Libertarian Paternalism Research Articles

Daniel Kahneman and the concept of the true self

Abstract Kahneman and Tversky's ‘Prospect Theory’ paper famously demolishes expected utility theory as a predictive device. However, it presents deviations from that theory as ‘normatively unacceptable’ and argues that decision-makers would normally correct them when possible. In a later paper, Kahneman rejects a similar argument (the ‘discovered preference’ hypothesis) advanced by Plott. Later still, Kahneman endorses Sunstein and Thaler's ‘libertarian paternalism’, which aims to help people avoid deviating from their ‘true’ preferences. I report an email correspondence between Kahneman and me in which we debated whether his position on libertarian paternalism was consistent with his critique of Plott's hypothesis.

After nudging: the ethical challenge of post-pandemic policymaking in the UK

This article explores the interplay between crises, opportunities and democratic change in the United Kingdom. A vast body of scholarship underlines that crises open ‘windows of opportunity’ that can occasionally lead to radical shifts in the role of the state and the design of public policy. Even when a radical shift occurs, however, it has often proved temporary, with relationships and processes quickly reverting to pre-crisis modes once the immediacy of the crisis abates. This may not be true of our present period of crisis following the COVID-19 pandemic. The consequences of decades of underinvestment in infrastructure and increasing concentration of resources in a small minority of individuals and organisations are being exacerbated by climate change, geopolitical conflict and new waves of disease. The challenge for policymakers in the UK now is heightened by evidence that suggests that nudging, a libertarian paternalist means of promoting certain ends, is ineffective. Policymakers who have long used state neutrality between conceptions of the good as the justification for not promoting certain ends now have to confront a real ethical dilemma: coerce to achieve specific outcomes or invest in addressing the social determinants that actually affect behaviour. This article suggests that contrary to decades of opposition to redistribution among UK policymakers, only the latter is consistent with libertarian paternalism.

Thinking Medium: A Design-based Critique of Nudge Theory

Mainstream economic thought rests on a picture of human actors as rational, calculating, and selfish. Since the 1980’s, the sub-discipline of behavioral economics has challenged mainstream economic thought by revealing limitations in the ordinary person’s ability to reason as orthodox theory predicts. People’s choices are influenced by the manner in which options are presented. And since many of the choices people make involve basic dimensions of moral life, including the chooser’s autonomy and general welfare, the structuring of choice situations is an irreducibly ethical enterprise. These topics are explored in “nudge theory,” which represents an attempt to understand the implications of behavioral economics for people involved in the shaping of others’ decisions. Nudge theory proposes that professional designers should structure choice situations on behalf of others in a paternalistic way: leveraging the designers’ expertise and superior knowledge to promote outcomes that serve choosers’ long-term interests. In this paper, the co-authors agree that paternalism can be a valid approach to ethical design practice in a limited range of cases. But in general, the program of “libertarian paternalism” advocated by nudge theorists represents a failure of imagination that arbitrarily forecloses opportunities for collective decision-making and reinforces unhealthy social divisions. Instead, a greater sensitivity to the potential of design thinking, specifically its capacity to incorporate a wide range of heterogeneous factors and perspectives, is a key to the ethical deployment of nudges. Design itself is the best answer to the question: how can economic thought register the results of the behavioral sciences in a thoughtful, creative, and defensible way? Through a series of examples drawn from the literature, the co-authors present a design-based critique of nudge theory, illustrating the interdisciplinary potential of design and aspects of the role design thinking may play in creating more harmonious and unified societies.

