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01/14/2007

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Talin

As someone who has worked in the computer games industry since it's inception, I've repeatedly witnessed this phenomena of "multiple selves" - that is, individuals holding multiple, contradictory goals, choosing actions that work against their own long-term best interest. I'd like to describe what I've experienced in this regard, and how that affects my general political philosophy.

Rather than use the term "multiple selves", I think it makes more sense in this case to think of multiple roles, each of which has separate, and possibly conflicting, goals.

In the case of a game player, there are two sets of active goals. On one level, the player is expected to play well - to "win" the game, using every means at their disposal. In this mode, the players behavior resembles that of a "game theoretic" agent, in which actions are chosen to maximize success within the game.

On another level, however, the player's goal is to have fun. "Fun" is not as easy to describe as "winning", however let's just say for now that in order to have fun, the challenge of the game must not be too difficult, nor can it be too easy.

Normally, these two goals are aligned - that is, one has fun when one progresses nearer to the goal of winning. But this is only true so long as the level of challenge - the difficulty - is not under the player's control. Once the player has the ability to modify the rules of the game, the two goals - fun and winning - come into sharp conflict. The "need to win" part wants to reduce the difficulty to the minimum possible, while the "fun" part wants to keep the level of challenge fairly high so that "winning" is actually meaningful.

What I have observed is that the impulse to win almost always predominates over the desire to have fun.

As a real-world example, take the phenomena of "power leveling" in online games. This is where you get some friend who has already gained great power within the virtual world to essentially walk in front of you and obliterate any obstacles in your path. It's like playing football with Superman on your team - you (the football player) don't need to do much of anything, Superman is able to do all the work and win the game without any effort on your part.

The thing is, that people who do this are perfectly aware of the fact that by letting someone else take all of the difficulty out of the game, they are in effect ruining the fun of playing. But somehow, they can never seem to factor this into their decision making process - the need to win is so much stronger than the need to have fun, that only individuals with extraordinary self-control can resist.

I've seen this kind of thing happen so much (and not just in the games field), that it has led me to seriously reconsider how much faith I put in human reason. It's not that humans are incapable of reasoning, but rather that they often seem incapable of benefiting from their own reasoning processes. Or as I often say "never dismiss the human power of dismissiveness".

Another way to look at it is that our minds are full of design defects - we're constantly making bad choices for ourselves. (As a data point, I recently read a paper on how individual choices become more irrationally biased towards optimism as the individual rises in the hierarchy and gains more power over others.)

However, as you point out - I don't have faith in the ability of any one else to make those kinds of decisions either.

The best I can come up with is a kind of "separation of powers" between different forms of decision making. In other words, the outcome of a decision tends to be different based on the ways that humans are organized. Individuals tend to decide differently than committees; Corporations tend to decide different than governments. Specialists often come to different conclusions than the general public.

Therefore, my best guess as to how to organize a society is to let not only the individuals compete against each other, but to also let these various forms of organization compete against each other.

It is for this reason that I am not a strict libertarian - because I think that sometimes (but not always) collective decisions are wiser than decisions made by individuals. Certain kinds of desirable outcomes aren't reachable via distributed, market-based decision making. (Such as the creation of a market in the first place, which requires a rule of law and enforcement of contracts.)

American Psikhushka

I can't get over how dangerous the "conflicted selves" reasoning tends to be. It's the modern academic version of the logic of the Inquisition. Whatever we do is justified because it rests on the assumption that we are doing it in the actual best interests of the individual. The rack, the flail, the hot iron? Trivial compared to saving the heretic's immortal soul.

Tom Grey

sorry about the bold, preview didn't show breaks.

Erisian

>> When comparing full no-choice gov't programs (for your own good!), perhaps including full bans of trans fats, Lib Paternalism means more choices. And is thus better.

And there-in lay the riddle. Where to draw the lines for paternalism? Historically Libertarian meant "no regulation of self-regarding acts". You're defining Paternal Libertarianism to mean "less than full regulation of self-regarding acts". For example, some self-described Libertarian Paternalists support the ban on transfats in NY and yet others do not. Based on what objective criteria does the Libertarian Paternalist system draw lines not to be crossed?

Libertarian: The overall best-effect for the advance of individual wellfare is achieve by allowing individuals to make their own self-regarding decisions.
Paternalism: In some cases group think is superior to individual will for the advancement of the individual's wellfare.
LP's fundamental failure in my eyes is the lack of a concrete definition for "in some cases". With that ambiguity built in, there are very few rules or regulations you could not justify under the pretense of "libertarian paternalism", thus reducing LP to mere "paternalism". Tacking on the secondary goal of "tending towards the least amount of gov't regulation possible" doesn't make it Libertarian.

