Rationality

Matthew Adler on extended preferences and interpersonal comparisons

Mark D. White

Matt Adler (Duke University) has a fascinating article in the latest issue of Economics and Philosophy (30/2, July 2014) titled "Extended Preferences and Interpersonal Comparisons: A New Account":

This paper builds upon, but substantially revises, John Harsanyi's concept of ‘extended preferences’. An individual ‘history’ is a possible life that some person (a subject) might lead. Harsanyi supposes that a given spectator, formulating her ethical preferences, can rank histories by empathetic projection: putting herself ‘in the shoes’ of various subjects. Harsanyi then suggests that interpersonal comparisons be derived from the utility function representing spectators’ (supposedly common) ranking of history lotteries. Unfortunately, Harsanyi's proposal has various flaws, including some that have hitherto escaped scholarly attention. In particular, it ignores the limits of personal identity. If the subject has welfare-relevant attributes that the spectator cannot acquire without changing who she is, full empathetic identification of the latter with the former becomes impossible. This paper proposes instead to use sympathy as the attitude on a spectator's part that allows us to make sense of her extended preferences. Sympathy – an attitude of care and concern – is a psychological state quite different from empathy. We should also allow for hetereogeneity in spectators’ extended preferences. Interpersonal comparisons emerge from a plurality of sympathetic spectators, not (as per Harsanyi) from a common empathetic ranking.


Special issue of Ethical Theory and Moral Practice: Private Autonomy, Public Paternalism?

Mark D. White

The latest issue of Ethical Theory and Moral Practice (17/3, June 2014) is devoted to the theme "Private Autonomy, Public Paternalism?" and features articles by Joel Anderson, John Christman, Bijan Fateh-Moghadam and Thomas Gutmann, John Kultgen, Amy Mullin, and Diana Tietjens Meyers. Rather than link to each article, I'll reproduce part of the editor's introduction (open access):

A special issue on ‘Private Autonomy and Public Paternalism’ constitutes the first part of this issue. Guest-editors are Annette Dufner and Michael Kühler, both from the University of Munster, Germany. It is often assumed that personal autonomy is a ‘private’ matter in the sense that it is based primarily on a person’s subjective characteristics and capabilities. At the same time, the literature mainly deals with paternalism as a problem of the ‘public’ sphere, for example by focusing on the dangers that threaten the autonomy of individuals as citizens, such as state paternalism. However, it is widely acknowledged nowadays that personal autonomy can only develop and flourish if conditions in the social and relational sphere are favourable, which means that personal autonomy is not so private after all. At the same time, it should be clear that paternalism not only relates to our behaviour in the public sphere, but also to how we behave in more private social spheres, like family, friendships, romantic or sexual relationships.

Being autonomous, says Joel Anderson in the article that opens the special issue, is a socially attributed, socially claimed, and socially contested status, like being able to drive a car. Normative debates about criteria for autonomy (and what autonomy entitles one to) are best understood, not as debates about what autonomy, at core, really is, but rather as debates about the relative merits of various possible packages of thresholds, entitlements, regulations, values, and institutions. John Christman looks at various ways that interpersonal and social relations can be seen as required for autonomy. He considers cases where those dynamics might play out or not in potentially paternalistic situations. In particular, he considers cases of especially vulnerable persons who are attempting to reconstruct a sense of practical identity required for their autonomy and need the potential paternalist’s aid in doing so. He then draws out the implications for standard liberal principles of (anti-) paternalism, specifically in clinical or therapeutic situations. According to Bijan Fateh-Moghadam and Thomas Gutmann, conventional liberal critique of paternalism turns out to be insensitive to the intricate normative problems following from ‘soft’ or ‘libertarian’ paternalism. In fact, these autonomy-oriented forms of paternalism could actually be even more problematic and may infringe liberty rights even more intensely than hard paternalistic regulation. Fateh-Moghadam and Gutmann aim to contribute to the systematic differentiation of soft and hard paternalism by discussing the (legal) concept of autonomy and by elaborating the moral and legal limits of autonomy-orientated paternalism. John Kultgen points out how far-reaching the changes in our public life would actually have to be if we wanted to avoid paternalism altogether. Many professional regulations, not just in medicine and law, but also in engineering and many other areas of expertise, have a strongly paternalistic function. Professional organizations are neither governments, nor necessarily democratic, but they are often state-certified and produce binding regulations for issues of public interest. Kultgen bites the bullet and accepts professional paternalism, while insisting that special care should be placed on how to design an appropriate professional code of conduct. Amy Mullin addresses the issue of paternalism in child-rearing. The parent–child relationship is generally understood as a relationship that is supposed to promote the development and autonomy-formation of the child, so that the apparent source of the concept is a form of autonomy-oriented paternalism. Far from taking paternalism to be overtly unproblematic in such paradigmatic, pedagogical settings, Mullin analyses how an effort should be made to understand a child’s capacities and which standards parents should be held to when deciding whether interference truly serves the child’s interests. The last contributor to the special issue, Diana Tietjens Meyers, argues that potential cases of oppression, such as sex trafficking, can sometimes compromise autonomous choices by the trafficked individuals. This issue still divides radical from liberal feminists, with the former wanting to ‘rescue’ the ‘victims’ and the latter insisting that there might be good reasons for ‘hiding from the rescuers.’ Tietjens Meyers presents new arguments for the liberal approach and raises two demands: first, help organizations should be run by affected women and be open-minded about whether or not the trafficked individuals should remain in the sex industry. Second, the career choices of trafficked individuals should be expanded by the introduction of an opportunityextending right to asylum.


