Is it worth noting that one cannot simply “opt out” of Thaler and Sunstein’s endorsed retirement programs (see endnote 15, chapter 6 of Nudge)? If employers wish not to participate in auto-enrollment, then they are exposed to costly legal liability and must expend costly effort filling out forms to attenuate this liability. If employees wish not to participate in retirement plans like a 401k, they are exposed to a tax penalty. So, even as the authors might prefer to see things, this intervention does indeed reduce the decision space of market actors.
November 4, 2009
November 1, 2009
Nudge and the Subjectivity of Ends
I wanted to expand on one of the criticisms of Nudge that I made below. Namely, I criticize Thaler and Sunstein’s inability to dispense with the fundamental fact of subjective human preferences.
The authors refer to their preferred program as “libertarian paternalism”. I suspect this term is insincere, (perhaps merely an attempt to woo libertarians into more state-friendly territory?) since Thaler, for example, seems quite willing to endorse clearly non-libertarian paternalism. But for argument’s sake I’ll use their nomenclature. After all, the authors’ inability to stand by their professed principles is not a rebuttal of those principles per se (though it does undermine their pat dismissal of slippery-slope arguments).
Facially, libertarian paternalism attempts to account for subjective preferences in its definition. Paternalism, Thaler and Sunstein say, “tries to influence choices in a way that will make choosers better off, as judged by themselves” (page 5). This neat trick hangs subjective consumer preferences as the goal-point of all rigid government interventions. But it gets us nowhere.
Any of the chapters could be used to demonstrate the inability of libertarian paternalism to choose a “correct” direction in which to point consumers. But the discussion of retirement planning (Chapter 6 – “Save More Tomorrow”) struck me as the most obviously futile.
