Libertarian Paternalism
Posted February 5, 2009, 15:02 ET Comments Off
My book, Fair Governance, came out from Oxford U.P. last week, and I am asked by someone in the British government for a precis of my thoughts on “libertarian paternalism.” That’s a bit of jargon popularized by Cass Sunstein and Richard Thaler, in their book Nudge. Cass is a very smart guy and it’s a good book–which is not to say that I agree with it!
Paternalism seems inconsistent with libertarianism. Paternalism would fetter choices, and libertarianism expand them. But, ask Sunstein and Thaler, what about choices that are strongly influenced by the way in which options are framed? When people are asked whether they want to be organ donors, how they respond depends mostly on whether they are asked to opt in or opt out. If they are presumed to choose to be organ donors unless they opt out, very few people opt out; when they are presumed to choose not to be organ donors unless they opt in, very few people opt in. So it comes down to how the question is framed.
That makes a lot of sense, because we ordinarily don’t want to take the time to understand things for ourselves. I’ll go along with the default option for my pension plan because life is too short to figure it out myself.
From this, Sunstein and Thaler argue for changing the way default rules are framed, “nudging” people in a more progressive direction. For example, they argue, people might be presumed to make particular charitable donations. That looks like paternalism, but they call it libertarian paternalism because it respects opt out rights.
I think that Sunstein-Thaler oversell libertarian paternalism. First, the only kind of paternalism that deserves the sobriquet libertarian is one in which the default rule mimics what people would choose with full information. A pension plan regime which nudges me in the direction of what I probably would want if I waded through all the fine print does not offend on libertarian principles. But a default rule that nudges me to make charitable contributions can’t be called libertarian. I can make those decisions on my own, and don’t need a paternalist to influence my choices.
Second, the logic of libertarian paternalism would suggest that we expand choices by creating more opt out possibilities. Parents might be permitted to opt out of public schools and into private ones through vouchers. Couples might be permitted to opt out of mandatory no-fault divorce laws. Debtors might be permitted to opt out of mandatory bankruptcy legislation. And so on.
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