Richard H. Thaler & Cass R. Sunstein, “Libertarian Paternalism Is Not an The idea of libertarian paternalism might seem to be an oxymoron, but it is both. Libertarian Paternalism. By RICHARD H. THALER AND CASS R. SUNSTEIN*. Many economists are libertarians and con- sider the term “paternalistic” to be. Libertarian Paternalism. By RICHARD H. THALER AND CASS R. SUNSTEIN’. Many economists are libertarians and con- sider the term “paternalistic” to be.

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But what if the purchaser has a strong aversion to paying for repairs when an appliance has broken down?

Libertarian Paternalism | Mises Institute

True enough, the authors preach a mild doctrine. The authors consider a related objection, but they do not fully grasp the key point. Thaler and Sunstein published Nudgea book-length defense of this political doctrine, in new edition View the discussion thread.

Thaler and Sunstein may not share this preference, but their doing so is not a requirement of rationality in preferences. The term was coined by behavioral economist Richard Thaler and legal scholar Cass Sunstein in a article in the American Economic Review. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

Thaler and Sunstein might respond in this way: This article is about the concept of liberal paternalism, which is sometimes described as a form of soft paternalism. Suppose an employer has a voluntary plan that allows workers to save for retirement. Choices in these circumstances, Thaler and Sunstein aver, are problematic: Why, they ask, need one progress down it? Richard Epstein has written a detailed response to many of the arguments for irrationality that Thaler has advanced on previous occasions: Nudge theory in business.

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Their escape from apparent contradiction is ingenious. For example, it has been argued that it fails to appreciate the traditional libertarian concern with coercion in particular, and instead focuses on freedom of choice in a wider sense. The American Economic Review But libertarians can support it, because it forces no one to donate.


Behavioral economists attribute this to the ” status quo bias “, the common human resistance to changing one’s behavior, combined with another common problem: Let us return to those who, despite the health risks, continue to smoke. Skip to main content. They do not favor doing so; but this leaves them free to support a less exigent variety of paternalism. Nudges, not force, are on their agenda.

Thaler and Sunstein are right to think libertrian the standard model is flawed, but they themselves remain too much its prisoner. Are not paternalists, even of the soft variety who confine their oaternalism to nudges, substituting their preferences for the freely chosen decisions of others? There seems nothing “irrational” about this preference, but if someone has it, purchasing the extended warranty makes sense.

That power is absolute, minute, regular, provident, and mild… The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Economics textbooks assume that people act on their preferences rationally, based on full information.

Libertarian paternalism

Thaler and Cass Sunstein. They extend their view further.

People, as their title suggests, may be subject to paternalistic “nudges,” so long as these nudges do not coerce them. Given these uncontroversial characterizations of the two positions, is it not obvious that they cannot be combined with each other? Skepticism and Freedom University of Chicago Press, There is a problem here that Thaler and Sunstein fail to note.

For a sense of Thaler’s libwrtarian on government interventions in the marketplace, we have posted below David Gordon’s review of one of Thaler’s more well-known books. Research by behavioral economists demonstrated, moreover, that firms which raised the default rate instantly and dramatically raised the contribution rates of their employees.


The authors respond that this objection rests on an unrealistic view of choice. Thaler and Sunstein suggest that we change the default position.

Above this race of libertarjan stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate.

Thus, they cannot be said “really” to choose to smoke. Until recently, the default contribution rate for most tax-deferred retirement savings plans in the United States was zero, and despite the enormous tax advantages, many people took years to start contributing if they ever did. Views Read Edit View history.

Libertarian paternalism – Wikipedia

It is libertarian in the sense that it aims to ensure that “people should be free to opt out of specified arrangements if they choose to do so” p.

But a great deal of research, by both economists and psychologists, shows that the assumptions of the standard view cannot be retained in unmodified form. Unless, though, they have filled out a donor card, doctors who wish to transplant organs must secure the consent of sunsten has legal custody of the body. They think it libertariaan that many more transplants would be obtained under this system.

He strongly prefers that payments for breakdowns be handled libertariaan advance. Smokers, research indicates, haven’t fully taken into account the heath risks of smoking.

Libertarian paternalism is similar to asymmetric paternalism, which refers to policies designed to help people who behave irrationally and so are not advancing their own interests, while interfering only minimally with people who behave rationally.

This page was last edited on 16 Decemberat An obvious objection to their proposals arises, and their efforts to respond to this objection form the theoretical substance of the book.