Libertarian Paternalism, Nudging, and Public Policy

Libertarian Paternalism, Nudging, and Public Policy

An Economic Model of Media Ethics

Ethics and economic profits are considered to be trade-offs to one another. Akin to other disciplines, private media face the same dilemma. Pursuing more economic profit through increased viewership, advertising rates, or other practices usually comes at the cost of diminished ethical compliance. However, many studies highlight the importance of ethical guidelines in increasing revenues and profits in media organizations. This article aims to reconcile previous scholarship on the subject and develop an economic model of media ethics. The model is based on the literature and methodology of public economics, particularly that of public goods and externalities. It predicts that private media firms, when left to the perfectly competitive market, produce a greater quantity of news that may not be socially desirable and is of low quality and poor ethical compliance. When the social cost of producing ethical and quality media products is considered, the revenue of the private firms decreases, thereby suggesting an inverse relationship between ethical compliance and profits. This demands a case for libertarian paternalism, nudges, or incentives to restore private firms to the socially optimal equilibrium to ensure independent, ethical, free, and sustainable media.

Государственное регулирование и дерегулирование: право и экономика в современной России

Introduction. The legal aspects of state regulation of economic relations are of high relevance for the Russian Federation due to the development of modern crisis situations. At present, it is necessary to study the general parameters of the interaction between law and economics, on the basis of which it is possible to develop specific recommendations for improving Russian legislation. Empirical analysis. The author presents general factors that have a serious (in the long term) impact on the Russian economy: gradual decarbonization; the emergence of the concept of sustainable development, establishing a link between GDP growth (gross domestic product) and concern for future generations; universal digitalization affecting all spheres of public life. Methods and concepts. The confrontation between the two global currents of libertarianism and Keynesianism has a serious impact on the limits of state intervention in economic relations. At the same time, the gradual convergence leads to the development of such concepts as the social market economy and libertarian paternalism, each of them involving a transition to indirect influence and taking into account social factors in creating a competitive environment. The absence of a direct consolidation of the foundations of the economic system in the Constitution of Russia implies the development of synthetic principles that need further constitutionalization. Theoretical analysis. In the Russian Federation, the further strengthening of the direct role of the state in the country’s economy has institutional grounds – a large bureaucratic apparatus and a significant public sector in the economic system. At the same time, legal support for various forms of deregulation (self-regulation, co-regulation, quasi-regulation, etc.) has been formed. The declared "regulatory guillotine", in isolation from the general directions of administrative reform, is unlikely to have a significant long-term effect. Results. The process of deconcentration of power (with deregulation being one of the aspects) in the Russian Federation cannot be considered complete. Deregulation is not the only form of deconcentration and reduction of the administrative burden on businesses.

Aide active à mourir et maladie mentale : le concept d’incurabilité est-il scientifiquement acceptable et éthiquement recevable ?

Laws granting the right to obtain active assistance in dying initially concern people suffering from incurable illnesses that cause unbearable suffering and are life-threatening in the short to medium term. But these laws are always followed by proposals and debates aimed at extending the indications for euthanasia or assisted suicide to incurable conditions, even if they are not life-threatening, as soon as they cause unbearable suffering. And so it is that some countries accept psychiatric illnesses that are declared incurable as indications for access to active assistance in dying. In Belgium and the Netherlands, for example, the press has reported on cases of people suffering from depression or post-traumatic stress disorder who have been euthanized at the end of an authorization process that involves two psychiatric opinions declaring their condition incurable, without any collegial reflection on the diagnosis or the therapeutic programs implemented. Depression and post-traumatic stress disorder, however, account for less than half of all indications for euthanasia for psychiatric illness in Belgium. That leaves us with patients labelled psychotic and with ill-defined personality and behaviour disorders. Psychiatric indications for euthanasia raise their own specific ethical issues. How can we fail to underline the uncertainty and complexity of the diagnosis, which cannot, as a rule, be supported by imaging or biology? How can we understand that indications for euthanasia are accepted for patients with several psychiatric diagnoses? From one end of the procedure to the other, the problem is to obtain the opinions of two psychiatrists declaring that the disorders are incurable, that the suffering is intolerable and that the patient's capacity for discernment is intact. The decision thus stems from a libertarian paternalism convinced of the humanist dimension of active aid in dying, and which results in an incentive (nudge) whose aim, set by the law, is only to know whether the suffering is incurable, without calling into question the diagnosis and therapeutic programs. How can we say that a mental illness is incurable? How can we distinguish between a depressed person's disgust with life and so-called existential suffering? How can we reconcile preventing suicide in cases of depression and social isolation, while at the same time encouraging assisted suicide or euthanasia for the same people? What are the criteria for verifying that the capacity for discernment has been preserved? Is there not a danger, in the name of autonomic relentlessness, of declaring that a person is autonomous when in fact he or she is subject to the heteronomy of depression, delirium or obsessive disorders? The world of psychiatry cannot avoid such questions. The American Psychiatric Association, for example, has adopted the position on medical euthanasia holding that “a psychiatrist should not prescribe or administer any intervention to a non-terminally ill person for the purpose of causing death”. Other psychiatric associations have hesitant positions. The debate must be opened. It must involve all those who treat, care for and support people of all ages whose mental health is suffering. It must also concern every citizen.

