer, they offer a more pragmatic and ‘ecological’ understanding of human rationality.

Tyler Cowen (George Mason University) via Marginal Revolution:

The authors are Mario Rizzo and Glen Whitman, and the subtitle is Rationality, Behavioral Economics, and Public Policy.  This is the most comprehensive, definitive attempt to respond to paternalism and nudge that I have seen, written from a (mostly) libertarian and partially Austrian perspective.


Most Popular Posts of 2018

We published lots of new posts in 2018. Some have received more attention than others. Below you find the 5 most popular new posts of 2018:

  1. My appreciation of Mario Rizzo on his 70th birthday (See: A Tribute to Mario Rizzo)
  2. Ten Years After Lehman: Bubbles Galore & Zombies
  3. Hayek’s Work Helps Explain the Link Between Monetary Policy and Political  Instability
  4. Friedrich von Wieser, or: Against “Sidelining” Austrian Economists
  5. Distributional Effects of Monetary Policy: An Opportunity for Austrian Economics

The Ride-Hailing Vehicle Cap

by Liya Palagashvili

About two weeks ago, City Council in New York City voted to ban ride-hailing services (Uber, Lyft, Via, Juno) from adding new drivers for a year—with the exception of wheelchair accessible vehicles. The main justification for this cap is that ride-hailing services have been leading to reductions in vehicular speeds and causing road congestion in Manhattan’s busiest areas.

Continue reading

Workshop on the Future of the EMU

I would like to bring the following to your attention:

– Call for Papers –

Workshop on the Future of the EMU

Leipzig, Germany

May 30, 2018

The Institute for Economic Policy at Leipzig University invites submissions for the international workshop on the Future of the European Monetary Union. The workshop will take place at Leipzig University on May 30, 2018. The papers should be policy-oriented, building a solid basis for a profound discussion of the future of the European Monetary Union. The best papers can be published after a peer-review process in a special issue of Economists’ Voice. Participation in the workshop is free, travel and accommodation costs of selected presenters will be reimbursed.

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Most Popular Posts of 2017

ThinkMarkets got a facelift in 2017 and there were lots of new posts. Some posts have received more attention than others. Below you find the most popular new posts of 2017:

  1. Richard Thaler’s Nobel Prize
  2. David Rockefeller as an Economist
  3. 200 Years of the Theory of Comparative Advantage
  4. A Crisis in Economics?
  5. An Axiomatic Case for the Flat Tax


COSMOS + TAXIS Issue on Jane Jacobs

by Sandy Ikeda

Jane Jacobs’ writings span several disciplines—including ethics and most especially economics—but she is best known for her contributions to and her critique of urban planning, design, and policy. Many of those whom she influenced in academia, policy, and activism took the occasion of her one-hundredth birthday in 2016 to celebrate those contributions through lectures, biographies, and various events and publications.

The current issue of COSMOS + TAXIS is offered in that same spirit. I am especially pleased that it includes the contributions of a diversity of scholars—with backgrounds in economics, urban policy, urban planning, geography, architectural history, and engineering—with a diversity of insights expressed from the perspectives of epistemology, intellectual history, spatial analysis, urban history, private cities, mercantilism, and of course spontaneous order; and ranging in approach from the theoretical to the historical to the applied. Indeed, we learn from Jacobs that from the diversity of the living city springs experiment, creativity, and surprise; and that pertains equally to the realm of living ideas. Read these pages and be surprised!


IREF Research Support

I’d like to draw your attention to the following opportunity:

Call for Research Proposals

IREF is a free-market oriented think tank based in France. It promotes ideas, debates, events, and rigorous academic research.

With regard to research, IREF supports original research projects that lead to the production of papers of academic quality of at least 7,000 words. This support is not a prize to published work, nor is it an encouragement to “work in progress”.
The paper must have clear policy implications. It will be circulated as an IREF working paper and the author is expected to publish it in a reputed academic journal.

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O’Driscoll: Allan Meltzer Remembered

Allan Meltzer has died at age 89. The number of articles on Meltzer these days indicate the significance of his contributions. Carnegie Mellon University and Bloomberg published good summary articles on Meltzer’s outstanding academic career, ideas and influence in policy. Jerry O’Driscoll‘s personal note on Alt-M emphasizes that Meltzer was also a great manager and communicator (“He can herd cats”). Check it out!

