Wednesday, August 19, 2015

Jayson Lusk Takes on Libertarian Paternalism

Jayson L. Lusk, “Are You Smart Enough to Know What to Eat? A Critique of Behavioural Economics as Justification for Regulation.” European Review of Agricultural Economics 3: 355-373, 2014.

• People make some 200 food-related decisions per day! 

• Food policy activists presume that people should be eating differently than they do. 

• Lusk argues that behavioral economics-inspired policies are best when they are applied to rules that are aimed at externalities, not internalities. 

• Behavioral economics is sort of an intellectual fad, boosted by the interest of journals in novelty. At the same time that behavioral economics articles started appearing claiming that humans are not rational, other journals were publishing articles claiming that non-human animals are rational. 

• Some behavioral economists jump quite quickly from small-scale experiments on undergraduates to major claims about appropriate policy. Laboratory conditions are not the real world, and lab experiments reveal how people operate in the lab. 

• People need practice to make good decisions, so the government should not remove opportunities for people to choose. People self-regulate, self-commit, and even employ

• Behavioral economics incentivizes the abdication of personal responsibility and normalizes abnormality. Markets, alternatively, anticipate our changing preferences. 

• If we abandon traditional “welfare” analysis based on consumer surplus, all we have to go on are the prejudices of researchers. 

• Is there really any evidence that those people who are subject to all of these behavioral biases actually do worse in life than others not similarly afflicted?

Adam Oliver on “Nudging, Shoving, and Budging”

Adam Oliver, “Nudging, Shoving, and Budging: Behavioural Economic-Informed Policy.” Public Administration, 2015; doi: 10.1111/padm.12165.

• There is no accepted definition of libertarian paternalism or nudges. As a result, many policies are described to be behavioral despite having little claim to that moniker. You should worry about being pro-nudge, because the nudgers might go way beyond what you think you are signing up for. 

• Oliver claims nudges should present “no” burden on the rationals while attempting to correct an internality. 

• Loss aversion is not something you choose, but something you are, like a White Sox fan [Okay, the White Sox are not actually mentioned in the article.]

• Libertarian paternalism concerns internalities, respects liberty, and employs behavioral means. The British Behavioural Insights Team goes beyond nudging: sometimes it addresses externalities, as with organ donation. Having teenagers mentor toddlers to reduce teen pregnancy is not an obvious behavioural policy, nor is the provision of information about the drinking habits of one’s peers. 

• Straight out paternalism, without the libertarian adjective, is a “shove”; smoking bans are shoves. 

• A “budge” is a behaviorally informed regulatory intervention, designed to counter the misleading nonsense thrown up by profit-seeking corporations, like the payments made by candy makers to grocery stores for check-out line product placement. 

• Maybe it is the opportunity to choose, and not the utility derived from the choices, that is the real measure of welfare.