ПОВЕДЕНЧЕСКАЯ ЭКОНОМИКА: ИНТЕГРАЦИЯ И СИНЕРГИЯ ЭКОНОМИКИ И ПСИХОЛОГИИ

The article analyzes the scientific merits of behavioral economics, as one of the most promising and dynamically developing trends in modern science that is of great interest to researchers. Particular attention in the article is paid to the analysis of the scientific conclusions of Nobel laureate R. Thaler who is considered to be the most authoritative scientist in the field of behavioral economics. Scientific integration with psychology has enriched the methodology of economic research with many new scientific approaches, including experiment, which until the beginning of the 21st century was generally considered almost unacceptable in economic practice due to the irreversibility and unpredictability of its consequences. However, the use of experiment to study the psychological characteristics of people's behavior helped to understand the logic of many economic processes better, making them more predictable and controllable. The article concludes that the scientific developments of representatives of behavioral economics are important both for economic theory and for economic practice. They are implemented in predicting the dynamics of various markets, in optimizing socio-economic decisions based on the policy of ‘libertarian paternalism’. With their help, the widely used hyperbolic discounting model was developed, and another new branch of economics emerged — behavioral finance.

Nudge Concept and its Controversy - The Behavioural Economics Applications

Over the decades, the nudge idea of behavioural economics (BE), disseminated by Thaler & Sunstein (2008) in their well-known book, has generated controversial views among many academics and scientists around the world. As an application area of behavioural economics (BE), nudge theory and the nudge concept has found many supporters, but at the same time has generated controversial views among many academics and scholars around the world, especially with regard to its broad definition, decision-making architectures, and libertarian paternalism concepts. Interestingly, this concept has attracted a lot of attention from key government officials, especially in the UK and the US, to change the behaviour of the population to a significant extent. The aim of this study is to discuss the nudge concept and its application to current situations and also to shed light on the critical views of this concept. It was found that this concept, although it has many critics, is considered a useful tool to change the behaviour of people or customers without using coercive measures to achieve the desired result.

Soft Paternalism and Freedom in the Age of Artificial Intelligence – Through the “tactfulness (融通無碍 Yuzu-Muge)” of 華厳学 Hua-Yan philosophy

Abstract Living in an era of technological innovations, we must understand and trust them to benefit from these new technologies. In this context, paternalism is renewed as the so-called “soft-” or “Libertarian paternalism”. How can we face it and ensure freedom in the vortex of wellmeaning advice and persuasion? This paper will discuss 1. the characteristics of freedom since the 18th century from the perspective of the Enlightenment discourse in Germany by Mendelssohn and Kant, 2. the conditions for freedom in the contemporary age of accelerating technological innovation, and 3. from trans-modernism, rethinking the dichotomy between otherness and autonomy, coercion and freedom, by the idea of 融通無碍 Yuzu-Muge, tactfulness in 華厳学 Hua-Yan Philosophy.