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Call for Papers: 2017 SDAE Meetings (Deadline: April 1, 2017)

The annual meeting of the Society for the Development of Austrian Economics will be held during the Southern Economics Association meetings in Tampa, FL at the Tampa Marriott Waterside Hotel and Marina, November 17-19, 2017 (Friday to Sunday; more information can be found here:

Members interested in presenting papers, serving as chairs/discussants, or proposing entire panels should submit proposals by Saturday, April 1, 2017. Continue reading

Discussion of Israel Kirzner’s Work on Entrepreneurship

Check this out at Liberty Matters.

Lead Essay: Peter J. Boettke, “Israel M. Kirzner on Competitive Behavior, Industrial Structure, and the Entrepreneurial Market Process” [Posted: March 1, 2017]

Responses and Critiques

Mario J. Rizzo, “Kirzner’s Theory of the Market Process” [Posted: March 6, 2017]
Peter G. Klein, “Entrepreneurial Discovery: Who Needs It?” [Posted: March 8, 2017]
Frederic Sautet, “Purposeful Human Action and Entrepreneurship: Kirzner’s Misesian Contribution” [Posted: March 9, 2017]

Economics of the Undead: Zombies, Vampires, and the Dismal Science

by Glen Whitman

Last year in this space, I posted the Call for Abstracts for a forthcoming book called Economics of the Undead. That project is now coming to fruition! The book will officially be published tomorrow; here’s the Amazon page, and here’s the Barnes & Noble page. (The Kindle version should also become available tomorrow.) If the brilliant title and fetching cover haven’t already convinced you to buy the book, then you should visit the official website, which includes the table of contents, chapter excerpts, a course guide, and even a blog.

I know that some economists, including some who might frequent this page, have a problem with the term “dismal science.” For that reason, I thought I should post the following passage from the book’s introduction:

But before you start sampling, let’s return for a moment to the subtitle of this book: “Zombies, Vampires, and the Dismal Science.” In a book about the undead, we couldn’t resist the temptation to use the economics discipline’s most famous nickname. But while many people know economics as the dismal science, few know the true origin of that phrase. It came from Thomas Carlyle, another Scottish philosopher. And Carlyle was not denigrating economists for their (quite real) tendency to emphasize the limits of our resources and the barriers to remaking society as a fanciful utopia. No, Carlyle was criticizing economists for supporting the abolition of slavery! He was incensed by the optimism of economists like John Stuart Mill, who believed that people of African origin—like people of all races—were capable of governing themselves.

We tell this story because we think you’ll find, possibly to your surprise, that this book presents one of the more optimistic perspectives you’ll find on the undead threat. From Darwyyn Deyo and David T. Mitchell’s argument that we should trade with vampires instead of staking them; to Kyle Bishop, David Tufte, and Mary Jo Tufte’s suggestion that innovative humans might ultimately achieve victory over the zombie threat; to Brian Hollar’s discussion of how humans will seek prosperity even after a zombie apocalypse, a broad theme emerges: that humans—and maybe our recently dead brethren as well—have a vast capacity to cope with adversity and somehow make the world a better place.

(There’s also a citation to Levy and Peart in there, which I have omitted from this post.)

Economics Music Video Contest: Markets Promote Peace

by Edward Stringham

As a professor, I am a  fan of rigorous economic research, but I am also a fan of helping students learn about how important economics is in an engaging way. John Papola did an excellent job with the Keynes Versus Hayek music videos (especially the second one with yours truly), and over the past couple years I have had students make economics music videos. Think it is impossible to have music videos about Supply and Demand or Economic Value is Subjective? Think again! The results of the 2012 Supply and Demand Music Video Contest and the 2013 Economic Value is Subjective Video Contest have  been fantastic and have had more than 100,000 views on Youtube. See the winning entries below.

I am pleased to announce the 2014 Economics Music Video Contest on Markets Promote Peace. Winners get $2,500 and their professor gets $500. According to the great 19th century liberal, Richard Coben, markets help change a relationship between strangers from one of indifference, or even contempt, to one of mutual benefit. People who may not have cared about each other, now see the other party as an ally. Militarism, on the other hand, causes conflict. To Cobden an important, more humane, and more effective substitute for militarism in the international realm is the expansion of markets.

