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Nudging Is Judging: The Inevitability of Value Judgments

Consequences of the Collapse of the Fact/Value Dichotomy for Behavioural Law and Economics

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Nudging - Possibilities, Limitations and Applications in European Law and Economics

Abstract

This article shows that there can never be nudging without judging. Specifically, the essay analyses the impact of the collapse of the fact/value dichotomy on rational choice and behavioural law and economics. Not only does a nudge require an ex-ante value judgment, but facts and values are almost always inextricably entangled. Thus, the real problem does not lie in “getting the facts right” (i.e. judging people as neutrally as possible), but in the so-called “facts” themselves, which already contain value judgments. In the context of rational choice and behavioural law and economics, the term ‘rational’ is at the same time used in its positive meaning (how things are) and in its normative meaning (how things ought to be). As a result, researchers in BLE engage in both positive and normative science. Instead of accepting the normative and making it explicit, however, it is often shunned by researchers. In doing so, an unscientific double standard is maintained with the explicit positive science in the fore and the implicit normative science looming in the background. As a result, the normative concept ‘rationality’ is maximized under the guise of it being a positive concept while ‘autonomy’ is rejected as a legitimate concept for maximization on grounds of it being normatively laden. Pragmatic ethics could serve as a basis to make the normative transparent while at the same time not exclude it from scientific discourse.

A shortened, more concise version of this essay is scheduled to be published in German at Nomos Verlag in 2016.

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Notes

  1. 1.

    For an early critique of rational choice theory see for example Sen 1967.

  2. 2.

    Walsh 2000, p. 5.

  3. 3.

    Cf. Smith 1776/2008.

  4. 4.

    Sen 2000, p. 272.

  5. 5.

    See e.g. http://www.investopedia.com/articles/economics/09/adam-smith-wealth-of-nations.asp (last accessed on 10 April 2015).

  6. 6.

    Simon 1979, p. 507 (emphasis added).

  7. 7.

    See Simon 1979, p. 502.

  8. 8.

    See Kahneman and Tversky 1979, pp. 263–292.

  9. 9.

    For an overview of the most important heuristics and biases, see Mathis and Steffen 2015, pp. 31–48. For further details on heuristics and biases, see Schweizer 2005; Rachlinski 2000, pp. 95–115; Sunstein 2002, pp. 61–107; Jolls and Sunstein 2006, pp. 199–241; Thaler and Sunstein 2008; Kahneman and Tversky 1981, pp. 453–458; Tversky and Kahneman 1974, pp. 1124–1131, 1991, p. 1039; Kahneman 1997, p. 105, 2003, p. 697, 2011; Tversky and Fox 1995, pp. 269–283; Thomas and Millar 2011, pp. 139–149; Meyerowitz and Chaiken 1987, pp. 500–510; Kahneman et al. 1990, pp. 1325–1348; Kahneman et al. 1991, pp. 193–206; Christensen-Szalanski and Fobian-Willham 1991, pp. 147–168. For a general discussion of behavioural law and economics, see Sunstein 2000; Arlen 1998, p. 1765; Issacharoff 1998, p. 1729; Jolls et al. 1998, pp. 1471–1550; Kelman 1998, p. 1577; Korobkin and Ulen 2000, pp. 1051–1144; Parisi and Smith 2004; Jolls 2009; Englerth 2007, pp. 60–130. For an overview of libertarian paternalism and the problems associated with it, see van Aaken 2015 (focussing on the legal limits of paternalistic nudges ); Mitchell 2005, pp. 1–42; Sunstein and Thaler 2003, pp. 1159–1202.

  10. 10.

    Sunstein and Thaler 2003, p. 1162. Note that Sunstein and Thaler do not elaborate on how the nudger is reliably able to find out how the nudgee judges his or her choice. It is implied, however, that the nudgee’s revealed preferences (outset) systematically deviate from his or her rational preferences (goal). The rational preferences are supposed to be value-neutral and universally accepted, derived from the allegedly equally value-neutral and universally accepted rational choice theory. In other words, rational preferences serve as an axiom and are closed to debate.

  11. 11.

    Thaler and Sunstein 2008, p. 6 (emphasis added).

  12. 12.

    For arguments in favour of nudging, see for example Sunstein and Thaler 2003, pp. 1159–1202. For arguments against nudging, see for example van Aaken 2015 and Mitchell 2005, pp. 1–42.

  13. 13.

    See van Aaken 2015.

  14. 14.

    Note how this is closely connected with the ‘naturalistic fallacy’, which claims that it is fallacious to explain e.g. the concept of ‘goodness’ reductively in terms of natural properties, such as ‘being pleasant’ or ‘being desirable’. For further information on the naturalistic fallacy, see George Edward Moore, Principia Ethica, 1903, §10.

  15. 15.