Let the Chips Fall! Public Nudging Arrangements, Coercion, and the Role of Independent Shopkeepers

Nudging, according to its inventors and defenders, is supposed to provide a non-coercive way of changing human behavior for the better—a freedom-respecting form of “libertarian paternalism.” Its original point was to complement coercive modes of influence without any need of justification in liberal frameworks. This article shows, using the example of food-product placement in grocery stores, how this image is deceptive. Although nudging practices may not restrict the freedom of consumers, nudging arrangements by public health authorities do restrict the freedom of shopkeepers in standard liberal senses. Libertarianism cannot justify this coercion, and the creed is best left out of the equation as the ideological ruse that it, in this discussion, is. Other liberal theories can justify the coercion, but on grounds that can also be applied to other methods of public health promotion by subsidies and regulation. This result reaffirms that nudging should be seen to complement, not to replace, those other methods.

Epistemic Libertarian Paternalism

Libertarian paternalism is a weak form of paternalism that recommends nudges rather than bans, restrictions, or other strong interventions. Nudges influence people’s choice by modifying contextual factors (the “choice architecture”). This paper explores the possibility of an epistemic analogue of libertarian paternalism. What I call “epistemic libertarian paternalism” is a weak form of epistemic paternalism that recommends “epistemic nudges” rather than stronger paternalistic interventions. Epistemic nudges influence people’s beliefs and judgments by modifying contextual factors (the “epistemic choice architecture”). The main aim of this paper is to defend epistemic libertarian paternalism from the “irrationality problem”, which I take to be the most urgent problem for epistemic libertarian paternalism; given how epistemic nudges work (i.e. they typically co-opt psychological biases), nudged beliefs are irrational. In response to the irrationality problem, I admit that nudged beliefs are often (not always, though) irrational, but insist that there are conditions in which epistemic nudging can be justifiable nonetheless. I will propose two conditions that are jointly sufficient for justifiable epistemic nudging: “Veridicality Condition” (which says that nudged beliefs are more likely to be true than non-nudged beliefs) and “Not-More-Irrationality Condition” (which says that nudged beliefs are not more likely to be irrational than non-nudged beliefs).

Unpacking the nudge muddle.

Libertarian paternalism initially focused on policy domains in which the state was prohibited from interfering coercively in decision making out of respect for individual autonomy. Because adjustment of the s-frame was not an option, achieving better outcomes through manipulation of the i-frame seemed attractive. This original motivation was unfortunately lost in the transition from libertarian paternalism to the nudge framework.

Paternalism as a long-term strategy of a management control system

PurposeThe purpose of this paper is to trace the evolution of paternalism as a long-term component of a management control system (MCS) in a multi-national business enterprise.Design/methodology/approachThe authors used a historical methodology involving the collection and evaluation of both primary and secondary data. Annual reports of Michelin (2009–2021) were also analysed to trace the evolution of the MCS towards corporate social responsibility (CSR).FindingsThis research traces the evolution of Michelin's Paternalistic MCS from “Traditional Paternalism” to “Welfare Paternalism”, “Managerial Paternalism” and “Libertarian Paternalism” thereby leading the way to CSR. The findings indicate that the evolution of the MCS revealed “Managerial Paternalism” as a specific type of paternalism and an important component of the “Personnel and Cultural Controls” (Merchant and Van der Stede, 2018, p. 95) at Michelin.Research limitations/implicationsMany multi-national companies began as family-owned and controlled firms (e.g. Ford, Toyota, Fiat, Renault, Tata) and they often employed paternalistic MCSs during their early development (Newby, 1977; Perrot, 1979; Colli, 2003). Such MCSs have been seen as being anachronistic and are often abandoned as the family-owned enterprise grows into a multi-national company (Casson and Cox, 1993; McKinlay et al., 2010). The research challenges this assertion and demonstrates how aspects of a paternalistic MCS can survive in a multi-national business enterprise.Practical implicationsWith respect to practical implications, this research shows that paternalism can still be a component of an MCS in a multi-national enterprise.Originality/valueUsing a historical approach, this research addresses a gap in the prior literature regarding the variations and persistence of paternalism in companies. In the case of Michelin, the authors investigate the evolution of its paternalistic MCS from a traditional form to an emphasis on CSR.

