Since I have been living in the Land of One Goddamned Health Problem After Another recently, and am having to greatly restrict my time on the computer due to nearly chronic headaches, I haven't been blogging much recently. But Tam emailed me a question that I thought I could post here with the answer I sent her. This does not represent my finest thinking on this issue, but does get across my general view of the matter. I might elaborate on this more at a later time, when I am feeling less like someone has taken a tire iron to the back of my head.
Question:
I'm asking because I'm not sure about your position. How do you feel about "nannying" (corporate or governmental) in ways that don't actually take away choices, but arrange things such that the default is right for most people? For instance, do you object if a company makes their 401K plan opt-out rather than opt-in? What if the government did the same thing in some similar type of situation?
Answer:
First of all, I think the term "paternal libertarianism" (which is what I have heard this described as) is a terrible one, since it combines two ideas that are contradictory together and individually offensive (or at least carry a lot of negative baggage) to a lot of people.
The fundamental idea though is not a bad one, given the premise that people are experiencing information overload in a sort of hyperchoice environment. Although I think that argument is often oversold, the people who actually think this is a non-issue are not experiencing the same world that I am. There is also fairly abundant evidence that framing and selections of default matter, sometimes a lot.
(Robert and I have talked about the gains to consumers that would have accrued if deregulation of the TX electricity market had included people not only having the choice to pick a new (almost always cheaper) supplier, but if after a certain point, the people who had not made an affirmative choice were randomly allocated to the suppliers in the market in some fashion.)
Part of the issue, of course, rests on how we determine whether something is "right" for other people. This is not something that the government necessarily has a good track record on. And of course, it is not entirely unreasonable for people to place a value on people improving their self-regulation abilities, and it is possible that widespread paternalism (beyond simple matters of, e.g., the default 401K option) could undermine that to some extent. There are a lot of questions that relate to why exactly people do not come to the "right" choice themselves in various situations, and some of these may be more appropriately remedied by paternalism than others.
In general, I'd say it's a good approach to consider, and is an example of economics finally catching up with what has been known in the behavioral sciences for a very, very long time. But it's not a panacea and I do not support widespread application on the grounds that people "can't" do these things for themselves. It is easy to see how the idea can be extended to mimic old-fashioned paternalism by actually limiting choice.
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4 comments:
This just reminded me of an article I read about Generation Y and the difficulty/stress of having to make decisions on their own (e.g. selecting between 5 different health care plans)...
I have to wonder if many people would prefer not having to make a choice. With the average American living what is considered a much more stressful life than previous generations, I am sure that the fewer choices one has to pick from the less stressful that particular decision would be.
Makes me think of how I hate to shop in large department stores because there is too much to look at, which makes it much more difficult to decide what to buy.
I agree that there are definitely times (either based on the person or the situation) when fewer choices are preferable.
An issue for government, though, is whether it is permissible to restrict the options of all to make life "easier" for the others.
And for every situation in which I like having fewer choices, there is another in which I want to be able to pick from all the alternatives that are available (and others that are not!).
To me, it makes more sense/seems more appropriate for organizations with which a person does business voluntarily to restrict choice (e.g. if the store decides to only stock two of the possible 30 brands) than for government to do so.
Jen, I'm curious about that article. 5 health plans, especially for a group that is mostly healthy due to their age, doesn't seem like it should cause cognitive overload. Maybe Gen Y's brains are too fried from trying to watch TV, play computer games, web surf, and text message all at the same time ;)
Oh, and of course, in response to Mom's comment, I cannot resist quoting William James: "When you have to make a choice and don't make it, that is in itself a choice."
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