Sunstein’s “libertarian paternalism” is really just paternalism

by on April 7, 2008 · 17 comments

Cass Sunstein has another new book out. The University of Chicago law school professor is so insanely prolific that it seems every time I finish reading one of his new books, a new title by him lands in my inbox. Seriously, either this man does not sleep or he is a robot. Anyway, his latest book is entitled, Nudge: Improving Decisions About Health, Wealth, and Happiness, and it was co-authored with Richard Thaler, an economist also residing at Univ. of Chicago.

Their thesis is that people sometimes make bad choices (no duh, right?), but that with a little helpful prodding (i.e., “the nudge”) we mere mortals might make better decisions. The way we get there is through what they call “libertarian paternalism.” Here’s how their official book page describes it:

Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself. Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful “choice architecture” can be established to nudge us in beneficial directions without restricting freedom of choice.

OK, so the obvious question here is, who, exactly, is doing the “nudging.” And who died and made them the nudgers in chief?!

Like so much of what Cass Sunstein writes, there is a subtle elitism at work here. But he often tries to dance around it or pretend it isn’t really elitist at all. In Nudge, that really comes through when he and Thaler use the oxymoron “libertarian paternalism” to describe what they are proposing. What a brilliant rhetorical tactic! Just add the term “libertarian” to your generally elitist proposal and thereby make the poison.. er, uh, medicine easier to swallow!

But, at least to my ears, “libertarian paternalism” as they describe it sure sounds a heck of lot like ol’ fashion paternalism. Consider these examples they provide to the Washington Post’s Shankar Vedantam:

Carefully designing choices seems to matter most in domains where human nature causes people to make mistakes that a rational machine might avoid. Investing for retirement is one of those domains. Getting divorced is another. “Most couples that get married do not have prenups because they think the probability of a divorce is zero,” Thaler said. “We know the probability of a divorce is around 50 percent.” Because both people in a divorce can see themselves as the aggrieved party, couples often fight protracted battles, Thaler said. Many more couples would reach amicable settlements, he said, if all states had default divorce guidelines. Anyone considering a divorce could still go to court, but most people would choose the default option. Setting up default choices is one of the recurring themes of “Nudge,” because a lot of research shows that people are powerfully influenced by default options. When new employees are told that retirement accounts will be started for them unless they object, for example, most sign up cheerfully. When told that the accounts will not be started unless they opt in, most employees do not sign up because not having the account is then the default choice.

Default marriage and investment guidelines? If it’s the government who is setting such rules, then I don’t see anything libertarian about it. It’s blatantly paternalistic. Again, who decides? That’s the key question here. It’s one thing for private organizations to suggest or even set “defaults” since there will always be alternative options to which people can turn. Not so when the rules are set from above. When set from above, such default rules can lock society into inefficient regulatory systems or subsidization schemes.

Or sometimes they are just elitist and silly. Consider some of the other examples of “nudges” they propose:

  • “Dollar a day” program, by which teenage girls with a baby receive a dollar for each day in which they are not pregnant.
  • Laws enabling gambling addicts to put themselves on a list that bans them from entering casinos or collecting gambling winnings.
  • Motorcycle helmet laws that allow riders to go without a helmet but only if they get special licenses. To qualify for the license, a rider would have to take an extra driving course and submit proof of health insurance.
  • And my personal candidate for most absurd… ”The Civility Check,” which Sunstein and Thaler describe as their “favorite proposal.” They argue that:
The modern world suffers from insufficient civility. Every hour of every day, people send angry emails they soon regret, cursing people they barely know (or even worse, their friends and loved ones). A few of us have learned a simple rule: don’t send an angry email in the heat of the moment. File it, and wait a day before you send it. (In fact, the next day you may have calmed down so much that you forget even to look at it. So much the better.) But many people either haven’t learned the rule or don’t always follow it. Technology could easily help. In fact, we have no doubt that technologically savvy types could design a helpful program by next month. We propose a Civility Check that can accurately tell whether the email you’re about to send is angry and caution you, “warning: this appears to be an uncivil email. do you really and trulywant to send it?” (Software already exists to detect foul language. What we are proposing is more subtle, because it is easy to send a really awful email message that does not contain any four-letter words.) A stronger version, which people could choose or which might be the default, would say, “warning: this appears to be an uncivil email. this will not be sent unless you ask to resend in twenty-fourhours.” With the stronger version, you might be able to bypass the delay with some work (by inputting, say, your Social Security number and your grandfather’s birth date, or maybe by solving some irritating math problem!).

