Libertarian Paternalism--Posner's Comment

The term is indeed an oxymoron. Libertarianism, as expounded in John Stuart Mill's On Liberty, is the doctrine that government should confine its interventions in the private sector to what Mill called "other-regarding" acts, which is to say acts that cause harm to nonconsenting strangers, as distinct from "self-regarding" acts, which are acts that harm only oneself or people with whom one has consensual relations authorizing acts that may result in harm. So, for example, if you are hurt in a boxing match, that is a "self-regarding" event with which the government has no proper business, provided the boxer who hurt you was in compliance with rules--to which you had consented--governing the match, and provided you were of sound mind and so could give meaningful consent. Paternalism is the opposite. It is the idea that someone else knows better than you do what is good for you, and therefore he should be free to interfere with your self-regarding acts. Paternalism makes perfectly good sense when the "pater" is indeed a father or other parent and the individual whose self-regarding acts are in issue is a child. In its more common sense, "paternalism" refers to governmental interference with the self-regarding acts of mentally competent adults, and so understood it is indeed the opposite of libertarianism. The yoking of the two in the oxymoron "libertarian paternalism" is an effort to soften the negative connotation of paternalism with the positive connotation of libertarianism. I would further limit the term "paternalism" to situations in which the government wishes to override the informed preferences of competent adults. The dangers of smoking are well known; indeed, they tend to be exaggerated--including by smokers. (The increased risk of lung cancer from smoking is smaller than most people believe.) Interventions designed to prevent smoking, unless motivated by concern with the effect of smoking on nonsmokers (ambient smoke, which is not much of a health hazard but is an annoyance to nonsmokers), are paternalistic in the sense in which I am using the term. Thus I was not defending paternalism when I defended the ban on trans fats in New York City restaurants. If people are aware of the dangers of trans fats but wish to consume them anyway, the only nonpaternalistic ground for intervention, which I would be inclined to think insufficient by itself, is that they may be shifting some of the costs of their medical treatment for heart disease to taxpayers who forgo consumption of trans fats. If, however, people don't know the dangers of trans fats and it would not be feasible for them to learn those dangers (prohibitive transaction costs), and if as I believe the dangers clearly exceed any benefits from trans fats compared to substitute ingredients, then the ban can be defended on nonpaternalistic grounds, as I attempted to do. Another way to put this is that it is not paternalistic to delegate a certain amount of decision making to the government. There are some goods that government can produce at lower cost than the private sector, and among these is the banning of trans fats from food served in restaurants. It might seem that the good could be produced just by competition-impelled advertising by restaurants that do not use trans fats. But such a suggestion ignores the difference between disseminating and absorbing information. If you have a peanut allergy, and the label on a package of cake mix says that the mix contains peanut oil, you know not to buy it; the cost of absorbing the information on the label is trivial. But if you are told that a restaurant does not use trans fats in its meals, determining the significance of that information to you would require you to undertake a substantial research project. You would have to learn about trans fats, somehow estimate the total amount of trans fats that you consume every year, estimate the amount of trans fats in the restaurant meals you consume relative to your total consumption of trans fats, and assess the significance of that consumption in relation to other risk factors that you have or don’t have for heart disease. Few people have the time for such research, or the background knowledge that would enable them to conduct it competently. Given that trans fats have close substitutes in both taste and cost, it is not unrealistic to suppose that the vast majority of people would if consulted delegate to government the decision whether to ban trans fats. One of the great weaknesses of "libertarian paternalism" is failure to weigh adequately the significance of the operation of the cognitive and psychological quirks emphasized by libertarian paternalists on government officials. The quirks are not a function of low IQ or a poor education; they are universal, although there is a tendency for the people least afflicted by them to enter those fields, such as gambling, speculation, arbitrage, and insurance, in which the quirks have the greatest negative effect on rational decision making. As Edward Glaeser has pointed out, the cost of these quirks to officials--who are not selected for immunity to them--is lower than the cost to consumers, because the officials are making decisions for other people rather than for themselves.