Jeff

One avenue discussed by Thaler and Sunstein not touched upon here is the impact of the default position on people's choices. Reallocating transaction costs can work as a form of paternalism that preserves individual choice by not, as many of the examples above do, prohibiting certain behaviors (such as smoking or transfat bans).

Thaler and Sunstein use the example of a new employee completing 401(k) paperwork. If no paperwork is submitted, the default position is no savings. T&S argue that the default should be something more in line with what older workers say they wished they had saved, say 2%. Any worker who truly valued not directing any of their current wages into savings could do so, but it would require the act of completing and submitting the paperwork.

I don't see anything wrong with the government recognizing an area where "bounded rationality", in the form of a preference for current cash over savings, consistently produces future dissatisfaction regarding retirement savings and adjusting transaction costs to create higher savings without taking certain options off the table.

The point by Glaeser cited above is a strong one - but I'm much less afraid of a state that toggles between opt-in and opt-out choices in my interest than one that creates prohibitions for the same reasons.

Of course, the example falls apart if transaction costs become prohibitive (you can only save 0% if you file the form in person in triplicate on the first day of the new moon, for instance). The fact that the internet is, in general, steadily lowering the transaction costs of opting out is a compelling reason why instituting the type of default adjustments that T&S advocate makes sense now when it hasn't before.

Jack

Becker posits:

"Can one have the slightest degree of confidence that these (government) 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."

... There seems a common lament here that smoking regulations are "anti-Libertarian" and usurps "individual choice". As one who worked on Alaska's first, very moderate, smoking area limitations, I'd submit that the old "free to light up anywhere I please" policy was dishonest in Libertarian terms ignoring the "costs" of polluting the indoor air shared by all.

JK:
..Today, not having the "slightest degree of confidence" in government officialdom is closely related to our being at a very low point in terms of having a functioning democracy.

Exhibit one, for big issues, could be that of taxes on the renewable supply of human labor and creativity were implemented when we saw America's natural resources as nearly infinite and energy use too small to provide much of a tax base.

In today's circumstance it would seem VERY wise to shift 25% or more of the individual income tax burden over to a tax onto non-renewable energy sources. No harm done to "Libertarian" values, right? Same level of taxation but a democratic move to "getting it right" for our era.

But the slim odds of seeing such a change shows that our "democracy" has been co-opted by oil corp lobbyists holding far more sway than that of the common taxpayer and we're likely to muddle along tinkering at the margins with debates over CAFE standards and other bits of patchwork that are more intrusive and disruptive than that of taxing wasteful over-consumption of energy and don't get the job done. BTW.... have you noticed that were our per capita energy consumption on par with that of Europe the US would be energy independent?

Sorry, sort of got off the definition of Libertarianism and its benefits, but hope I've conveyed that Libs really need to be a bit more thoughtful (smoking issue) and make sure they aren't being used as stooges for a corporate status quo that is highly beneficial to them at the extreme cost to the citizen. Jack

Lester Hunt

As Tom Grey describes it in the comments above, libertarian paternalism sounds like it will require awfully clever regulators/legislators. To apply just enough coercion to circumvent people's bounded rationality and bounded information, but not so much that you bring them to an indifference curve lower than what they would achieve on their own with perfect info and perfect self-control -- sounds like a pretty neat trick if you can do it!

shiva

Another strand in libertarian thought does not rely on the, as I take it, rule-utilitarian argument that, should the government be allowed to significantly limit individual choice, people will be worse off.

Rather, it claims that the ability for one to make her own choices ought to be protected out of respect for the individual herself. One such argument invokes (in twisted manner, I believe) the Kantian idea that people ought not be treated as means to an end (of, say, a healthier, or more just society), but rather as ends themselves.

Chairman Mao

Gary B,

The choices people make may be the best choices for them but they may be too costly to society in general. That is where the trans fat ban (and the cost to public health) come in.

Is government more farsighted than the individual? Probably not. However, government (or industry, or academia) may see impending events sooner than the individual - events that the individual will then accuse the family (or larger family, i.e. government) of not acting soon enough to prevent.

On skinny people in Europe, me thinks it may be due to more social interaction and therefore more frequent social feedback than in the U.S.

Chairman Mao

Gary B,

The choices people make may be the best choices for them but they may be too costly to society in general. That is where the trans fat ban (and the cost to public health) come in.

Is government more farsighted than the individual? Probably not. However, government (or industry, or academia) may see impending events sooner than the individual - events that the individual will then accuse the family (or larger family, i.e. government) of not acting soon enough to prevent.

On skinny people in Europe, me thinks it may be due to more social interaction and therefore more frequent social feedback than in the U.S.

