Abstract
Behavioral economics has addressed interesting positive and normative questions underlying the standard rational choice theory. More recently, it suggests that, in a real world of boundedly rational agents, economists could help people to improve the quality of their choices without any harm to autonomy and freedom of choice. This paper aims to scrutinize available arguments for and against current proposals of light paternalistic interventions mainly in the domain of intertemporal choice. It argues that incorporating the notion of bounded rationality in economic analysis and empirical findings of cognitive biases and self-control problems cannot make an indisputable case for paternalism.
Highlights
There is a long-standing methodological tradition stating that economics is a positive science that remains silent about policy issues and the complex determinants of human ends, values and motives
Systematic evidence of biased probabilistic judgments and conflicting preferences conducive to suboptimal outcomes lead behavioral economists to appeal to the notion of bounded rationality so as to recommend light paternalistic interventions
We draw on experimental evidence of economically significant framing effects, status quo bias, default rules, self-control problems, and loss aversion to scrutinize behavioral economists’ arguments for and against light or libertarian paternalism
Summary
There is a long-standing methodological tradition stating that economics is a positive science that remains silent about policy issues and the complex determinants of human ends, values and motives. Systematic evidence of biased probabilistic judgments and conflicting (time, risk and social) preferences conducive to suboptimal outcomes lead behavioral economists to appeal to the notion of bounded rationality so as to recommend light paternalistic interventions. The latter draw on the idea that it is possible and desirable to improve the quality of people’s decisionmaking without any damage to their autonomy and freedom of choice (Thaler and Sunstein, 2003; Thaler and Benartzi, 2004; Loewenstein and Haisley, 2008). We draw on experimental evidence of economically significant framing effects, status quo bias, default rules, self-control problems, and loss aversion to scrutinize behavioral economists’ arguments for and against light or libertarian paternalism. The fifth section wraps the overall argument up and concludes
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