Escaping Paternalism

Mario Rizzo and Glen Whitman book ISBN:1108760007

Dec30'2020: Rizzo and Whitman have won a much-deserved Szasz Prize for Outstanding Contributions to the Cause of Civil Liberties. Casual readers may wonder, “What on Earth does Escaping Paternalism have to do with civil liberties?” The answer: Paternalism is a top – possibly the top – argument for violating civil liberties. (Civil Liberty)

Escaping Paternalism Book Club - Econlib

If you haven’t heard of Mario Rizzo and Glen Whitman‘s Escaping Paternalism, you should. The book is an unbelievably learned, thoughtful, fair, wise, and inspired critique of applied behavioral economics in general and libertarian paternalism (a.k.a. “nudging“) in particular.

The book is not light reading

Escaping Paternalism Book Club: Part 1 - Econlib.

Rizzo and Whitman (R&W) begins with a primer on the “new paternalism” – the influential policy reform movement powered by the engine of behavioral economics

Cass Sunstein and Richard Thaler are the popular and intellectual leaders of the new paternalists

Cass Sunstein and Richard Thaler, coming from an economic perspective, support policies that will make people better off “in terms of their own welfare.” That welfare is best advanced by the choices people would make “if they had complete information, unlimited cognitive abilities, and no lack of willpower”

R&W close the chapter by explaining their multi-stage argumentative strategy: Our case will consist of a series of challenges – in effect, hurdles that behavioral paternalist proposals must clear in order to be justified as a matter of policy

The most abstract: Behavioral economists take simple models of rational choice too literally.

Much of the evidence for “failures of rationality” derives from experimental settings that are effectively context-free. Such experiments may identify “raw” or unmodified propensities in human behavior in the laboratory. But they do not tell us how strong those propensities are “in the wild,” where people make real decisions

In Chapter 2, R&W appeal to “inclusive rationality” to critique behavioral economics at its root.

the word “rational” has many meanings

In this book, we will defend what we call inclusive rationality. Inclusive rationality means purposeful behavior based on subjective preferences and beliefs, in the presence of both environmental and cognitive constraints

*[R]eal people may do all of the following and still qualify as inclusively rational:

Experience internal conflict that has not yet been (and may never be) resolved; Have preferences that change over time;*

Because our notion of inclusive rationality is very broad, we might be accused of offering a theory that cannot be falsified. We should therefore clarify that we do believe positive claims should, in principle, be falsifiable. But some claims are more easily tested than others, and there is no guarantee that the most easily tested claims are also normatively relevant.

Rational people may change their minds – and we have not encountered anyone arguing otherwise.

Critical Comments

1. Escaping Paternalism focuses almost entirely on the “new paternalism.” Yet the more I read the book, the more I concluded that “new paternalism” is largely an attempt to repackage “old paternalism” for an elite, secular audience

As you’ll see, I find the conceptual objections only moderately persuasive, but the rest of their critique is strong indeed

Note: If we take Social Desirability Bias seriously – as I think we should – we can readily identify the “real” preference. Namely: Contrary to the new paternalists, the real preference is what people really do!

10. When I began Escaping Paternalism, I skipped over chapters 1-5, fearing they’d be long-winded, half-baked Austrian philosophy. I was so impressed with chapters 6-10, however, they I started reading the book from the beginning as soon as I finished chapter 10. I swiftly concluded that unlike so many other Austrian-inspired works, Escaping Paternalism was not only conceptually thoughtful, but eager to engage with an array of empirical literatures. If you’re impatient with economists waxing philosophical, I urge you to make an exception here.