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Libertarian Paternalism, Utilitarianism, and Justice Jamie Kelly

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Libertarian Paternalism, Utilitarianism, and Justice Jamie Kelly chapter 11 Libertarian paternalism, utilitarianism, and justice Jamie Kelly introduction In a number of recent publications, Cass Sunstein and Richard Thaler have argued for a novel approach to the design of public policy.1 Their proposal has received a great deal of attention, both within academic circles and the public at large. Drawing upon evidence from behavioral economics and empirical psychology, the authors attempt to demonstrate that the conventional antagonism between libertarians and paternalists within political theory dissolves in conditions that obtain widely in public decision-making. Where free choice and the promotion of individual welfare can coexist, the authors believe that designers of public policy ought to be libertarian paternalists. In this paper I criticize their proposal on grounds that the authors are unable to sufficiently motivate the paternalistic element of their approach. I argue that the empirical evidence cited by the authors is capable of supporting a number of competing approaches, including what I call liber- tarian utilitarianism and libertarian justice. Since the evidence that the authors draw upon does not provide us any grounds for selecting between these rival approaches, I conclude that Sunstein and Thaler are unable to provide us with a convincing guide for the design of public policy. In order to show that this is the case, I consider three arguments in favor of libertarian paternalism, and find each lacking. I end with some comments about what we can properly conclude on the basis of Sunstein and Thaler’s arguments. In constructing their argument for libertarian paternalism, Sunstein and Thaler draw upon a rich and interesting body of empirical results from the Heuristics and Biases literature.2 This literature got its start in empirical 1 I will focus on Thaler and Sunstein, Nudge, “Libertarian Paternalism,” and Sunstein and Thaler, “Libertarian Paternalism Is Not an Oxymoron.” 2 Major contributions to this research have been anthologized in three volumes: Kahneman, Slovic, and Tversky, eds., Judgment Under Uncertainty; Kahneman and Tversky, eds., Choices, Values, and Frames; and Gilovich, Griffin, and Kahneman, eds., Heuristics and Biases. 216 Downloaded from https://www.cambridge.org/core. Vassar College Libraries, on 13 Oct 2020 at 15:05:10, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/CBO9781139179003.012 Libertarian paternalism, utilitarianism, and justice 217 psychology, but has recently had enormous impact upon a number of other disciplines including economics, law, and finance. Most important for our purpose is the portion of this literature that concerns the relation- ship between individual choice and the framing of decisions. Since the 1970s, a vast amount of empirical evidence has been accumulated showing that individual choices in a wide variety of domains are not invariant over equivalent presentations of a decision problem. That is, individuals respond in different ways to a given choice, depending upon how it is framed. Sunstein and Thaler interpret this evidence as follows: Our emphasis is on the fact that in many domains, people lack clear, stable, or well-ordered preferences. What they choose is strongly influenced by details of the context in which they make their choice, for example default rules, framing effects (that is, the wording of possible options), and starting points. These contextual influences render the very meaning of the term “preferences” unclear.3 Drawing on one of the most memorable experiments in the Heuristics and Biases literature,4 Sunstein and Thaler explain: Consider the question whether to undergo a risky medical procedure. When people are told, “Of those who undergo this procedure, 90 percent are still alive after five years,” they are far more likely to agree to the procedure than when they are told, “Of those who undergo this procedure, 10 percent are dead after five years.” What, then, are the patient’s “preferences” with respect to this procedure? Repeated experiences with such problems might be expected to eliminate this framing effect, but doctors too are vulnerable to it.5 The authors assert that our susceptibility to framing effects means that, in a whole host of common situations, we lack stable preferences. In proposing libertarian paternalism, they aim to show that such situations often involve contexts of both public and private decision-making. As a result, they argue that planners ought to design choices in such a way that individuals are “nudged” towards making good decisions, even if they might not do so on their own. One of their central examples concerns Carolyn, the director of food services for a large city school system. In their example, Carolyn must make a decision about how to arrange items in the cafeterias under her control: 3 Sunstein and Thaler, “Libertarian Paternalism Is Not an Oxymoron,” 1161. 