When I read that one, I did the same sort of ‘did-he-really-just-say-that’ double-take that I did when I read Sunstein’s proposal in his 2000 book Republic.com that we need mandatory “electronic sidewalks” for cyberspace that would require “partisan” websites to run material from opposing groups (i.e., a massive “Internet Fairness Doctrine” regulatory regime, if you will). Could there be anything more elitist than that? Well, this “Civility Check” certainly might fit the bill. Look, I agree that many insulting things are said online every day, but does that mean we should have the equivalent of an automated digital nanny issuing warnings to us before we can send any e-mail? Who sets the rules regarding civility? Will the system understand sarcastic talk among chums? Will we be able to override it without inputing personal information or solving math problems, like they suggest?

It’s all just so absurd and horrendously elitist. And thankfully I don’t have a civility check system running on my machine right now so I can immediately post that thought!

  • http://sethf.com/ Seth Finkelstein

    Oh, that’s hilarious (“Civility Check”). Hey, why not have someone implement it, and let The Free Market decide, huh, huh, huh? If I want to buy Civility Check software, who are you, Mr. Libertarian, to tell me I shouldn’t be able to do that? You’ve violating my rights! :-)

    Hmm … “And thankfully I don’t have a civility check system running on my machine right now so I can immediately post that thought!” … self-proving? self-refuting? :-) :-)

  • http://sethf.com/ Seth Finkelstein

    Oh, that’s hilarious (“Civility Check”). Hey, why not have someone implement it, and let The Free Market decide, huh, huh, huh? If I want to buy Civility Check software, who are you, Mr. Libertarian, to tell me I shouldn’t be able to do that? You’ve violating my rights! :-)

    Hmm … “And thankfully I don’t have a civility check system running on my machine right now so I can immediately post that thought!” … self-proving? self-refuting? :-) :-)

  • dm

    “Horribly elitist”. What’s wrong with this elitism, exactly?

    As to the opt-out retirement thing, it’s an excellent idea (and has proven to be successful). It just leaves you free to be stupid (and opt out of retirement savings) instead of leaving you free to be wise (and opt in to retirement savings). If this be paternalism, make the most of it.

    As to the civility check, yes, that does seem a little silly. Except, didn’t Eudora have such a thing (I remember hot-pepper icons)? Maybe that was just on incoming mail.

  • dm

    “Horribly elitist”. What’s wrong with this elitism, exactly?

    As to the opt-out retirement thing, it’s an excellent idea (and has proven to be successful). It just leaves you free to be stupid (and opt out of retirement savings) instead of leaving you free to be wise (and opt in to retirement savings). If this be paternalism, make the most of it.

    As to the civility check, yes, that does seem a little silly. Except, didn’t Eudora have such a thing (I remember hot-pepper icons)? Maybe that was just on incoming mail.

  • http://www.codemonkeyramblings.com MikeT

    The idea is not entirely without merit, provided it is done outside of the state. My employer by default starts all new hires out with a 2% contribution to the conservative investments in its 401K. You can opt-out if you know what you are doing, but this sort of paternalism does help new hires out of college, many of whom are irresponsible with saving for retirement.

    I’ve been investing since I got out of college, and in 2.5 years, I’ve saved quite a bit by voluntarily doing between 6-8% of my paycheck, but some of my coworkers think it’s stupid. Why? They don’t care that I am getting an addition few thousand bucks a year invested for me, all they know is that that additional money out of their paycheck can’t go to fun stuff like big TVs and video games.

    The sad truth is that these sort of people will be the ones whining and complaining 20 years from now about how expensive the cost of living is, and how they’ll never be able to retire. Now, this’d be no problem in a society in which they can’t vote, but since they can vote, it’s probably good that our employer is nudging them in a direction that will make them less likely to end up destitute later on in life.

    Be all that as it may be, libertarian paternalism will invariably require even more government, and in that sense, I think it certainly disqualifies the “libertarian” adjective in any meaningful sense of the word.

  • http://www.codemonkeyramblings.com MikeT

    The idea is not entirely without merit, provided it is done outside of the state. My employer by default starts all new hires out with a 2% contribution to the conservative investments in its 401K. You can opt-out if you know what you are doing, but this sort of paternalism does help new hires out of college, many of whom are irresponsible with saving for retirement.

    I’ve been investing since I got out of college, and in 2.5 years, I’ve saved quite a bit by voluntarily doing between 6-8% of my paycheck, but some of my coworkers think it’s stupid. Why? They don’t care that I am getting an addition few thousand bucks a year invested for me, all they know is that that additional money out of their paycheck can’t go to fun stuff like big TVs and video games.

    The sad truth is that these sort of people will be the ones whining and complaining 20 years from now about how expensive the cost of living is, and how they’ll never be able to retire. Now, this’d be no problem in a society in which they can’t vote, but since they can vote, it’s probably good that our employer is nudging them in a direction that will make them less likely to end up destitute later on in life.

    Be all that as it may be, libertarian paternalism will invariably require even more government, and in that sense, I think it certainly disqualifies the “libertarian” adjective in any meaningful sense of the word.

