Libertarian Paternalism and the Danger of Nudging Consumers

Abstract

Consumer law and policy have sought to protect consumers through various forms of information disclosure. This has, however, failed in several areas. A central reason for such a failure has been irrational consumer behavior. Libertarian paternalism, a currently influential view in the US and the UK, attempts to capture the many ways in which market behaviour can be irrational and suggests nudging consumers towards self-interest. This has important implications for consumer protection policies. In the area of healthy eating, rather than insisting on nutrition labeling and other legislative interventions, libertarian paternalism claims that nudging consumers towards healthy food is likely to improve healthy eating and reduce obesity in society. This work critically assesses the limitations of nudging consumers for healthy eating. It argues that nudge intervention can only induce short-term cosmetic behavioral changes likely to work for nutrition-conscious, somewhat informed or affluent consumers. This should not be surprising as nudge interventions have no interest in changing the structural disadvantages and social constraints that underlie the patterns of unhealthy eating; the harmful effects of corporate nudging and advertising; and the negative impact of nudged food choices on social welfare, the environment and economic inequality. This work suggests moving beyond nudge interventions and presents some evidence for combining non-regulatory and regulatory interventions in order to reduce more effectively unhealthy eating and the obesity epidemic.