Abstract
The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice. Often people's preferences are ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer. Examples are given from many areas, including savings behavior, labor law, and consumer protection.
Highlights
Consider two studies of savings behavior: 1. Hoping to increase savings by workers, several employers have adopted a simple strategy
The notion of libertarian paternalism might be complemented by that of libertarian benevolence, by which starting points, framing effects, and default rules are enlisted in the interest of vulnerable third parties, and we shall devote some discussion to this possibility
We suggest that because of the likely effects of default rules, framing effects, and starting points on choices and preferences, paternalism, at least in a weak sense, is impossible to avoid
Summary
Consider two studies of savings behavior: 1. Hoping to increase savings by workers, several employers have adopted a simple strategy. "paternalistic" if it attempts to influence the choices of affected parties in a way that will make choosers better off.[11] Drawing on some well-established findings in behavioral economics and cognitive psychology, we emphasize the possibility that in some cases individuals make inferior decisions in terms of their own welfare -- decisions that they would change if they had complete information, unlimited cognitive abilities, and no lack of willpower.[12] the notion of libertarian paternalism might be complemented by that of libertarian benevolence, by which starting points, framing effects, and default rules are enlisted in the interest of vulnerable third parties, and we shall devote some discussion to this possibility. In the important domain of savings behavior, we shall offer a number of illustrations To those antilibertarians who are suspicious of freedom of choice and would prefer to embrace welfare instead, we urge that it is often possible for paternalistic planners to make common cause with their libertarian adversaries, by adopting policies that promise to promote welfare but that make room for freedom of choice.
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