Sunday, February 8, 2009

Nudge, Nudge, Wink, Wink, Say No More

. Sunday, February 8, 2009

In this post, I wrote the following in response to Robin Hanson:

I'll extend the question even further: If it's appropriate to keep the populace in the dark, then why not take the extra step and deliberately mislead them in order to get them to operate in the most socially beneficial ways? To ask that question is to answer it.

Apparently not. Deliberately manipulating "nudging" the populace is now the responsibility of policy makers, according Richard Thaler and Cass Sunstein. Both are noted academics, and the latter has been tapped to head the Office of Information and Regulatory Affairs in the Obama administration. They call it "libertarian paternalism" but Kevin Grier won't hear it:

This stuff is pretty much just trying to enforce a particular view of the world or pattern of behavior on others via implicit taxation. Paternalistic, yes, but libertarian? No.

We think that increasing the transparency of international institutions can actually make those institutions less effective at achieving their desired ends. And it's possible that if macroeconomists explain themselves, then stimulus might not work. So what's a little neurological subterfuge in the service of the greater good?

Well, that's a loaded question. One possible answer is that there's nothing wrong with it in the abstract, it happens all the time anyway, but governments are bad at it while markets are better. Call it the Harford Principle. Then there's Grier's view, which rejects state-sponsored paternalism of any kind. For my part, I'd add the following to the list:

1. Instead of tricking people into acting more rationally, we should actually teach them to be more rational.

2. Even if #1 is impossible, nudging is unlikely to work if we tell people we're nudging them. And who is really comfortable with the idea of being unconscious nudged by somebody in the Office of Information and Regulatory Affairs?

3. If people are biased, and any nudging program will be run by people, then why shouldn't we expect it to be biased as well? A corollary: If people make bad decisions because they have poor information, then why should we think that a government bureaucrat will have access to better information?

I wonder what the Hansonian view might be.

For more criticism of nudging, see this book.


Nudge, Nudge, Wink, Wink, Say No More
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