Call for abstracts: Conference, "Economics and Psychology in Historical Perspective"

Mark D. White

Conference call for contributions

Economics and psychology in historical perspective

(from 18th century to the present)

Paris, December 17th - December 19th 2014

Organized by Mikaël Cozic (UPEC, IUF & IHPST, France) and Jean-Sébastien Lenfant (U. Lille 1, France)

 

IMPORTANT DATES:

Notification of interest: June 10th 2014

Deadline for abstract:  July 10th 2014

Notification of acceptance: August 31th 2014

Full paper: December 1st 2014

 

SCIENTIFIC COMMITTEE:

Erik Angner (George Mason university, USA), Richard Arena (Université de Nice Sophia-Antipolis), Laurie Bréban (Université Paris 8, France), Luigino Bruni (Università Lumsa a Roma, Italy), Annie L. Cot (Université Paris 1, France), Agnès Festré (Université de Picardie Jules Verne, France), Till Grüne Yanoff (Royal Institute of Technology, KTH, Sweden), Alessandro Innocenti (Università di Siena, Italy), Ivan Moscati (Insubria University, Italy), Annika Wallin (Lunds Universitet, Sweden).

CONFIRMED INVITED SPEAKERS:

Philippe MONGIN (CNRS & HEC Paris, France), Floris HEUKELOM (U. Nijmegen, Netherdlands), Robert SUGDEN (University of East Anglia, United Kingdom).

CALL FOR CONTRIBUTIONS

“Psychology is evidently at the basis of political economy and, in general, of all the social sciences. A day will come when we will be able to deduce the laws of the social science from the principles of psychology” (Pareto, Manual of Political Economy, 1909, II, §1)

Neoclassical economics was built upon a theory of rational behavior that pretended to be independent from psychological foundations. Actually, Pareto, who has been instrumental in laying the foundations of modern utility and rational choice theory, uphold that economics and psychology needed to develop separately and that the hopes for reconciling psychology, economics and sociology in the social sciences “still remain some way off”.

Over thirty years or so, an important part of economics has been oriented towards realizing Pareto’s prophecy that a day would come when economics and psychology would benefit from reconciling each others, opening the way for a better understanding of individual and collective behaviors. This reconciliation comes after a period of time during which economics has developed its tools and principles away from psychology (or so the standard narrative argues), on the mere assumption that rational behavior could be described satisfactorily with a well-behaved utility function. For many economists, the offspring of this collective effort is called “behavioral economics”, and it is sometimes viewed a new paradigm in economics, providing tools and principles that may be applied to different fields of economic inquiry (finance, development economics, game theory, etc.).

Basics of behavioral economics are now part of any curricula in economics. The advent of behavioral economics has often been associated with a story-telling argument about its early development in the 1970s and its establishment, focusing on three main points: 1) the legitimization of experimental methods in economics; 2) the usefulness of concepts and ideas borrowed from psychology to increase the explanatory or predictive power of the theory of rational behavior; 3) the advent of a renewed view of human behavior and hence of new ideas in normative economics.

Actually, Pareto’s opening quotation reminds us also that psychology (in different guises) has been a fundamental issue for economists even since 18th century, if only because economists have usually grounded their own theory of economics on some ideas about human nature, and especially on human desires and beliefs.

In recent years, historians of economic thought and theoreticians have shown an interest in understanding the ins and outs of the behavioral turn in economics, and more broadly, on the introduction of psychological elements in economic explanations. Some have focused on recent history, enhancing the different trends of behavioral economics. Others have dealt with the nascent of behavioral economics and the early collaboration between economists and psychologists in the 1950s. Still some others have tried to understand how the marginalist school of thought had relied on the experimental psychology of its time—namely psychophysics—and how it had progressively been expelled out of the realm of economics, at least temporarily, with Pareto and Fisher. However, those contributions have not been coordinated and we are far from having a comprehensive overview of the complex history of the relationships between economics and psychology.

