‘Nudge’ Policies Are Another Name for Coercion

Thaler-nudgeHenry Farrell and Cosma Shalizi in New Scientist:

WE HAVE all cringed watching friends and family make terrible decisions, and been tempted by visions of the pain spared if we could only make them follow our advice. The same feeling motivates well-intentioned technocrats to take charge of the public: people are plainly making sad blunders they will regret.

Economist Richard Thaler and legal scholar Cass Sunstein (now a senior policy-maker in the Obama administration) present the latest, and subtlest, version of this temptation in their influential work on “nudging” people into making wiser choices. They argue that wise decision-makers should tweak the options and information available so that the easiest choice is the right one. For example, this can guide people to donate their organs if they die unexpectedly by making organ donation an opt-out rather than an opt-in choice. And it can encourage people to plan for their pensions by making pension contributions automatic for everyone who does not explicitly opt out of the system.

“Nudging” is appealing because it provides many of the benefits of top-down regulation while avoiding many of the drawbacks. Bureaucrats and leaders of organisations can guide choices without dictating them. Thaler and Sunstein call the approach “libertarian paternalism”: it lets people “decide” what they want to do, while guiding them in the “right” direction.

Much criticism of this approach comes, in fact, from libertarians, who see little difference between guiding a person's choices and eliminating them. A nudge is like a shove, they argue, only more disreputable because it pretends otherwise. The real problem, though, is that Thaler and Sunstein's ideas presume good technocrats can use statistical and experimental results to guide people to make choices that serve their real interests. This is a natural belief for scientists and intellectuals, especially those who see the awful ways scientific knowledge is abused politically, and think life would be better if scientists had more authority.

However natural, though, this won't work because libertarian paternalists are often wrong on the underlying social science.