    See for example the complete transcript of the BBC HARD talk interview with Richard Thaler , held in October 2012, accessible via http://tvguide.lastown.com/bbc/preview/hardtalk/richard-thaler-behavioural-economist.html (last accessed on 10 April 2015).

  16. 16.

    See van Aaken 2015.

  17. 17.

    See von Humboldt 1792/1989.

  18. 18.

    See Mill 1859/1869.

  19. 19.

    See Putnam 2002/2004.

  20. 20.

    Putnam 2002/2004, p. 9.

  21. 21.

    See Putnam 2002/2004, p. 7.

  22. 22.

    See Kant 1781/1998, A6-7/B10-11. Immanuel Kant further distinguishes between a priori propositions (propositions whose justification do not rely on experience, such as “2+2=4”) and a posteriori propositions (propositions whose justification rely on experience, such as “chairs exist”).

  23. 23.

    Cf. Hume 1738/1978, pp. 469–470.

  24. 24.

    Putnam 2002/2004, p. 14.

  25. 25.

    Locke 1689/2008, II.viii.8.

  26. 26.

    Hume 1748/2008, II.3–4.

  27. 27.

    Hume 1748/2008, II.1.

  28. 28.

    Hume 1777/1975, pp. 287–288 (original emphasis).

  29. 29.

    Carnap 1934, p. 22.

  30. 30.

    Putnam 2002/2004, p. 19, p. 31.

  31. 31.

    Putnam 2002/2004, p. 19 (original emphasis).

  32. 32.

    Putnam 2002/2004, p. 21 (original emphasis).

  33. 33.

    See Putnam 2002/2004, p. 22.

  34. 34.

    See Putnam 2002/2004, pp. 23–25.

  35. 35.

    Putnam 2002/2004, pp. 26–27 (original emphasis).

  36. 36.

    Putnam 2002/2004, pp. 26–27.

  37. 37.

    Putnam 2002/2004, p. 8.

  38. 38.

    Quine 1951, p. 20.

  39. 39.

    Quine 1951, p. 20.

  40. 40.

    Quine 1951, p. 20.

  41. 41.

    Quine 1951, pp. 33–34.

  42. 42.

    Quine 1951, p. 34.

  43. 43.

    Carnap 1934, p. 22.

  44. 44.

    Quine 1951, p. 38.

  45. 45.

    Quine 1951, p. 38.

  46. 46.

    Quine 1951, p. 38.

  47. 47.

    Quine 1951, p. 39.

  48. 48.

    Quine 1951, pp. 39–40.

  49. 49.

    Quine 1951, p. 43.

  50. 50.

    See Habermas 1992/1998, 1992/1996, 1999. Also see Brune 2010.

  51. 51.

    For an overview see Ott 2001, pp. 165–166.

  52. 52.

    An axiomatic theory T is said to be complete if, and only if, it is consistent and if for every sentence σ in the language of T it holds true that either T ˫ σ (the sentence σ is provable in T) or T ˫ ¬ σ (the sentence not-σ is provable in T, i.e. the sentence σ is refutable in T).

  53. 53.

    For more information on the two Gödel incompleteness theorems, please refer to the respective entry in the Stanford Encyclopedia of Philosophy, available at: http://plato.stanford.edu/entries/goedel-incompleteness/ (last accessed: 23.10.2015).

  54. 54.

    See for example Aronson et al. 2008, pp. 163 et seqq.

  55. 55.

    Cf. Putnam 2002/2004, pp. 79–95.

  56. 56.

    Cf. for example Mas-Collel 1982, pp. 72–82.

  57. 57.

    Cf. Putnam 2002/2004, pp. 82–86.

  58. 58.

    Putnam 2002/2004, p. 82.

  59. 59.

    Putnam 2002/2004, p. 83.

  60. 60.

    Cf. Bernstein 1991, pp. 203–204. Also see Frankfurt 1988, p. 22.

  61. 61.

    See e.g. Aronson et al. 2008, pp. 163 et seqq.

  62. 62.

    Cf. Carney 2007. Retrieved on 31.08.2015 via: http://archive.wired.com/medtech/health/news/2007/05/india_transplants_donorpolicy

  63. 63.

    See for example: Bastiat 1848/1995, chapter 2.

  64. 64.

    Putnam 2002/2004, p. 145.

  65. 65.

    Cf. Putnam 2005, pp. 31–32.

  66. 66.

    Cf. Putnam 2002/2004, p. 134.

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Acknowledgement

I would like to sincerely thank Prof. Dr. iur. Klaus Mathis, MA in Economics, and Katrien Van Den Bergh, MA, for their valued input and careful proofreading.

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Correspondence to Ariel David Steffen Ph.D. Candidate .

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Steffen, A.D. (2016). Nudging Is Judging: The Inevitability of Value Judgments. In: Mathis, K., Tor, A. (eds) Nudging - Possibilities, Limitations and Applications in European Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-29562-6_6

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