Continue reading about the contest here:

Winners of  the 2013 Value is Subjective Music Video Contest


Winners of the 2012 Supply and Demand Music Video Contest



by Mario Rizzo

There have been no posts in a long time. Apologies to our readers.

I have been working on my book with Glen Whitman on new paternalism, behavioral economics and rationality. I have also been hard at work establishing the Classical Liberal Institute at the NYU Law School. I am excited about both projects. Nevertheless, posts will begin to appear again on ThinkMarkets. Please spread the word.

Tomorrow there will be the first new post of our second wind.

Stay tuned.









A New Journal from The Ronald Coase Institute

by Mario Rizzo

Readers of this blog may be interested in learning that the awaited-and-hoped-for new journal is actually coming soon. It is a welcome change from the usual in economics today. I hope that Austrians might consider submitting articles of high quality. The following is taken from the website of the Ronald Coase Institute.

A New Journal Coming Soon
Man and the Economy: A Journal of the Coase Society
Editors: Ronald Coase & Ning Wang
Publisher: De Gruyter    Inaugural Issue: April 2014

From the editors:

We are pleased to announce that Man and the Economy will soon be launched. As revealed by its title, Man and the Economy commits to a particular viewpoint of economics: a study of man as he is and a study of the economy as actually exists. This is in sharp contrast to the prevailing view where the economic actor is treated as an atomized utility maximizer and the economy as an artifact of mechanical design, which misrepresents the character of man and the nature of the economy. Man and the Economy restores the economy as an open and evolving social organism of cooperation and competition.

Professor Ronald Coase was editor of the Journal of Law and Economics(JLE) for 18 years. During his editorship, LJE not only became a distinct journal, but also helped to create a new field of study, law and economics. Man and the Economy aims to do to economics what JLE has done to law and economics. Professor Coase serves as founding editor of the new journal. Dr. Ning Wang, who has been working with Professor Coase since 1998, will serve as managing co-editor. They are joined by two associate editors, Sam Peltzman of the University of Chicago and Guang-zhen Sun of the University of Macau, along with a distinguished editorial board made up of economists, anthropologists, political scientists, sociologists, and legal scholars from all over the world.

Man and the Economy starts in 2014 and publishes two issues a year in the first three years. It welcomes empirical (historical, qualitative, statistical, experimental) investigations and theoretical explorations that shed light on how the economy works and how it changes over time. We are committed to making Man and the Economy international and interdisciplinary.

We are keen to publish articles that examine how the emerging market economy works and evolves in Asia, Africa, Latin America, and Eastern Europe as well as contributions by non-economists that focus on the working of the economy. Man and the Economy acceptsOriginal Articles (regular research papers), Research Notes (interesting ideas and findings not fully developed), Voices from the Field(contributions from practitioners in the business and policy community that are of interest to students of the economy), Marketplace for Ideas (interviews with leading scholars and other game-changers in the field), Wisdom of the Past (insights on man and the economy that have been largely forgotten), and Letters from Readers.

We aim to makeMan and the Economy the equivalent of Nature or Science in social sciences, read by and with contribution from the concerned public, policy-makers, business and legal professionals, as well as academics who look up to economics as a study of man as he is and of the economy as it actually exists in the real world.

Elinor Ostrom, RIP

by Mario Rizzo

This will not be a review of her scholarly contributions. I have already made some attempt at that in a post shortly after her richly-deserved Nobel prize in economics. And I also link an announcement of her death here. 

I met Professor Ostrom at a celebration of her work at GMU after she won the prize. I was fortunate enough to be invited to dinner with her and just a few other people afterwards. I was so positively impressed by her, first, as a human being. She was kind, funny and liked a good scotch. (I stuck with the wine.) As a scholar, she was not only brilliant but she was non-dogmatic about methods, willing to learn from others, and had a wonderful combination of humility and self-confidence. She knew how important a good story is to the advancement of science, and not just heuristically.

She and Peter Boettke apparently “clicked” academically. After all, he saw her importance and published a book about her work before the Nobel Committee recognized her (and 99% of all economists ever heard of her!).

At the end of obituaries it is customary to say “she will be missed.” But, really, this time she will be missed by more than her family and friends, but by all of those who learned from her writings or from her in person. We carry on —  impoverished by her death, enriched by her life.