Libertarians believe that individuals should be allowed to pursue their own interests, unless their behavior impacts the interests of others, especially if it negatively impacts others. So individuals should be allowed, according to this view, to buy the food they want, whereas drunk drivers should be constrained because they harm others, and chemical producers should be prevented from polluting as much as they would choose because their pollution hurts children and adults.
Modern research argues that sometimes individuals may not have enough information to effectively pursue their interests. In these cases, it may be suggested that government regulations and rules help guide individuals to the better pursuit of interests they would have if they had additional information. A few weeks ago Posner and I debated the role of information in interpreting New York City's recently enacted ban on the use of trans fats in restaurants.
A libertarian paternalist is happy to accept information arguments for government regulation of behavior, but typically stresses other considerations. One of the best statements of this view argues that "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." Cass Sunstein and Richard Thaler, ‚ÄúLibertarian Paternalism is Not an Oxymoron‚Äù, University of Chicago Law Review, 70(4), Fall, 2003; for a strong response, see Daniel Klein, ‚ÄúStatus Quo Bias‚Äù, Econ Journal Watch, August 2004.
If not literally an oxymoron, the term "libertarian paternalism" is, I believe, awfully close to it. Before trying to show why, let me illustrate what this expression might reasonably mean--Sunstein and Thaler give some innocuous examples like the placement of desserts in cafeterias that raise no significant issues. Suppose a person smokes, but has an internal conflict between his stronger "self" who wants to quit, and his weaker "self" who continues to smoke whenever he feels under pressure, or in social situations. In effect, the weaker self does not stop smoking because he has limited self-control.
The goal of paternalism in this case is to help the more dispassionate self obtain greater control over the choices made by the conflicted individual because of his dual selves. Such paternalism may take the form of high cigarette taxes, so that even weaker selves would not want to smoke so much, or of ordinances to limit smoking in restaurants, bars, and other social situations to prevent weak selves from being tempted to smoke. The argument is that individuals would be "happier" if they were given a helping hand to exercise self-control. One study even claims to find that smokers are happier in states of the United States that heavily tax cigarettes than in seemingly comparable states that tax cigarettes more lightly because higher taxes help control the urge to smoke. If this evidence were valid, groups of smokers should lobby for higher cigarette taxes, yet to my knowledge there is not a single instance where this has happened. Indeed, if anything, they lobby for lower taxes, but perhaps one can claim--most anything goes in such a world-- that they do not even know they have this conflict among their different selves!
Classical arguments for libertarianism do not assume that adults never make mistakes, always know their interests, or even are able always to act on their interests when they know them. Rather, it assumes that adults very typically know their own interests better than government officials, professors, or anyone else--I will come back to this. In addition, the classical libertarian case partly rests on a presumption that being able to make mistakes through having the right to make one's own choices leads in the long run to more self-reliant, competent, and independent individuals. It has been observed, for example, that prisoners often lose the ability to make choices for themselves after spending many years in prison where life is rigidly regulated.
In effect, the libertarian claim is that the "process" of making choices leads to individuals who are more capable of making good choices. Strangely perhaps, libertarian paternalists emphasize process when claiming conflict among multiple selves within a person, but ignore the classical emphasis on decision-making process that helps individuals make better choices.
Two other serious limitations of the libertarian paternalist approach further weaken its appeal. First, it is virtually impossible to distinguish such paternalism from plain unadulterated paternalism. How does one decide with objective criteria where "bounded rationality and bounded self-control" are important, and areas of choice where they are not? For example, models of rational addiction appear to do as well if not better than models of bounded self-control when applied empirically to smoking behavior. Why adopt models of bounded self-control in this case?
Or to take another illustration, is the weight gain of teenagers and adults since 1980 in much of the developed world, particularly the United States, due to bounds on rationality and control? If so, why did it not happen earlier, or why is the gain in weight so much greater in the United States than in most other countries? Are Americans less able than say the Japanese or Germans to exercise self-control? Often libertarian paternalism simply involves substituting an intellectual's or bureaucrat's or politician‚Äôs beliefs about should be done with other peoples' time and money for the judgment of those choosing what to do with their own incomes and time. It is in good part because libertarians recognize the temptation in all of us to control choices made by others that they end up in favor of allowing people to make their own choices, absent clear negative (or positive) effects on others.
A serious problem arises if libertarian paternalism is not just considered an intellectual exercise, but is supposed to be implemented in policies that control choices, such as how many calories people are allowed to consume, whether adults are allowed to use marijuana or smoke, or how much they can save. Even best-intentioned government officials should be considered subject to the same bounds on rationality, limits on self-control, myopia in looking forward, and the other cognitive defects that are supposed to affect choices by us ordinary individuals. Can one have the slightest degree of confidence that these officials will promote the interests of individuals better than these individuals do themselves?
This is why classical libertarianism relies not on the assumption that individuals always make the right decisions, but rather that in the vast majority of situations they do better for themselves than government officials could do for them. One does not have to be a classical libertarian--I differ on some issues from their position--to recognize that the case for classical libertarianism is not weakened by the literature motivating libertarian paternalism. Indeed, when similar considerations are applied to government officials and intellectuals as well as to the rest of us, the case for classical libertarianism may even be strengthened!