Nudging Merit Goods: Conceptual, Normative, and Practical Connections

Abstract

Mainstream economics has traditionally maintained a respect for preferences and the choices that individuals make based on them. But recent advances in psychology and behavioral economics have led scholars and policy-maker to doubt if people make wise choices in their own interests. Based on this, libertarian paternalists endorse choice interventions—nudges—designed to steer people to decisions that will better promote their interests. However, the complex, multifaceted, and subjective nature of interests implies that policy-makers are imposing externally chosen interests for people’s own when designing nudges. In this sense, policy-makers are treating the interests they choose to advance like merit goods as described by Richard Musgrave, goals or ends that are explicitly judged by policy-makers to be worth advancing even if they are not ranked highly or chosen consistently by individuals themselves. This paper will make explicit the conceptual and normative connections between nudges and merit goods, arguing that nudges can be considered delivery mechanisms for merit goods, and recommending that libertarian paternalists abandon their claim to be advancing people’s true interests and instead adopt the objective theories of good used to justify merit goods.