Do "Libertarian Paternalists" Really Care About Choice?

I’m a bit late to the party, but I have some thoughts on Cass Sunstein’s reply to Becker and Posner’s posts on “libertarian paternalism.”

Sunstein makes a big deal about how much libertarian paternalists care about choice. They really don’t want to restrict choice, they really do want to preserve freedom of contract, etc. Here’s a typical passage:

Libertarian paternalists insist on preserving freedom of contract. They also want to think about whether some default rules are better than others, by reference to the interests of contracting parties themselves. Libertarian paternalists emphasize that government officials are also subject to bounded rationality, and hence they are especially skeptical of approaches that ban freedom of choice or impose high costs on those who do what officials don't like.

Call me skeptical. First, as Sunstein himself would surely admit, he is not a libertarian. He holds numerous un-libertarian positions, as becomes apparent from perusing his body of work outside the “libertarian paternalist” mold. Which raises the question: who are these libertarian paternalists who care so much about preserving choice? The “libertarian” part of “libertarian paternalism” is a rhetorical strategy aimed at persuading people sympathetic to libertarian arguments, but it does not describe Sunstein himself. I'm curious as to whether it describes anyone.

Second, Sunstein and his coauthors have championed clearly non-choice-preserving policies even within their work on libertarian paternalism. For instance, Sunstein and Thaler argue that cooling-off periods constitute a form of libertarian paternalism. But for whatever merits cooling-off periods might have (and there are some), they are not choice-preserving. In general, you as a customer cannot waive a waiting period. Nor can the seller demand that you to do so as a condition of your purchase. The cooling-off period clearly restricts the freedom of contract of both buyer and seller, because it removes their option of concluding a final sale immediately. Perhaps cooling-off periods are desirable paternalism because the benefits outweigh the harms – but they are clearly not libertarian paternalism. Sunstein should admit, forthrightly, that he thinks they are a good but un-libertarian policy. That he doesn’t is further evidence that “libertarian paternalism” is a rhetorical strategy to lower the defenses of libertarian-sympathetic listeners. See Dan Klein for more in this vein.

Third, Sunstein and Thaler don’t recognize any sharp distinction between choice and the lack thereof. Instead, they define choice purely in terms of the degree of cost, whether that cost is imposed by government or by oneself or by other private actors; here is the key passage from their paper, “Libertarian Paternalism Is Not an Oxymoron”:

The libertarian paternalist insists on preserving choice, whereas the non-libertarian paternalist is willing to foreclose choice. But in all cases, a real question is the cost of exercising choice, and here there is a continuum rather than a sharp dichotomy. A libertarian paternalist who is especially enthusiastic about free choice would be inclined to make it relatively costless for people to obtain their preferred outcomes. ... By contrast, a libertarian paternalist who is especially confident of his welfare judgments would be willing to impose real costs on workers or consumers who seek to do what, in the paternalist’s view, would not be in their best interests. (1185-6)

Read that last sentence again, and ask how concerned the so-called libertarian paternalists are about preserving choice. By focusing on low cost as the defining characteristic of choice, Sunstein and Thaler sidestep the relatively clear distinction between voluntary private action and coercive state action, and they replace it with a fuzzy gradient. Once we’re on that gradient, it becomes much more difficult to resist further “libertarian” interventions, since any newly proposed intervention seems only marginally less choice-preserving than the last. This is just one of many ways in which Sunstein’s modest-sounding paternalism puts us on a slippery slope toward harder paternalism.