Soft Paternalism Hardens Quickly

A great essay from economist and Fringe writer Glen Whitman kicks off a debate over at Cato Unbound on the dangers of "libertarian paternalism."

To the casual reader, the new paternalism might seem to have little to do with government at all. Cass Sunstein and Richard Thaler's Nudge and Daniel Ariely's Predictably Irrational, for instance, often read more like advice manuals than policy manifestos.

But if you dig deeper, you'll find a wide-ranging policy agenda at work. In seminal journal articles by Sunstein & Thaler, Camerer et al., O'Donoghue and Rabin, and others, you'll find a panoply of policy proposals from mild to downright intrusive. The story begins with the seemingly innocuous proposal to enroll all employees in savings plans automatically (with the ability to opt out). Then it progresses to new default rules in contracts, such as a presumption of "for cause" rather than "at will" employment, again with an opt-out. And then? Default rules that can be waived only through a cumbersome legal procedure. Then default rules with some options ruled out entirely — such as maximum hours that cannot be waived for less than time-and-a-half pay. Then cooling-off periods for high-cost purchases. Then sin taxes for fatty or sodium-rich foods. Then outright bans on ingredients like trans fats.

Not every new paternalist supports every one of these policies, and they don't advocate them all with the same confidence. But they're all on the list, and all justified by an appeal to behavioral economics.

Small case study: Sodas in schools. Kids are fat. Bans loom. Soda companies—which generally prefer to fight to the death—collaborate to remove full-sugar sodas entirely from schools. Is this what a victory for non-coercive nudging looks like?

Reason Contributor Will Wilkinson nudges regulatory czar Cass Sunstein a new one in our pages here.