Comments

[Wulf]

Another way to put this is that it is not paternalistic to delegate a certain amount of decision making to the government.

I can delegate a certain amount of decision making to my wife. Having that done for me by somebody other than me would not be "delegation". In fact, that is more like the relationship I had with my parents when I was a child.

So, is it not paternalistic to mandate (for everyone, not just those who would prefer it) a certain amount of decision making to the government?

[ben]

Two insightful essays.

I believe Posner overstates the information requirements for socially optimal consumption of transfats to emerge:

But if you are told that a restaurant does not use trans fats in its meals, determining the significance of that information to you would require you to undertake a substantial research project...Few people have the time for such research, or the background knowledge that would enable them to conduct it competently.

I believe this overstates the information requirements on each individual for an efficient (i.e. welfare maximising) market outcome to emerge, and does not appreciate the way markets pool information. This is an unintuitive process, one I don't pretend to understand, but I cite two examples of it in action.

One, a relationship between wages and risk emerges in labour markets. Presumably, few individuals in high risk occupations have conducted any kind of research on the risk to life. Nor have they thought explicitly about the additional compensation they would require in exchange for this risk. Yet markets pool information on risk and aggregate risk preferences and produce a relationship between risk and reward.

Two, prices which emerge from prediction markets, also the result of individuals with limited information interacting, are efficient in the sense that prediction markets outperform other prediction mechanisms.

What I think these examples show is that markets pool the (often limited) information held by each participant to produce outcomes that, though often appearing imperfect, can be demonstrated to be superior to available alternatives (at least where that is testable).

The NYC transfats example may demonstrate this. If the markets hypothesis presented here is correct, and if transfats substitutes really are a near-free lunch, we'd expect markets to eliminate them. In spite of the information problems cited by Posner, that is precisely what was underway in NYC prior to the ban (encouraged, it must be said, by public officials).

[Jack]

One of the problems of Libertarianism is that many over-embrace the concept, ignoring community and interests common to and beneficial to most members of a tribe. Even as "paternalism" is discussed it's as though the "pater" got there by non-democratic means.

In such cases as recent smoking legislation most of it has been for the benefit of the non-smoker and, thankfully, it's been awhile since I've heard any misguided smoker claim he has a "right" to light up anywhere he pleases and it appears that we've just finished up a century of mistaken "libertarianism" that was further fueled by far too little restraint on cigarette companies as they deliberately targeted massive ad campaigns to make addicts out of our minor children.

The increased taxes? Surely a "right-thinking" Libertarian doesn't mind paying a portion of the added societal costs of smoking? As for the taxes shifting supply demand curves to slow the addiction of teens? OK, perhaps? a "paternalism" to protect our minor age children? Would the devout Libertarian bow respectfully and appoint Phillip Morris the pater du jour instead?

Another case where democratic action may, and should intervene in "The Market" is that of energy conservation. In part this is another negative aspect of the widening economic gulf between haves and nots; that we'll virtually be out of oil before it's costly enough to change behavior of upper income folk while those who are near the bottom will be squeezed out of the market, most likely, along with many of our high energy use industries such as ALCOA....... and not long after? Boeing?

It's a bit interesting that the examples cited here in weighing various "Libertarian" aspects are those of corporations dependent upon creating new addicts for their survival, or those who care so little for the health of their customers that they'd keep poisoning their food supplies until prodded to do otherwise, despite the, generally agreed upon here, low cost of substituting real food.

BTW........ would all agree that were it not for NYC and perhaps MA banning the chemically adulterated shortenings and cooking oils that we'd not be debating the issue here?

[Mike Liveright]

As I have not read the articles, I am not sure, but based on a Podcast, it was my understanding that "Libertian Paternalism" was not such things as Trans Fat prohibition, etc. but ONLY actions such as specifying Opt/In vs Opt/Out where there was little force and either was reasonable, but that do to psychology if one had an Opt/Out it seemed better than Opt/In.

