Non Compos Credit

By Megan McArdle

Andrew characterizes this scenario as a "libertarian litmus test":

I want to pitch to the credit card and financial industry a new innovative online survey. It is targeted for older, more mature long-time users of our services. We'll give a $10 credit for anyone who completes it. Here is a sense of what the questions will look like:

- 1) What is your age?
- 2) What day of the week are you taking this survey?
- 3) Many rewards offered are for people with more active lifestyles: vacations, flights, hotels, rental cars. Do you find that your rewards programs aren't well suited for your lifestyle?
- 4) What is the current season where you live? Are any seasons harder for you in getting to a branch or ATM machine?
- 5) Would rewards that could be given as gifts to others, especially younger people, be helpful for what you'd like to do with your benefits?
- 6) Would replacing your rewards program with a savings account redeemable for education for your grandchildren be something you'd be interested in?
- 7) Write a sentence you'd like us to hear about anything, good or bad!
- 8 ) How worried are you you'll leave legal and financial problems for your next-of-kin after your passing?

Did you catch it? Questions 1,2,4,7 are taken from the 'Mini-mental State Examination' which is a quick test given by medical professionals to see if a patient is suffering from dementia. (It's a little blunt, but we can always hire some psychologist and marketers for the final version. They're cheap to hire.) We can use this test to subtly increase limits, and break out the best automated tricks and traps mechanisms, on those whose dementia lights up in our surveys. Anyone who flags all four can get a giant increase in balance and get their due dates moved to holidays where the Post Office is slowest! We'd have to be very subtle about it, because there are many nanny-staters out there who'd want to coddle citizens here.

I'm not sure why this is supposed to be a hard question for libertarians.  I mean, I might argue that preventing people from ripping off the marginally mentally impaired would, in practice, be too difficult.  Crafting a rule that prevented companies from identifying people who are marginally impaired might well be impossible--I'm pretty sure that if I wanted to, I could devise subtler tests than "What day of the week is it?"  And while the seniors lobby is probably in favor of not ripping off seniors, they're resolutely against making it harder for seniors to do things like drive or get credit, which is the result that any sufficiently strong rule would probably have.

But it's pretty much standard libertarian theory that you shouldn't take advantage of people who do not have the cognitive ability to make contracts.  Marginal cases are hard not because we think it's okay, but because there is disagreement over what constitutes impairment, and the more forcefully you act to protect marginal cases, the more you start treating perfectly able-minded adults like children.

The elderly are a challenge precisely because there's no obvious point at which you can say:  now this previously able adult should be treated like a child.  Either you let some people get ripped off, or you infringe the liberty, and the dignity, of people who are still capable of making their own decisions.

Konzcal is, I take it, in favor of more paternalism.  But the objection that I have to paternalism is not that it prevents companies from more effectively ripping off their customers.  The presumption that a majority of American adults are essentially children puts the state in loco parentis, which hands too much power to people who are not nearly as clever and wise as they believe themselves.  It is morally wrong for companies to attempt to capitalize on dementia, just as I believe it is morally wrong for casinos to attempt to identify, and monetize, their customers with serious gambling problems.  But giving that moral belief force of law is not necessarily a good idea, particularly if it involves eroding the presumption that we are adults capable of, and responsible for, running our own lives.

This article available online at:

http://www.theatlantic.com/business/archive/2010/01/non-compos-credit/33036/