  • dm

    It’s not possible for “the government to stay out of 401K”, since they’re creations of the government to begin with. Encouraging employers to make them opt-out, instead of opt-in doesn’t really make any difference to anyone’s freedom.

  • dm

    It’s not possible for “the government to stay out of 401K”, since they’re creations of the government to begin with. Encouraging employers to make them opt-out, instead of opt-in doesn’t really make any difference to anyone’s freedom.

  • Alex Harris

    Sunstein’s original article on “libertarian paternalism” (American Economic Review, May 2003) discussed exactly the sort of employer savings plans that libertarians would have no objection to. If I sign a contract with an employer saying that I’ll work there, the company will pay me so much, and the company will also put 2% of my pay in a 401(k), that’s totally fine. The original article simply pointed out that sometimes defaults are necessary – but it didn’t involve state action at all. It’s interesting that he apparently now equates such innocuous actions as employer savings with state-mandated civility. One is definitely libertarian. The other is definitely paternalism. I’m not sure if either action fits both categories.

  • http://www.openmarket.org/author/alex-harris/ AlexHarris

    Sunstein’s original article on “libertarian paternalism” (American Economic Review, May 2003) discussed exactly the sort of employer savings plans that libertarians would have no objection to. If I sign a contract with an employer saying that I’ll work there, the company will pay me so much, and the company will also put 2% of my pay in a 401(k), that’s totally fine. The original article simply pointed out that sometimes defaults are necessary – but it didn’t involve state action at all. It’s interesting that he apparently now equates such innocuous actions as employer savings with state-mandated civility. One is definitely libertarian. The other is definitely paternalism. I’m not sure if either action fits both categories.

  • http://techliberation.com/2009/04/09/anonymity-reader-comments-section-230/ Anonymity, Reader Comments & Section 230 | The Technology Liberation Front

    [...] something must be done to remedy this problem.  Cass Sunstein and Richard Thaler, for example, have advocated a Civility Check that “can accurately tell whether the email you’re about to send is [...]

  • waynecrews

    Adam, thanks for this, clicked it while reading your Zittrig post, and you know how i feel about that worldview. In any event, the Senate hold on Sunstein's appointment to head OMB's OIRA has been lifted, so he's likely to be confirmed. Republicans think his favorable attitude toward cost-benefit analysis for regulation is a good thing; But as “nudging” implies, there's little regulators can cook up that they won't regard as net-beneficial, and worthy of imposing on others. The world is there for them to lord over; we are all people things are done to.

  • waynecrews

    Adam, thanks for this, clicked it while reading your Zittrig post, and you know how i feel about that worldview. In any event, the Senate hold on Sunstein's appointment to head OMB's OIRA has been lifted, so he's likely to be confirmed. Republicans think his favorable attitude toward cost-benefit analysis for regulation is a good thing; But as “nudging” implies, there's little regulators can cook up that they won't regard as net-beneficial, and worthy of imposing on others. The world is there for them to lord over; we are all people things are done to.

  • waynecrews

    Adam, thanks for this, clicked it while reading your Zittrig post, and you know how i feel about that worldview. In any event, the Senate hold on Sunstein's appointment to head OMB's OIRA has been lifted, so he's likely to be confirmed. Republicans think his favorable attitude toward cost-benefit analysis for regulation is a good thing; But as “nudging” implies, there's little regulators can cook up that they won't regard as net-beneficial, and worthy of imposing on others. The world is there for them to lord over; we are all people things are done to.

  • http://techliberation.com/2009/07/20/zittrains-pessimistic-predictions-and-problematic-prescriptions-for-the-net/ Zittrain’s Pessimistic Predictions and Problematic Prescriptions for the Net — Technology Liberation Front

    [...] to ensure that their platforms do not discriminate,” possibly through regulation or other Sunstein-ian “nudges.” Here we have the truly frightening prospect of a handful of faceless bureaucrats becoming [...]

  • http://techliberation.com/2010/03/10/would-a-citizenship-news-voucher-get-us-more-broccoli-journalism/ Would a “Citizenship News Voucher” Get Us More “Broccoli Journalism”?

    [...] crew thanks to Cass Sunstein’s book of the same name (w/Richard Thaler). But, as I’ve said here before, such “nudging” is rife with elitism since some policymakers imagine they can steer the [...]

  • http://techliberation.com/2010/07/06/stupid-people-stupid-lawsuits-stupid-warning-labels-the-coming-digital-tort-reform-fight/ Stupid People, Stupid Lawsuits, Stupid Warning Labels & the Coming Digital Tort Reform Fight

    [...] driven by the tort system, will only be amplified by federal and state policymakers’ newfound nudgeiness—the desire to get us all to make the “right” decisions through subtle governmental [...]

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