Consumer Data: Who Owns It?

by Mario Rizzo

Richard Thaler is one of those academics with an excess of nervous energy. He is constantly on the look-out for ways that he and his soft-paternalist sympathizers can tinker around improving our welfare, suitably defined.

The latest scheme is to force companies who have gathered data about product usage from particular individuals to share it with those individuals so that they can use it to improve their future purchases. Thus your cell phone company will reveal to you in convenient form everything it “knows” about “how much you use services like texting, social media, music streaming and sending photos.” (This, of course, is a kind of anthropomorphism because no human mind knows this stuff – it is all computerized!) Then you can use this information, with the help of other websites, to get your optimal phone plan.

Thaler argues, “After all, it is our data.”

New Paternalism: Odds & Ends

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.

Cafeteria Marvels

 by Mario Rizzo  

The market is a “marvel.” What does that mean? According to Marcus Tullius Cicero, the Roman orator and senator, a marvel is something contrary to or surpassing common understanding.  

In that sense, the market is a true marvel – so much so that it even surpasses the understanding of many economists.  

Richard Thaler (a University of Chicago Business School professor) and Cass Sunstein (a Harvard law professor and Obamian regulatory czar) have illustrated the benign qualities of paternalism with a curious example of cafeteria food placement. (An interesting and important exchange between Glen Whitman and Richard Thaler – among others – is now taking place at Cato Unbound.)