Andre

I really do not see the problem with Sunstein and Thaler's formulation of libertarian paternalism. The key is that it operates "without eliminating freedom of choice". There may be policy cases were coercive government interventions may be justified, but these would not qualify as liberal paternalism. Clearly, a smoking ban is not applicable.

The concept does extend beyond cafeteria layouts, as S & T describe. Retirement plans or organ donation policies are good examples. Upon being hired by a firm, the employee has the option of participating in the retirement plan. There has to be a default option. Either the employee can choose to opt-in, or he/she can choose to opt-out. However, in designing the plan the firm must make the default decision for the employee. There is no escaping this. The firm must be at least a little paternalistic in choosing the default for the employee. Either the employee begins as a non-participant in the plan and must endeavour to opt-in, or vice versa. In this case, there is reasonable evidence that participation in the program is the best option for the majority of employees. Consequently, a libertarian paternalistic firm makes the plan opt-out. In both cases the employee has total freedom to participate in the plan or not. (As Jeff rightly notes, as long as transaction costs are relatively low)

The crux of libertarian paternalism is that freedom of choice is preserved. However, S&T argue (rather persuasively IMHO) that things like baselines, choice order, etc. can be constructed in a way that improves overall welfare. Organ donation is another good example they cite. Having an opt-out organ donation policy dramatically increases donation rates. Arguably, libertarian principles are upheld. The individual can choose to opt-out and refrain from donating their organs. Thus, in establishing the default, a libertarian paternalistic government would choose the opt-out. Societal welfare is maximized (more people get transplants), while freedom of choice is preserved.

I notice that many commentators seem to be misrepresenting Thaler and Sunstein's position or applying it beyond it's orginal construction. I suggest critics at least read the author's actual arguments. Either the piece cited above, or the initial piece in the American Economic Review 93(2).

lawmoldova

awesome, very cool article

Jim Moser

Indeed, I am confident that Hayek would have referred to libertarian paternalism as the "slippery slope to serfdom."

David Welker

I want to focus on just a few points.

Becker writes:

"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!"

But the problem here is that smoker activists are probably not representative of smokers in general. Activists of all kind tend to be a little different than the rest of the population. Besides, smokers who advocated higher taxes on cigarettes would open themselves up to social mockery.

From this, we can conclude that Becker has failed to address the dual selves problem. As someone who has a brother and sister who smokes, and who had a mother whose smoking strongly contributed to her very young death, I can say that my brother and sister are both strongly motivated to quit smoking. But, somehow, their weaker selves really do tend to rule.

Think of it this way. For someone to quit smoking, their stronger selves must win every single battle. Once a person smokes even one cigarette after attempting to quit, that person is very likely to smoke many more before their stronger selves convince them to try to quit again. Their weaker selves need only win only once, such as in a period of heightened stress.

All of this is to say that we probably should not have a all encompassing view of when libertarianism is appropriate, and when paternalism is appropriate. It probably should depend on the context. When it comes to things that are physically addicting, I think some paternalism in terms of a Pigou tax makes a lot of sense. Also providing free access to resources to overcome the addiction make sense.

By the way, it never is truly the case that our decisions don't affect others. Having been to multiple highschools, I have noticed some where a lot of kids smoked, and others where most did not. I do not think that the decision of X to smoke is entirely independent of the decision of Y, his or her peer to smoke. As just one example.

Libertarian paternalism is not an oxymoron. All it means is that in some contexts, one favors a libertarian approach, in others, a more paternalistic approach. Maybe this is not satisfying for those wishing for simple rules, but it is probably superior to simplistically favoring one approach to the other in all contexts.

Jack

Talin, it's great how you came to a good understanding of the inter-relationships of market via computer gamesmanship. I'm sure your understanding trumps that of all who are trying to pound all of our decisions through a "Libertarian" lassez faire market model driven by the priorities, only of "me, my and mine" with little regard for the whole.

Talin sez
"However, as you point out - I don't have faith in the ability of any one else to make those kinds of decisions either.

The best I can come up with is a kind of "separation of powers" between different forms of decision making. In other words, the outcome of a decision tends to be different based on the ways that humans are organized. Individuals tend to decide differently than committees; Corporations tend to decide different than governments. Specialists often come to different conclusions than the general public.

Therefore, my best guess as to how to organize a society is to let not only the individuals compete against each other, but to also let these various forms of organization compete against each other."
end..

