Nudge, Nudge, Push, Push…Are You Ready for Libertarian Paternalism?
Here's an account in The Chronicle of Higher Education discussing Nudge, a new book about "libertarian paternalism" by University of Chicago profs Cass Sunstein and Richard Thaler. They define LP as "noncoercive alterations" in various sorts of social and economic decision-making contexts.
Sunstein explains the appeal of libertarian paternalism: "For too long, the United States has been trapped in a debate between the laissez-faire types who believe markets will solve all our problems and the command-and-control types who believe that if there is a market failure then you need a mandate." That debate has been exhausted, he says.
"The laissez-faire types are right that … government can blunder, so opt-outs are important," he says. "The mandate types are right that people are fallible, and they make mistakes, and sometimes people who are specialists know better and can steer people in directions that will make their lives better."
Sunstein argues that understanding human irrationality can improve how public and private institutions shape policy by increasing the likelihood that people will make decisions that are in their own self-interest. Most important, he and Thaler insist, such nudges can be executed while protecting freedom of choice.
Take two examples in their book. Studies show that placing fruit at eye level in school cafeterias enhances its popularity by as much as 25 percent. Or consider this stroke of creativity by an economist in Amsterdam charged with cleaning up the restrooms at the Schiphol Airport: He had a fly etched into the wells of urinals, giving male patrons something to aim at. Spillage was reduced by 80 percent. The problems of childhood obesity and foul restrooms are remedied with very little inconvenience to people—or cost. Children remain free to grab that piece of chocolate cake, and there is nothing preventing visitors to Schiphol's restrooms from ignoring the fly and aiming elsewhere. It is merely less likely that either group will do so.
"Nudges are inevitable, so they might as well be smart," Sunstein says with a grin. The inevitability—and potential—of nudges is most clear when it comes to default options. For example, 401(k) employee-savings plans generally have an opt-in design, meaning that when employees become eligible to participate, the onus is on them to join. Many will procrastinate - even though it is usually in their best interest not to. According to Sunstein and Thaler, that inertia can be harnessed. They suggest that companies adopt automatic enrollment for 401(k) programs, pointing to studies that show how doing so significantly increases levels of employee participation. And, they stress, because there is still an opt-out, people aren't forced to do anything against their will.
This all sounds fine and innocuous enough, especially the 401(k) example, since there is going to be default setting one way or another in most payroll departments (the urinal example sounds a bit too pat. I admittedly have not read the book and its notes, but how exactly does anybody—even the Dutch—measure urinal spillage in such exact percentages?) Yet there's a logic here: If there's going to be default settings, why not tip them to one for which you can make a strong argument for the greater good, right? However, as any schoolteacher, drill sergeant, or playground bully will tell you, nudges have a knack for becoming outright shoves pretty quickly, and without much discussion. Certainly it should give one pause that in 2004 Cass Sunstein wrote a book about FDR's "second Bill of Rights" and "why we need it more than ever." FDR's uplift mofo party plan included guarantees of:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
More on that here. We can quibble over whether FDR's second Bill of Rights has effectively been delivered or not in contemporary America, but there's little question that it's chock full of the old sort of paternalism, and is predicated upon very forceful state action that would allow for very little opting out. Whatever large discomfort I have with the utilitarian and social-engineering impulse lurking close to the surface of libertarian paternalism is dwarfed by more prosaic concerns that it would immediately devolve into a my-way-or-the-highway scenario at larger and larger levels of governance.
Julian Sanchez on the matter here and especially below, where he discusses what Nobel Laureate James Buchanan called "parentalism" (which is basically LP by another name):
Yet when it comes to our most central choices-what kind of person am I to be, what work will I find rewarding?-we may take as least as much satisfaction in the feeling of responsibility for our choices, in knowing that we have shaped a life that is ours even when we have chosen badly.
Classical liberals have become good at explaining how the market order they favor promotes freedom and happiness. They have been less adept at explaining why-at least past a certain point-people ought to want that freedom, which when genuine is always at least a little frightening. In the face of the parentalist impulse, we may need to develop the case that our bad choices, the choices that make us unhappy, are as vital and precious as the ones that bring us joy.