The example was 401k's where an individual was given the option of joining or not, but if it seemed better if they joined, it was "Libertian Paternalism" to assume that they wanted to join and have an Opt/Out option rather than the inverse.

In this case one has to have a default and then a way to negate the default, so why not have the default the one considered best rather than that considered worse?

Any further pressure, taxes, etc. would be non-libertarian, and thus only justifiable if one wanted to violate the libertarian principals.

[Nelson]

we'll virtually be out of oil before it's costly enough to change behavior of upper income folk while those who are near the bottom will be squeezed out of the marketWorrying about "upper income folk" using oil to power their cars in the future will be a lot like worrying about them using coal to power their trains today. Auto and oil companies make their profits from mass sales. Once oil becomes scarce enough to raise the price orders of magnitude above alternate fuels, cars will be produced that are super efficient and/or use other fuels instead.

[ryang]

Why not just place an implicit tax on restaurants that choose to continue using trans fat. i.e. make them put a very large sign in their window that says trans fats are served here.

Places that serve peanuts in bulk like the "roadhouse" style restaurants do this...

[Randall Gremillion]

I think to wax legalistic about this issue or to bring Mill into it only empowers a specious debate and obfuscates the real issues. Mill had the luxury of appealing for individual freedoms in a culture that was largely monolithic and whose behavior was already circumscribed by a host of universally recognized laws. Like a Picasso or a Kandinsky, he could "push" against the dominant paradigm because there was something to push against. We have no such luxury. Our social contracts are vague and polymorphous, so Science as the final (and only unquestioned) arbiter is allowed to creep in to the discourse. But Science can make no value-based arguments, so the bait-and-switch leaves us with an impoverished argument that gets bogged down in legal footnotes while ignoring deeper and more important issue - the lack of a recognized good and the pallid substitution of Psychology and Quality of Life issues.

[N.E.Hatfield]

I've always viewed pure Libertarians and Libertarianism as nothing more than a euphemism for Anarchists and Anarchism. Both mutually exclusive, philosophically, to Paternalism. As Judge Posner is want to say, an "oxymoron". But such is the temper of the times in which we live; when the spin doctors try to turn black to white and evil into good, etc. etc.

As for myself, who has some philosophical back ground, I've always prefered the Pragmatic Common-sensical approach to systems development and political theory and action.

[me]

MSG is rarely used anymore because people freely chose not to visit those places that continue to use it. Couldn't transfat meet the same fate given enough time?

[Erisian]

>> I've always viewed pure Libertarians and Libertarianism as nothing more than a euphemism for Anarchists and Anarchism.

If I told you I wanted to add the least amount of salt to a dish necessary to achieve the best flavor, you would describe that as a rejection of both salt and flavor? With all due respect, that does sound a bit off the mark.

[N.E.Hatfield]

Erisian, Let's make this real simple. Lookup the term "Libertarianism" in Webster's Collegiate Dictionary. It's always best to define the terms before argument. There in lies the largest block to communication. No wonder Plato (the father of Western Philosophy) was so pissed off at the Sophists. ;)

[Doug Murray]

Perhaps it's true that nobody can fully evaluate all the potential risks he may encounter, but if he does choose to make that effort regarding trans-fats (or tobacco, retirement planning or motorcycle helmets,) shouldn't he get to make his own decision?

[ben]

Doug, I agree, but I think the argument here is a bit different. It is that however bad decisions rational decisionmakers may make, if the government were to decide on their behalf those decisions would be on the whole worse. I am not convinced transfat is an exception to this rule.

[Erisian]

N.E,

Done. Making "this real simple" doesn't seem to have helped. Your request to lookup the term "Libertarianism" appears to be completely non-responsive.