4 McNeil et al., “On the Elicitation of Preferences for Alternative Therapies.” 5 Sunstein and Thaler, “Libertarian Paternalism Is Not an Oxymoron,” 1161. Downloaded from https://www.cambridge.org/core. Vassar College Libraries, on 13 Oct 2020 at 15:05:10, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/CBO9781139179003.012 218 jamie kelly Here are some suggestions she has received from her usually sincere but occasion- ally mischievous friends and coworkers: 1. Arrange the food to make students best off, all things considered. 2. Choose the food order at random. 3. Try to arrange the food to get the kids to pick the same foods they would choose on their own. 4. Maximize the sales of the items from suppliers that are willing to offer the largest bribes. 5. Maximize profits, period.6 Sunstein and Thaler claim that the cafeteria director described above cannot help but make a choice that affects the decisions of her customers. Food must be arranged in some way, and the organizational strategy that is adopted will help to determine what people eat. The reason that this is the case stems from the (in this case, unproven) assertion that food ordering influences food choice. That is, we are invited to imagine that in this situation individuals lack clear, stable, or well-defined preferences about what to eat. Given this lack, an opportunity presents itself: The cafeteria director has the chance to promote better nutrition without having to eliminate any of her customers’ options. For example, should she choose strategy 1, more people might be induced to choose healthy options, but those with a well-defined preference for a cheeseburger and fries will not have had their freedom of choice restricted in any way. This is the sense in which their proposal is “libertarian”: Their aim is to influence decisions without constraining liberty. Thus, no options are to be eliminated, and no significant costs are to be imposed on the selection of these options. Central to Sunstein and Thaler’s proposal is their claim that evidence from the social sciences justifies a distinctively paternalistic approach to public policy. I will argue that this claim is false, that this research cannot justify paternalism in particular. In what follows, I will consider three different arguments purporting to justify the use of a paternalist approach to public policy. The first argument comes from a series of publications by Sunstein and Thaler written prior to Nudge. Here the authors assert directly that paternalism in public policy is inevitable. The second recon- structs the argument of Nudge, where the authors merely claim that nudges are inevitable. Finally, the third provides a friendly argument of my own, intended to establish that nudges ought to be paternalistic. I show that none of these arguments succeed in establishing libertarian paternalism as the proper approach to the design of public policy. 6 Thaler and Sunstein, Nudge, 2. Downloaded from https://www.cambridge.org/core. Vassar College Libraries, on 13 Oct 2020 at 15:05:10, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/CBO9781139179003.012 Libertarian paternalism, utilitarianism, and justice 219 paternalism is inevitable Starting in 2003, Sunstein and Thaler published a series of articles advocating for a new way of thinking about paternalism. Libertarian paternalism was proposed as a response to standard anti-paternalist arguments concerning government ineptitude and intrusion. Relying upon insights from the social sciences, the authors sought to demonstrate that their form of paternalism was not subject to standard anti-paternalist objections. In particular, in these early publications,7 the authors claimed that the instability of our preferences made it the case that paternalism in public policy is inevitable: Once it is understood that some organizational decisions are inevitable, that a form of paternalism cannot be avoided, and that the alternatives to paternalism (such as choosing options to make people sick, obese, or generally worse off ) are unattractive, we can abandon the less interesting question of whether to be paternalistic or not and turn to the more constructive question of how to choose among paternalistic options.8 Unfortunately, the authors appear to be running together two claims here: The first is the claim that some sort of influence is inevitable; the second is that the appropriate response must be paternalistic. In the present context, “influence” merely entails that the decisions of public planners have an impact upon the decisions of citizens or consumers. This kind of influence is demonstrated by a large number of studies where the framing of a decision directly influences the rate at which different options are chosen.9 It is clear to me that existing empirical evidence is sufficient to warrant the conclusion that this kind of influence in public policy is indeed inevitable: It is simply not possible to avoid having an impact upon the expressed preferences of individuals when we go about designing public policy instruments.
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