Проблема визначення концепції національного розвитку України в післявоєнний період

Problem setting. Starting from February 24, 2022, the whole world lives in a new reality – in the conditions of a full-scale war against Ukraine deployed by the Russian Federation. Russia’s military aggression carries through the information and semantic war, which, according to its authors, can justify all atrocities and be their ideological cover. There is a denial of the conceptual definition of the democratic development of social and power relations in Ukraine and their subordination to totalitarianism. That is why the semantic opposition to hybrid warfare is of particular significance as a reflection of all the advantages of civilization over barbarism. In particular, it concerns the determination of the concept of development of Ukrainian society as a theoretical and methodological basis for the formation of legislative norms, organizational imperatives, principled instructions for public servants’ activities, civic world-view focuses. In this context, the author sets a task – to outline the problem of the need to substantiate the conceptual framework for the modernization of Ukraine in the post-war period. Paper main body The paper emphasizes that the development of a modern democratic society carries on a conceptually defined framework, scientific substantiation of innovative opportunities, and consideration of social requests for changes. At the same time, it states that the concept of national development of Ukraine has not found a proper theoretical solution and has not received institutional completion in the relevant documents. And in the conditions of the war against the aggression of the Russian Federation with its semantic component, the problem of forming such a concept of development in the post-war period has acquired a specific urgency and requires its determination. By comparing a concept with a theory and doctrine, the concept defines as a holistic answer to the questions “what is?” and “what to do?”; as an awareness of the subject of his motives and goals, as well as real possibilities of their practical implementation. The paper outlines the main challenges of the Ukrainian present, which necessitate the achievement of democratic processes, that is, the development of civil society, its initiative, and involvement in innovative changes. In parallel, it shows the significance of tendencies towards strengthening the state. In this context, the author carries out an analysis of the concept of libertarian paternalism, which, being formed in the economic sphere, may acquire a general social, as well as public managerial meaning. The reasoned conclusion is that this concept requires a critical rethinking by Ukrainian scientists, as well as interdisciplinary discourse on the possibilities of its application in Ukraine. Conclusions and suggestions concern the need for further theoretical substantiation and institutional approval of the Concept of Development of Ukraine as a methodological basis for the modernization of Ukrainian society. The unprecedented uniqueness of the domestic situation necessitates its interdisciplinary scientific consideration without mechanical borrowing or duplication of other people’s concepts and ideas.

Commentary: Shooting on an Arrow, and the Downplay of Regulatory Economics

This brief review discussion raises additional regulatory ideas to those offered by 2017 Nobel Prize winning economist Richard Thaler, and philosophically and pragmatically argues that his winning of the award was more political than economic, especially in terms of the legislation offered that followed. The article then uses work from other economists, such as Coase, and Friedman, and Arrow, to theorize that in total there are at least four different categories of regulation currently identified. And, humans have yet to invent or recognize all possible avenues for using “libertarian paternalism,” Thaler’s neologism for social regulation. The article offers a number of real world, contemporary examples falling under such a philosophical umbrella, while discussing their possible benefits and short-comings. The paper overall argues that human society on the whole has been slow to create more solutions for unwanted or incentivized economic behavior, in the application of such philosophical theories to policies by regulators.

Agentic preferences: a foundation for nudging when preferences are endogenous

Abstract Since the publication of the seminal book Nudge by Thaler and Sunstein, several critics have highlighted preference endogeneity as a serious obstacle to nudging. When individuals hold preferences that are dynamic and endogenous to the nudge frame, it is unclear what the normative benchmark for libertarian paternalistic policies should be. While acknowledging this issue, the pro-nudging camp has not yet sufficiently addressed it. This article aims to fill this void by presenting a conditional defence of nudging when preferences are endogenous. We explain the learning process through which individuals establish ‘agentic’ preferences: preferences that are sufficiently stable, reasonable, autonomous and associated with organismic well-being to ground the ‘welfare’ principle of libertarian paternalism. To describe this process, we draw on theories from psychological science, in particular self-discrepancy theory and self-determination theory. We argue that agentic preferences are not only welfare-relevant and thus appropriate to libertarian paternalism but can also be identified by choice architects.