M-W defines "Libertarianism" as:

1 : an advocate of the doctrine of free will
2 a : a person who upholds the principles of individual liberty especially of thought and action
b [capitalized] : a member of a political party advocating libertarian principles

I fail to see how either of those definitions are a prescription for anarchy or otherwise related to what I wrote. Perhaps you could clarify your logic on this? I found the American Heritage Dictionary gives a somewhat more relevant definition:

1: One who advocates maximizing individual rights and minimizing the role of the state.

Unless "minimizing the role of the state" is to be reasonably construed as "total abolition of the state", this definition seems to support what I've suggested. I am a (less than absolute) Libertarian and many other things too, but I am not an anarchist. Out of the same respect I am requesting, I do not refer to "Paternalist Libertarians" as "Authoritarians in Sheep's Clothing".

Anarchy: I don't want a government to protect me.
Libertarianism: I don't want a government to protect me from myself, but from the malice of others.

With apologies, I do not see how I can reconcile those two statements and join you in equating the two.

>> If I told you I wanted to add the least amount of salt to a dish necessary to achieve the best flavor, you would describe that as a rejection of both salt and flavor?

Maybe we could keep this "real simple" if you'd be so kind as to offer a "yes" or "no" response please?

[ben]

I was confused by NE as well. Libertarians are I think clear that there is a role for the state in enforcing property rights and preventing people harming each other. I do not believe that is consistent with anarchy.

[N.E.Hatfield]

Simple, How does one respond to a question with either a yes or no when the response results in the creation of a dilemma for one of the positions? Let me rephrase, answer the question, "have you stopped beating your wife yet?" "Yes or no please". Get the point? Just another sophistical trick that muddys the waters. ;)

[Bill]

If my sources are right, Federal spending on social programs was nothing in the 1930s. In 1948, it was 10% of the budget. Today it is nearly 60%, and growing. I’m afraid that before we can even think about living as Libertarians, we’ll have to go through a good dose of anarchy.

[N.E.Hatfield]

Erisian, Oh, BTW! The relationship between "libertarianism" and "Anarchism" is based in the concept of Freewill and its application. ;)

[Haris]

"I’m afraid that before we can even think about living as Libertarians, we’ll have to go through a good dose of anarchy."

That's funny, I always thought that to become libertarian, we'd have to become massively statist in transition. Like, to privatize social security, we'd have to finance the transition and at the same time set up a private system to replace it. To set up markets where they haven't been before, we'd have to guide them along [a la Korea] whilst still keeping the state involved.

[bevens]

The examples chosen are all the hard ones - smoking, trans fat, etc.- but there are easier ones. Imagine if the government imposed no consumer protections at all. You would have to do detailed research for every purchase before deciding which model is sufficintly safe for your individual risk tolerance. This is the information cost Posner was talking about. Consumers do this for large purchases like cars, but not every purchase justifies such effort (backyard barbeque?). At some point it is appropriate for government to set a basement requirement so consumers can buy stuff with reasonable confidence that it won't blow up. The trick is finding the threshold for intervention. Is trans fat sufficiently dangerous and cheap to avoid to justify its ban? I found Posner's analysis convincing and certainly more reasonable than an ideological reflex that dismisses all intervention. Sometimes we want government to decide for us. It is easier and more efficient than each individual becoming expert in everything.

[James W]

I wonder if there's not a danger from "libertarian paternalism" of people coming to rely upon government action on their behalf in cases where in prior times people would have made their own decisions more carefully? This could lead to an ever-growing sphere of life where ordinary people expect that if something is unsafe or unwise some government agency will ban it or warn us about it, shifting the costs of ordinary prudence onto the taxpayers.

[Jack]

Nelson Thanks and you sum up the debate well:

Jack sez.....
we'll virtually be out of oil before it's costly enough to change behavior of upper income folk while those who are near the bottom will be squeezed out of the market

Nelson repeats the "Libertarian" trust in "The Market" to solve all problems?

