Libertarian Paternalism: A Revolutionary Resolution or an Ostentatious Oxymoron?

Libertarian paternalism, a term coined by behavioural economist Richard Thaler and legal scholar Cass Sunstein, is an idea that assumes it is possible to direct consumer behaviour in a positive way without encroaching on their freedom. This can be accomplished through what the behavioural science calls ‘nudges’ – indirect suggestions and reinforcements that influence our behaviour in a predictable way. The stated goal of libertarian paternalism is to maximize peoples well-being as judged by themselves. However, a question has to be raised whether libertarian paternalism is a genuinely revolutionary approach to public policy, or merely a fancy name for freedom-limiting government action.

Proponents of this idea build upon findings from behavioural economics which demonstrate, that people do not always make choices that they themselves would consider to be the best or most beneficial. Indeed, many studies show that we often make sub-optimal or even detrimental choices because of the many biases permeating our limited decision-making capabilities. Our personality, mental disposition, emotional state, or imperfect judgement can affect life-changing choices we make. For example, a study by Ariely et al. (2003) has shown that the value we assign to everyday objects and hedonic experiences are strongly influenced by completely arbitrary ‘anchors’ – random numbers presented to the test participants. These participants will change their opinion on the value of an item based on how high or low the initial anchor is. There are many similar and very arbitrary ways in which our judgements gets skewed in one way or the other without any logical reasoning. The various biases and systemic failures of judgement are quite often used by salesmen and con artists to get money out of people. Can we then really trust our choices, when they are so easily influenced?

Libertarian paternalism seems to be the antidote to this. Usage of gentle nudges to get people to do the right thing. Cheap, easy, and seemingly non-intrusive. Nudges seem to be the perfect addition to the policy-making toolbox as well as a welcome alternative to hard regulation. As opposed to government mandates, they should be very minor interventions that are cheap to avoid. Instead of banning junk food, the ‘choice architect’ simply places fruit and other healthy snacks at your eye level in the supermarket and nudges you towards eating healthier without you even knowing it. Seems like a great idea. But so does going to Disneyland after eight beers and a kebab. Until you inevitably stumble off the ride and puke.

In my opinion, libertarian paternalism is a brilliant idea dreamed up by economists, which has the same critical flaw as any other great policy innovation that comes from the scientific sphere. It has to be implemented by politicians. European integration was a genius concept. Until politicians got a hold of it and it became a pompous theatre aimed at international grandstanding and financing manure for French peasants. Splitting the atom was also a fascinating revolution that opened up many doors. And closed a couple of Japanese cities. Even absolutely, unequivocally brilliant ideas can be terrifying once they become a tool of the tools in power. That’s where the aforementioned puke comes in.

No one will really understand politics until they understand that politicians are not trying to solve our problems.  They are trying to solve their own problems — of which getting elected and re-elected are No. 1 and No. 2.  Whatever is No. 3 is far behind”

Thomas Sowell

The biggest problem with the idea of libertarian paternalism is that it necessarily leads to dividing the society into the nudgers and the nudged. And unlike regulations, bans, taxes, or other hard measures it is built around the rather insidious concept of constructing peoples choice architecture absent their knowledge. Now, one can perhaps make the claim that nudging is “libertarian” in comparison to the other governmental measures but I doubt that any self-proclaimed libertarian would say that having his mind unknowingly shaped by the people in power in the name of greater good is something he strongly desires. One can claim that nudging is lacking the coercive or intrusive elements of hard paternalism, that does not necessarily make it a policy panacea.

When Thaler and Sunstein introduce their idea of libertarian paternalism, they get around the problem of its morality rather quickly. They simply blow it off saying: “Once it is understood that some organizational decisions are inevitable, that a form of paternalism cannot be avoided,and that the alternatives to paternalism (such as choosing options to make people sick, obese, or generally worse off) are unattractive, we can abandon the less interesting question of whether to be paternalistic or not and turn to the more constructive question of how to choose among paternalistic options.” Though it might be true that some choice architecture has to be in place, that does not immediately give us the right or the mandate to decide what it should be. If we could unmistakably decide what is best for everyone why should we stop at light nudging and not go straight for a shove in the “right” direction.

While I applaud the effort to increase people’s well-being and turn them away from making stupid choices, I can’t overlook the fact that libertarian paternalism is based on the claim that people sometimes unwittingly make choices detrimental to their goals, so they should let their choices be made by people who know nothing of them. The point of libertarianism is not that people know best what they should do and they will never make mistakes. The point is that they are the only ones who have a right to screw up their own life. We could try to nudge people into being what we think is the best they can be and act in the best way they can… but maybe we shouldn’t. Maybe, the best thing to do is to let them be fat and lazy and unhealthy and imperfect because in the end, that’s what freedom is all about.

Republished by Technical Politics