06 Apr 2010

The New Paternalism

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Glenn Whitman, at Cato Unbound, has a good essay on the Progressive’s newer, subtler strategy for running your life.

Instead of fighting major policy battles to secure the power needed to make you do what liberals think you should using naked force, clever persons on the left, like Cass Sunstein (recently appointed head of the White House Office of Information and Regulatory Affairs) recognize that the same results can largely be obtained by the application of much-easier-to-enact regulatory tweaks and nudges.

For as far back as memory reaches, people have been telling other people what’s good for them — and manipulating or forcing them to do it. But in recent years, a novel form of paternalism has emerged on the policy stage. Unlike the “old paternalism,” which sought to make people conform to religious or moralistic notions of goodness, the “new paternalism” seeks to make people better off by their own standards.

New paternalism has gone by many names, including “soft paternalism,” “libertarian paternalism,” and “asymmetric paternalism.” Whatever the name, it arose from the burgeoning field of behavioral economics, which studies the myriad ways in which real humans — unlike the agents who populate most economic models — deviate from pure rationality. Real people suffer from a variety of cognitive biases and errors, including lack of self-control, excessive optimism, status quo bias, susceptibility to framing of decisions, and so forth. To the extent such imperfections cause people to make choices inconsistent with their own best interests, paternalistic interventions promise to help them do better. …

New paternalists, like many well-meaning advocates of expanded government, imagine conscientious policymakers carefully evaluating all the evidence, considering alternatives, consulting unbiased experts, and acting only when the benefits clearly outweigh the costs. That’s the idealized picture that comes to mind when Camerer, et al., call their perspective “a careful, cautious, and disciplined approach” to paternalism.

In political reality, legislators and bureaucrats face a constant stream of policy temptations, including both new policies and expansions of old ones. Rather than considering each new law on its merits, policymakers do what normal people do — they use simple heuristics and rules of thumb. They display what behavioral economists call extension neglect: the tendency to focus on “prototypes” instead of measuring the true degree and extent of a problem. In the paternalist context, the prototype citizens are chain-smokers and junk-food junkies. And the new paternalists have made sure the prototype policies are gentle nudges like reordering the food selections in cafeteria lines. These prototypes are, unfortunately, more likely to guide policy than studious consideration of behavioral economic research.

To make matters worse, policymakers will be influenced not only by supposedly neutral experts, but by special interests as well. Some will support policies for financial reasons — like milk producers who favor ever-greater restrictions on the availability of soft drinks, or financial services firms that favor ever-larger requirements for people to save and invest. Others will have a moral or ideological agenda, as in the case of temperance organizations (like Mothers Against Drunk Driving) or personal health advocates (like the Center for Science in the Public Interest). These groups may not share the new paternalists’ stated concern for the subjective preferences of targeted people.

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