Could Behavioral Economics Mitigate Shortcomings in Shared Decision-Making?

While shared decision-making (SDM) is generally considered to be the standard in current clinical practice, strict application of SDM can result in adverse outcomes in certain contexts. This article examines two illustrative cases-antibiotic over-prescription and decision-making at or near the end of life-to highlight how strictly applied SDM can result in suboptimal outcomes. The article continues to describe how strategies from libertarian paternalism, particularly default setting, framing, and nudging, can be valuable tools in supplementing strict applications of SDM, resulting in improved outcomes and patient care on both individual and societal levels.

The choice architecture and nudging in the behavioural economics

It is substantiated in the article that behavioural economics makes it possible one to move away from the idealized perception of a person as a completely rational decision-making subject who possesses all the information about the object; is able to form a clear hierarchy of own priorities, which is determined by the balance between benefits and costs; stable in his preferences and not susceptible to emotional influences. For this, it is necessary to take into account cognitive biases, systematic errors of thinking and the possibilities of their avoidance, which is actually what behavioural economics works with. The concepts of “choice architecture”, “nudging” and “libertarian paternalism” are considered. In its most general terms, choice architecture is the design of the environment in which people make decisions. By changing the decision-making environment, you can change the decision itself. Nudging is one of the strategies of behavioural economics, aimed at the behavior of subjects exclusively by changing the environment and context, that is, pushing tools are able to emphasize economic incentives and gently guide a person to optimal decisions without depriving him/her of a choice. It is shown that the toolkit of nudging began to be actively used in state policy to strengthen the effectiveness of regulatory actions, however, it was not limited to it, but rather quickly spread to other areas – environmental protection, health, the insurance and pension system, entrepreneurship, etc. Examples of the practical application of choice architecture and nudging tools in the field of state regulation, ecological use of resources, and personal choice are given. The focus is on the fact that imposing restrictions on options for action or directly implementing regulatory instruments can achieve the desired results, however, such influence on behaviour change is prescriptive rather than liberating. Nudging tools are able to emphasize economic incentives and gently guide a person to more rational decisions. The main needs are identifies for the satisfaction of which prompting and creating of an architecture of choice are effective and appropriate, for example, stimulating self-control or increasing the level of awareness of the need to take action.

МОДЕЛІ ПРИЙНЯТТЯ РІШЕНЬ В ЕКОНОМІЧНИХ ПРОЦЕСАХ ТА ПУБЛІЧНОМУ УПРАВЛІННІ

The article shows that the development of the economy today clearly demonstrates the limitations of classical management theories, which are based on the rationality of decision-making, the provision of the subject of decision-making with full information about possible alternative options, as well as a clear understanding of the consequences of each of the possible alternatives. The difference between the algorithmic model (which involves the subject performing a certain sequence of actions, which is not necessarily understood, with a predicted result) and the heuristic behavioral model (which offers the subject a sequence of actions that is understandable to the subject without a guaranteed result) is shown. Features of classical, behavioral and irrational behavior models are also demonstrated. Information is provided on the most common heuristic methods of scientific research, which are: brainstorming (involves group thinking with the search for an optimal solution); method of multidimensional matrices (combination of individual elements of the research object based on chance); inversion method (finding a solution through the analysis of opposite characteristics). It was concluded that given the limitations of the theory of rational choice, decision-making processes are complicated by the vagueness of the criteria by which decisions are made. That is, it is increasingly possible to see atypicality in the identification of such criteria, which is complicated by cognitive biases that are formed in the decision-making subject. Regulation of behavioral models of economic subjects is a complex task, which involves the creation of such an institutional framework, which will take into account the peculiarities of the tendency to irrationality, cognitive limitations and prejudices. It was found that the top-level managers are increasingly using the tools of the so-called "pushing" of the managed system, which can be implemented according to several conventional versions: asymmetric paternalism, light paternalism, and libertarian paternalism.