Worrying about "upper income folk" using oil to power their cars in the future will be a lot like worrying about them using coal to power their trains today. Auto and oil companies make their profits from mass sales. Once oil becomes scarce enough to raise the price orders of magnitude above alternate fuels, cars will be produced that are super efficient and/or use other fuels instead.

......... We're there now. And leave out "alternatives" as there are none to turn to. I know folks in both "camps" or castes? those for whom it's just a minor annoyance to see a fill-up taken the best out of a fresh Benjie and virtually ALL of those below our median household income of $45k for whom a doubling of their energy expenditures wipes out virtually all of what little discretionary income they formerly had.

The debate, of course is that of walking blindly forward toward a predictable train wreck while waiting for "The Market" to respond, belatedly to each "crisis". Even today, most could reduce their energy consumption by 10% using what we have and with little change in living standards. Had we begun, using our brains, 30 years ago with incentives for conservation (the best and cheapest of "alternatives") and alternatives our current consumption would likely be half or two thirds of what it is today.

If half........ that would mean importing only 4 million bbls per day instead of 14 million bbls per day, with the lesser number being easily available from our Canadian and Mexican friends, not to mention lowering our soaring trade deficit by a quarter billion bucks a year.

Overly zealous "Libertarians" remind me of standing there waiting for a prize fighter to smack you in the face and then reacting....... if able. Jack

[Jonathan Berman]

I have a question about libertarianism.

As I understand it, libertarian's value the ability of individuals to make choices for themselves which will ultimately lead to a more efficient and better society.

Yet, is there any conflict in the doctrine when individuals choose to subject themselves to a sovereign authority to make decisions for them in order to overcome things like transaction costs and a lack of information.

[David]

Interesting post. A couple of comments.

First, I think that one can have libertarian tendencies, or a general libertarian mindset, without being a perfect, doctrinal libertarian. For instance, one could generally like the free market but believe that some health, safety, and labor regulations are necessary. One could believe in free enterprise but also believe that the market sometimes fails, and that those who suffer because of the market's imperfections deserve a safety net. And, one could believe in free speech while acknowledging the impropriety of shouting "fire" in a crowded theater.

In short, the academic tendency toward doctrinal consistency can -- and should -- be tempered by real-life experiences. One can be a "libertarian" at heart while acknowledging that libertarian philosophy is imperfect.

Second, and perhaps more fundamentally, libertarians should examine why, exactly, they are libertarians. Some might believe, philosophically, that the state has no authority to infringe on the individual's autonomy. This philosophy is most appealing regarding matters of conscience, but it can also be applied to one's choice of occupation or other economic matters. However, autonomy-based libertarians should realize that they are, at heart, anarchists (or nearly so), and that anarchy doesn't work so well in the real world. Most often, it results not in a libertarian paradise, but in Somalia. In that sense, perhaps Hobbes was right, and perhaps doctrinal, automony-based libertarians should acknowledge that.

Other libertarians are more Millian, believing that a minimum of state involvement creates the greatest good for the greatest number. But the Millians should acknowledge that they are not truly libertarians at heart; rather, they are utilitarians. If experience proves that certain government regulations create a net gain of societal happiness, those regulations should generally be viewed as beneficial. Millian libertarians should acknowledge that the "free market" is not a good in itself, but rather is good because of what it delivers.

My guess is that most modern libertarians combine both philosophies, believing that political and economic freedom is both "right" and "good." Those are noble beliefs and, on a general level, they are shared by most Americans on both sides of the political aisle. But they should not be taken to the extreme, and they should be tempered by reality and experience.

[Nelson]

Jack... "Had we begun, using our brains, 30 years ago with incentives for conservation..."

Lets assume for the sake of argument that incentives for conservation are good.

Incentives for conservation are the same thing as disincentives for consumption.

Higer prices are a highly effective disincentive for consumption.

As prices of gasoline rise people will consume less of it

This self regulating feedback loop of higher prices satisfies our goal of conservation without costly government regulations or programs.