Should government "nudge" citizens to do what is in their self-interest? In his latest column, David Brooks runs through the arguments for and against "libertarian paternalism," summing them up as follows:
Do we want government stepping in to protect us from our own mistakes? Many people argue no. This kind of soft paternalism will inevitably slide into a hard paternalism, with government elites manipulating us into doing the sorts of things they want us to do. Policy makers have their own cognitive biases, which will induce them to design imperfect interventions even if they mean well. Individuals may be imperfect decision-makers, but they still possess more information than faraway government rule-makers. If government starts manipulating decision-making processes, then individuals won't learn to think for themselves.
Even just setting a default position reduces liberty and personal responsibility.
The pro-paternalists counter that government is inevitably setting contexts and default positions anyway, so they might as well be aligned with individual and social goals. There's very little historical evidence that there is an inevitable slippery slope leading from soft paternalism to hard paternalism. If companies are going to trick people into spending more on, say, bank overdraft fees, shouldn't government step in to prevent a psychological market failure?
Regular Brooks readers won't be surprised by his conclusion.
"I'd say the anti-paternalists win the debate in theory but the libertarian paternalists win it empirically. In theory, it is possible that gentle nudges will turn into intrusive diktats and the nanny state will drain individual responsibility," he explains. "But, in practice, it is hard to feel that my decision-making powers have been weakened because when I got my driver's license enrolling in organ donation was the default option. It's hard to feel that a cafeteria is insulting my liberty if it puts the healthy fruit in a prominent place and the unhealthy junk food in some faraway corner. It's hard to feel manipulated if I sign up for a program in which I can make commitments today that automatically increase my charitable giving next year. The concrete benefits of these programs, which are empirically verifiable, should trump abstract theoretical objections."
But wait a minute. Do you see the analytic flaw? Maybe another paragraph of examples that he offered will help:
Government could design forms where the default option is to donate organs or save more for retirement. Individuals would have to actively opt out to avoid doing these things. Government could tell air-conditioner makers to build in a little red light to announce when the filter needs changing. That would make homes more energy efficient, since people are too lazy to change the filters promptly otherwise. Government could crack down on companies that exploit common cognitive errors to induce you to pay more for your mortgage, bank account, credit card or car warranty. Or, most notoriously, government could make it harder for you to buy big, sugary sodas.
It seems to me that these things are not alike*.
I'll declare myself in favor of automatic organ-donor status with an option to opt out if you fill out a form; there is, in fact, no neutral default there. But soda size, at least as pursued by Michael Bloomberg, is an entirely different thing. The product is now available in every size imaginable. Banning the biggest isn't "libertarian paternalism." That is just straight-up paternalism.
But I'm okay with putting lines on the cup with calorie markings.
The cafeteria example is another thing still. "It's hard to feel that a cafeteria is insulting my liberty if it puts the healthy fruit in a prominent place and the unhealthy junk food in some faraway corner." Sure. So long as every cafeteria is free, under the law, to organize its food as it sees fit, I am all for inculcating a norm whereby the healthy stuff is prominently displayed and accessible. And by all means, put the candy bars in the back rather than right next to the register. Better defaults!
But do I want the federal government regulating food placement in every American cafeteria? The cafeteria owners may be imperfect decisionmakers, but they still possess more information than faraway government rulemakers -- and aren't lobbied ruthlessly to make certain rules.
My enthusiasm for "libertarian paternalism" is high when there is no neutral default position possible, and government sets an enlightened default within a realm it properly controls. I am even amenable to some government mandates, like the little red light on the air-conditioning unit. I'm all for private parties adopting enlightened defaults in their realms too, as I expect many will.