Soft paternalism
Encyclopedia
Soft paternalism is a political philosophy
that believes the state
can
The term libertarian paternalism is intended to evoke the idea that soft paternalism
is an approach to public policy that can be endorsed by some self-described libertarians
because it does not abridge individual freedom, though other libertarians are firmly opposed to it.
Asymmetric paternalism refers to two asymmetries: the policies are designed to help irrational people who are not advancing their own interests while not interfering with the autonomy of those who are making rational, deliberate decisions. It is also asymmetric in the sense that the policies are designed to be acceptable to those who believe that people behave rationally and to people who believe that people behave less than rationally.
. Until recently, the default contribution rate for most plans was zero, and despite the enormous tax advantages, many people took years to start contributing if they ever did. Behavioral economists attribute this to the "status quo bias
", the common human resistance to changing one's behavior, combined with another common problem: the tendency to procrastinate
. Research by behavioral economists demonstrated, moreover, that firms which raised the default rate instantly and dramatically raised the contribution rates of their employees.
The asymmetry of soft paternalism can be seen in the case of a policy which raises default rates. Those who are making an informed deliberate choice to put aside zero percent of their income in tax deferred savings still have this option, but those who were not saving simply out of inertia or due to procrastination are helped by higher default contribution rates. It is also asymmetric in the second sense: If you do not believe that defaults matter, because you believe that people will make rational decisions about something as important as retirement saving, then you should not care about the default rate. If you believe that defaults matter, on the other hand, you should want to set defaults at the level that you believe will be best for the largest number of people.
criticized libertarian paternalism as oxymoronic. In his article, Klein argued against what he perceived as an overly loose and weak definition of libertarianism on the grounds that Thaler and Sunstein made no meaningful distinction between liberty and coercion. In failing to define the concepts of liberty and coercion as fundamentally dissimilar processes, libertarian paternalism uses a hyper-rational behavior model of human nature as a definition for libertarianism, and neglects alternative definitions such as those advanced by Adam Smith
and Friedrich Hayek
.
Political philosophy
Political philosophy is the study of such topics as liberty, justice, property, rights, law, and the enforcement of a legal code by authority: what they are, why they are needed, what, if anything, makes a government legitimate, what rights and freedoms it should protect and why, what form it...
that believes the state
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...
can
The term libertarian paternalism is intended to evoke the idea that soft paternalism
Paternalism
Paternalism refers to attitudes or states of affairs that exemplify a traditional relationship between father and child. Two conditions of paternalism are usually identified: interference with liberty and a beneficent intention towards those whose liberty is interfered with...
is an approach to public policy that can be endorsed by some self-described libertarians
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
because it does not abridge individual freedom, though other libertarians are firmly opposed to it.
Asymmetric paternalism refers to two asymmetries: the policies are designed to help irrational people who are not advancing their own interests while not interfering with the autonomy of those who are making rational, deliberate decisions. It is also asymmetric in the sense that the policies are designed to be acceptable to those who believe that people behave rationally and to people who believe that people behave less than rationally.
Examples of policies
As an example, take the default contribution rates on defined contribution tax-deferred retirement savings plans in the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Until recently, the default contribution rate for most plans was zero, and despite the enormous tax advantages, many people took years to start contributing if they ever did. Behavioral economists attribute this to the "status quo bias
Status quo bias
The status quo bias is a cognitive bias for the status quo; in other words, people tend not to change an established behavior unless the incentive to change is compelling...
", the common human resistance to changing one's behavior, combined with another common problem: the tendency to procrastinate
Procrastination
In psychology, procrastination refers to the act of replacing high-priority actions with tasks of low-priority, and thus putting off important tasks to a later time...
. Research by behavioral economists demonstrated, moreover, that firms which raised the default rate instantly and dramatically raised the contribution rates of their employees.
The asymmetry of soft paternalism can be seen in the case of a policy which raises default rates. Those who are making an informed deliberate choice to put aside zero percent of their income in tax deferred savings still have this option, but those who were not saving simply out of inertia or due to procrastination are helped by higher default contribution rates. It is also asymmetric in the second sense: If you do not believe that defaults matter, because you believe that people will make rational decisions about something as important as retirement saving, then you should not care about the default rate. If you believe that defaults matter, on the other hand, you should want to set defaults at the level that you believe will be best for the largest number of people.
Criticism of including "libertarian" in the title
In an article appearing in the August 2004 Econ Journal Watch, economist Daniel B. KleinDaniel B. Klein
Daniel B. Klein is a professor of economics at George Mason University and an Associate Fellow of the Swedish Ratio Institute. Much of his research examines public policy questions, libertarian political philosophy, and the sociology of academia...
criticized libertarian paternalism as oxymoronic. In his article, Klein argued against what he perceived as an overly loose and weak definition of libertarianism on the grounds that Thaler and Sunstein made no meaningful distinction between liberty and coercion. In failing to define the concepts of liberty and coercion as fundamentally dissimilar processes, libertarian paternalism uses a hyper-rational behavior model of human nature as a definition for libertarianism, and neglects alternative definitions such as those advanced by Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
and Friedrich Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
.
Further reading
- Thaler, Richard H.Richard ThalerRichard H. Thaler is an American economist and the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business...
and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press, 2008.
- Camerer, Colin; Issacharoff, Samuel; Loewenstein, George; O'Donoghue, Ted; Rabin, Matthew (2003). Regulation for Conservatives: Behavioral Economics and the Case for "Asymmetric Paternalism". University of Pennsylvania Law Review, 1151(3), 1211-1254.
- Loewenstein, George, and Emily Celia Haisley. The economist as therapist: Methodological issues raised by 'light' paternalism. In A. Caplin and A. Schotter (Eds.), "Perspectives on the Future of Economics: Positive and Normative Foundations", volume 1 in the Handbook of Economic Methodologies, Oxford, England: Oxford University Press.
- Pope, Thaddeus Mason. Counting the Dragon's Teeth and Claws: The Definition of Hard Paternalism, 20 Georgia State University Law Review 659-722 (2004)
- Pope, Thaddeus Mason. Monstrous Impersonation: A Critique of Consent-Based Justifications for Hard Paternalism, 73 UMKC Law Review 681-713 (2005)
- Pope, Thaddeus Mason. Is Public Health Paternalism Really Never Justified? A Response to Joel Feinberg, 30 Oklahoma City University Law Review 121-207 (2005)
- Sunstein, Cass R. and Richard H. Thaler. Libertarian Paternalism is Not an Oxymoron. University of Chicago Law Review 70 (4), (2003): 1159-1202.
- Thaler, Richard H. and Cass R. Sunstein. The American Economic Review [AER] 93 (2), (2003): 175-179
- Harkin, James. Libertarian Paternalism. The Guardian. June 24, 2006.
- Thaler, Richard H. and Cass R. Sunstein. Designing Better Choices. Los Angeles Times. April 2, 2008.
- Vedantam, Shankar. A Dose of Libertarian Paternalism. Washington Post. April 7, 2008.
- Goldstein, Evan R. The New Paternalism. The Chronicle of Higher Education. May 9, 2008.
- Lewis, Carol. Why Barack Obama and David Cameron are keen to 'nudge' you. The Times. June 14, 2008.
- Will, George F. Nudge Against the Fudge. Newsweek. June 30, 2008.
- Harkin, James. This nudging stuff is nothing new - and it's all a bit shaky. The Guardian. August 5, 2008.
External links
- Interview with Richard Thaler about libertarian paternalism. An EconTalk podcast
- Interview with Cass Sunstein about libertarian paternalism. Grist.com.