Abstract
Thaler and Sunstein justify nudge policies from welfaristic premises: nudges are acceptable because they benefit the individuals who are nudged. A tacit assumption behind this strategy is that we can identify the true preferences of decision-makers. We argue that this assumption is often unwarranted, and that as a consequence nudge policies must be justified in a different way. A possible strategy is to abandon welfarism and endorse genuine paternalism. Another one is to argue that the biases of decision that choice architects attempt to eliminate create externalities. For example, in the case of intertemporal discounting, the costs of preference reversals are not always paid by the discounters, because they are transferred onto other individuals. But if this is the case, then nudges are best justified from a political rather than welfaristic standpoint.
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Notes
Cf. e.g. Camerer et al. (2003), Loewenstein and Haisley (2008), Thaler and Sunstein (2003, 2008), Sunstein and Thaler (2006). The secondary literature is already too large to be reviewed here, but see for example Glaeser (2006), Berg and Gigerenzer (2007), Amir and Lobel (2008), Sugden (2008), Bovens (2009), Hausman and Welch (2010), Selinger and Whyte (2010), Brennan and Brooks (2011), Grune-Yanoff (2012), Rebonato (2012), Schnellenbach (2012), Qizilbash (2012), Wilkinson (2012), Haybron and Alexandrova (2013).
In his recently published Storr’s Lectures, Sunstein (2014) distinguishes between different versions of paternalism, and claims that choice architects endorse a form of “means paternalism” aimed at helping people to attain their goals in life, or to maximize welfare “as seen by themselves”. However, Sunstein recognizes that means paternalism faces formidable problems in the case of temporal inconsistencies, which is the main focus of our paper.
Economists usually distinguish between public goods and externalities on the basis of the non-rivalry criterion. While goods with externalities are merely non-excludable (once produced, their consumption cannot be restricted), public goods are non-excludable and non-rival (consumption by one individual does not prevent consumption by another individual).
Independence requires that the ranking of two options (for example, x > y) does not change when new options become available to the decision maker. If the addition of an option (say, z) changes the relative ordering of x and y, the agent must have overlooked some feature of x and y (for example their complementarity with z) that matters for the decision at stake.
For a general analysis of this type of choice inconsistency, see Mongin (2000).
See e.g. Trope and Liberman (2003; 2010). Construal Level Theory belongs to a broad class of “attribute-based models” that explain temporal inconsistencies in terms of unstable weighing of the attributes of options (for a survey, see Read 2004). In Trope and Liberman’s theory the weighing is affected by cognitive salience, but the same point can be made using other models in this class.
Emotion-based models, for example, seem capable to deal with these cases appropriately. See e.g. Loewenstein (1996).
By “political” here we mean roughly “contractarian”, or that requires arbitration among the interests of several parties. We do not intend to claim that political solutions, in this specific sense, are independent from moral considerations.
We are indebted to Luc Bovens for this example. The example is not entirely fictional: according to some studies the prevention of certain conditions – like obesity – may actually increase healthcare spending in the long run (van Baal et al. 2008). If this is the case, letting people die may actually be the most effective policy from a purely economic perspective.
In the US some sectors of the population are supported by programmes like Medicare and Medicaid, but the extent of coverage is fairly limited compared to most European countries.
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Research for this paper was supported financially and logistically by the Fondazione Bruno Kessler. We are grateful to Luc Bovens, Till Grűne-Yanoff, Michiru Nagatsu, the editors of this journal, the participants at the Behavioral Economics Workshop held at FBK and at a seminar at Bocconi University for their comments and suggestions.
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Guala, F., Mittone, L. A Political Justification of Nudging. Rev.Phil.Psych. 6, 385–395 (2015). https://doi.org/10.1007/s13164-015-0241-8
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DOI: https://doi.org/10.1007/s13164-015-0241-8