JK..... Yes! For example in the selection, manufacture and distribution of shoes, where the decision is personal, has little effect on others etc, nothing could top a free and competitive market. (Leaving out for now the issue of American sports heroes being paid more for branding than are Chinese sweat-shop labor for manufacturing the product)

At the other end of the spectrum Denmark heard the warning bell of the last "oil crisis" of the 70's and with government (community) agreement and leadership they set a goal of generating 15% of their energy by wind, which they've nearly accomplished with the very beneficial side benefit of becoming a world leader in building wind generation plants the world over. We, who have even better wind resources than Denmark have largely left "wind" to "The Market" (but for small subsidies) have not benefited from such community foresight and thus, 30 years later our tribe and its individuals are disadvantaged and paying the price both at consumer level and in terms of its negative effects on our economy and global competition.

Jim sez:
"Indeed, I am confident that Hayek would have referred to libertarian paternalism as the "slippery slope to serfdom.""

JK....... "Serfdom" eh?

"1. a person in a condition of servitude, required to render services to a lord, commonly attached to the lord's land and transferred with it from one owner to another.
2. a slave."

In the above energy example, thirty years ago we were dealt a 7-card stud hand for predicting our current energy circumstance. The four face up cards were played fairly well by the Carter admin with CAFE stds doubling fleet mileage and a host of efforts to spur conservation and alternatives. It's, of course, possible that the three down cards might turn up in a manner that made these efforts wasteful or wrong though it seems highly improbable.

Following admins and "The Market" read only the false signals of temporarily cheap oil and did not even heed the warnings of Scoop Jackson and a few others that being 35% dependent on foreign oil was cause for national security concern. Since then "The Market" has flown us up a blind canyon where we're 70% dependent on foreign oil. With the largest fleet of gas-hogging "exemptions" to the CAFE standards engaging in the longest commutes in our nation's history, to the millions of over-sized (for this energy market) energy wasting homes that have been built in the last 30 years w/o concern for future energy costs and scarcity.
"Libertarians" and "The Market" has given us few options other than that of accepting our increased serfdom.

Anyone want to discuss our rapidly soaring trade deficit that is worsened in many ways by our lack of a rational energy policy and how "The Market" is likely to reverse the trend prior to our American standard of living dropping precipitously? JaCK

Haris

NO! Enough on the trade deficit. Plenty of other places to discuss the "problem" that it is.

happyjuggler0

I think the vast bulk of Americans are libertarian paternalists. They are adamantly libertarian, except for those things they don't like, in which case they suddenly believe in government coercion "for our own good".

What these people seem to not realize is that the paternalists don't need too big of a lobby group (informal or formal) to get government laws prohibiting something. Thus we can have an "issue" that 90% of Americans are in favor of individual liberty on, while the other visible and highly vocal 10% demand that government prohibit it.

Put all of these individual interest groups together and "all of a sudden" you find that almost everyone wishes government was smaller and less intrusive, and more in favor of individual liberty. Divide and conquer is still a great strategy, and it is hurting all of us, at least those of us who are actual libertarians.

Let the libertarian paternalists (wherever you may find them) know in no uncertain terms that they are a scourge that threatens individual liberty where it exists, and a serious obstacle for restoring lost liberty back to the people.

Jack

Eric; I liked some of your post, specifically that of looking for, and identifying market failures, before skipping directly to a ban or other direct government intervention.

In our discussion of NYC's transfat ban there seems at least two market failures. One is that of those profiting from transfat distribution not participating in any way with the costs born by the consumer, and two, having zero incentive to educate their consumers to switch to a more healthful alternative. I guess that predictable failure leaves government intervention by either a long slog to educating those who are educable, a ban, or standing by while nationless corps continue to poison their citizens.

As for your marijuana example, I wonder how tightly we'd have to strap down what's left of our democracy to protect us from those politicos using fear, doubt, uncertainty and outright irrational hysteria, coupled with corporate opportunism, (Dupont ridding itself of hemp as a competitor to their nylon rope and fiber) that have given us mistakes such our longstanding marijuana policy and a very costly and foolish war in Iraq.

In the matter of energy, clearly, there is a major market failure in that those owning or controlling fossil fuels benefit greatly by doing nothing to forestall the day when our soaring consumption outstrips production and the value of their reserves and franchises soars.

Starting from the mid-70's I can't see any means by which a lassez faire approach to energy policy would have done anything except what we see; being flown up a blind canyon with each of the "ways out" being painful, in the distant future and fictional.

Do Libertarians here think there was any combination of "market knowledge" and "consumer education" that would have prevented our building 20 million energy wasting homes and the biggest fleet of gas hogging vehicles plying the longest commute in our history since the last "oil crisis" bell rung?

My view is that of our public debate being too little, often co-opted by very powerful special commercial interests, resistance by doctrinaire ideologues and not acting on the logical conclusions of a rational public debate. The nations that did apply their intelligent foresight in the area of energy are now far better positioned than is the US.

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