Friday, June 22, 2007

Whose Preferences?

The new paternalists supposedly want to make individuals better off according to their own preferences. This is what allegedly distinguishes the new paternalists from the old-style paternalists, who just wanted to impose the religious and moral values on others. For instance, in “Libertarian Paternalism Is Not an Oxymoron,” Sunstein & Thaler define “inferior decisions in terms of [an individual’s] own welfare” as follows:
[D]ecisions that they would change if they had complete information, unlimited cognitive abilities, and no lack of self-control. (p. 1162)
So the idea is to get individuals to act on their “true” preferences, the ones they would act upon if they were unafflicted by cognitive biases. They want to make people better off “by their own lights,” to use one of Sunstein & Thaler’s favorite phrases. But Sunstein & Thaler repeatedly emphasize that such preferences may not even exist:
Our emphasis is on the fact that in many domains, people lack clear, stable, or well-ordered preferences. What they choose is strongly influenced by details of the context in which they make their choice, for example default rules, framing effects (that is, the wording of possible options), and starting points. These contextual influences render the very meaning of the term “preferences” unclear. (p. 1161, emphasis added)
And again:
If the arrangement of the alternatives has a significant effect on the selections the customers make, then their true “preferences” do not formally exist. (p. 1164, emphasis added)
Okay, so the new paternalists want to make individuals “better off” in terms of their own true preferences (“by their own lights”). But then they say those preferences often don’t even exist! You cannot make someone better off in terms of a non-existent standard. So what standard of well-being are the new paternalists using? Since it can’t be the preferences of the individuals they presume to help, it must be their own preferences. Or if not their own, then someone else’s – politicians, experts, bureaucrats, or the general public. Meet the new boss, same as the old boss.

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