Libertarian paternalism is the idea that both are possible and legitimate for private and public institutions to influence behavior while also respecting the freedom of choice, as well as the implementation of the idea. The term was coined by behavioral economist Richard Thaler and law scholar Cass Sunstein in the 2003 article on American Economic Review. The authors further describe their ideas in a more in-depth article published at the University of Chicago Law Review in the same year. They propose libertarian paternalism is paternalism in the sense that "it tries to influence choice in a way that will make voters better, as judged by themselves" (page 5); note and consider, the concept of paternalism in particular requires selection restrictions. It is libertarian in the sense that it aims to ensure that "one should be free to choose the prescribed arrangement if they choose to do so" (p.1161). The possibility to opt out is said to "maintain freedom of choice" (p.1182). Thaler and Sunstein published Nudge , defense throughout this political doctrine book, in 2008 (new edition 2009).
Libertarian paternalism is similar to asymmetric paternalism, which refers to policies designed to help people who behave irrational and not advance their own interests, while only minimal interference with people who behave rationally. Such a policy is also asymmetrical in the sense that they must be well received for those who believe that people behave rationally and to those who believe that people often behave irrational.
Video Libertarian paternalism
Policy example
Setting default to exploit default effects is a typical example of soft paternalistic policy. Countries that have an "opt-out" system for voluntary organ donations (anyone who does not explicitly refuse to donate their organs in case of accidents are considered as donors) experience dramatically higher rates of organ donor approval, than countries with in the system. Austria, with an opt-out system, has 99.98% approval rate, while Germany, with very similar culture and economic situation, but opt-in system, has only 12% approval rate.
Taxi drivers in New York City have seen a tip increase from 10% to 22% after passengers have the ability to pay by credit card on cabled-in devices whose screens feature three default tip options ranging from 15% to 30%.
To date, the standard contribution rate for most of the tax-deferred retirement savings plans in the United States is zero, and despite the enormous tax advantages, many people take years to start contributing if they ever do. The behavioral economist attributes this to "the prejudice of the status quo", the general human rejection to change one's behavior, combined with other common problems: the tendency to procrastinate. Research by behavioral economists suggests, moreover, that companies that raise the rate of default failures and dramatically increase the rate of their employees' contributions.
Increasing the standard contribution rate is also an example of asymmetric paternalism. Those who made a deliberate choice to set aside zero percent of their income in deferred tax savings still have this option, but those who did not save simply because of inertia or because of delays were helped by higher standard contribution levels. This is also asymmetric in the second sense: If you do not believe that the default problem is important, because you believe that people will make rational decisions about something as important as retirement savings, then you should not care about the default level. If you believe that a default problem, on the other hand, you should set a default on a level that you believe will be best for the largest number of people.
Maps Libertarian paternalism
Criticism of choice of terms
There are many criticisms of the ideology behind the term, libertarian paternalism . For example, it has been argued that he failed to appreciate traditional libertarian concerns by coercion in particular, and instead focused on freedom of choice in a broader sense. Others argue that, while libertarian paternalism aims to improve welfare, there may be more libertarian objectives to promote, such as maximizing future freedom.
See also
- Preferred architecture
- List of cognitive biases
- Choice of taxes - a gentle paternalism approach to taxation
References
Further reading
- Thaler, Richard H. and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale Press University, 2008.
- Sunstein, Cass R. and Richard H. Thaler. Libertarian Paternalism Is Not Oxymoron. University of Chicago Law Review 70 (4), (2003): 1159-1202.
- Comrade, Colin; Issacharoff, Samuel; Loewenstein, George; O'Donoghue, Ted; Rabin, Matthew (2003). Rules for Conservative: Economic Behavior and Cases for "Asymmetrical Paternalism". University of Pennsylvania Law Review, 1151 (3), 1211-1254.
- Harkin, James. Libertarian Paternalism. Guard. June 24, 2006.
- Thaler, Richard H. and Cass R. Sunstein. Designing Better Options. Los Angeles Times. 2 April 2008.
- Vedantam, Shankar. Dose of Libertarian Paternalism. Washington Post. April 7, 2008.
- Will, George F. Nudge Against the Fudge. Newsweek. June 30, 2008.
- Harkin, James. These stinging things are not new - and everything is a bit shaky. Guard. August 5, 2008. Heinig, Hans Michael, "Autonomy vs. Technocracy: Paternalism Libertarian Revisited", in: Alexandra Kemmerer/Christoph MÃÆ'¶llers/Maximilian Steinbeis/Gerhard Wagner (eds.), Architecture of Choice in Democracy. Exploring the Legitimacy of Nudging. Nomos/Hart, Baden-Baden/Oxford 2016, 219-227.
External links
- Interview with Richard Thaler on libertarian paternalism. EconTalk Podcasts
- Interview with Cass Sunstein on libertarian paternalism. Grist.com.
Source of the article : Wikipedia
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