The aim of this conference is to gather contributions from historians of economics and historians of psychology (including cognitive sciences), and also from historically-oriented researchers and philosophers of these disciplines. The overall ambition is to understand the way economics has dealt with psychological arguments, methods and concepts throughout history and to highlight the main debates between economists and psychologists that have fostered and are still fostering behavioral economics. It is hoped that these will pave the way for an overall vision of the history of the relationships between economics and psychology and of the methodological transformations of economics as a discipline.

The organizers wish to limit the number of contributions so that most of the conference will take place in plenary sessions. Interested contributors are asked to indicate their interest in participating to the conference to A COMPLETER. The deadline for submitting an abstract is July 10th 2014. It is hoped that the contributions to the conference will in turn lead to the publication of a comprehensive reference book with short versions of papers and to thematic issues in journals.

Below is a non-exhaustive list of topics, authors and schools of thought:

  • Psychology in economics before the marginalist revolution (Hume, Smith, Condillac, Quesnay)
  • Psychophysics, psychology and the (pre)marginalists (Gossen, Jevons, Walras, Marshall, Edgeworth, Pareto and Fisher, psychology in the Austrian tradition)
  • Psychologists, economists, and the birth and development of experimental psychology (1850-1950)
  • Psychology in the institutionalist and Keynesian schools of thought (Veblen, Mitchell, J.M Clark, Keynes, Duesenberry, Post-Keynesian school).
  • How psychologists came to study decision and choice after World War II (Edwards, Davidson, Luce, Suppes, Siegel, etc).
  • The role and importance of ‘mathematical psychology’ and of the ‘representational theory of measurement’
  • Allais’s paradox and other decision paradoxes from the point of view of economics and psychology.
  • National traditions in the development of “economic psychology” (in relation with social psychology) and early behavioral economics in the USA (Katona, Simon), France, Germany, England, Italy, etc.
  • How psychologists have been involved in the development of behavioral economics and alternative paradigms to study economic behavior (e.g. Kahneman, Tversky, Slovic, Gigerenzer)?
  • Did economics borrow concepts and laws from psychology or did they rather borrow methods?
  • What has been the influence of behavioral sciences, marketing and business studies on the development of behavioral economics?
  • What have been the effects of behavioral economics on public policy? Which role played public policy in the development of behavioral economics?
  • What have been the after effects of behavioral economics on the representation of utility and welfare? (Pigou, Boulding, Scitovsky, Easterlin, Happiness economics)
  • How has behavioral economics come into different fields of economics (finance, development economics, health economics, social choice, public economics, normative economics)?
  • The historical development of neuroeconomics and its links with psychology.
  • The role of normative considerations in the development of behavioral economics, and the links between normative and behavioral economics.


If you are interested in participating in this conference, please send a notification of interest mentioning the theme of your contribution by June 10th 2014 and an abstract of approximately 1000 words prepared for blind review by July 10th 2014. Send your abstract by email at eco-psycho@rationalite.org  with the following information:

Name and surname

Affiliation

Title of your contribution

Abstract


Zywicki and Smith examine the effect of behavioral law-and-economics on consumer financial protection

Mark D. White

Courtesy of the Mercatus Center at George Mason University, Todd Zywicki and Adam C. Smith have a new paper titled "Behavior, Paternalism, and Policy: Evaluating Consumer Finance Protection," in which they critique the impact of behavioral law-and-economics on the creation and operation of the Consumer Financial Protection Bureau:

This paper examines the relationship between behavioral law and economics (BLE) as a policy
prescription platform and its influence on the regulations emerging from the Consumer Financial Protection Bureau (CFPB). We show how these regulations are inconsistent with the intent and purpose of improving consumer choices. We further demonstrate that the selective modeling of behavioral bias in the BLE framework causes an overestimation of the ability of regulators, who in actuality use inefficient, heavy-handed rules based on little if any real empirical findings of “consumer irrationality.” Accordingly, the broader lesson on the misapplication of behavioral economics goes beyond the ill-considered policies emerging from the CFPB.

Near the end of the introduction (on p. 7), they detail their issues with this approach to consumer protection:

1. Political realities belie the attempts of behavioral theorists to construct policy corrections.
2. Actual political decision-making is susceptible to a number of distorting influences, most importantly bureaucratic overreach, behavioral bias on the part of the policymaker, and lack of appropriate information regarding consumer choices.
3. Bureaucrats do not hold the same preferences about political outcomes as behavioral theorists do. They are affected by self-interest like anyone else, which can cause deviations from prescribed policy measures.
4. Regulations based on behavioral findings tend to lean toward heavier forms of intervention that eliminate viable, alternative forms of exchange, thus impeding innovation and creativity in the marketplace. This in turn limits the overall amount of market activity (in this case consumer credit).
5. Policymakers are unlikely to incorporate evidence-based analysis into their decisionmaking in a manner consistent with the scientific method. Instead, policymakers are susceptible to “confirmation bias” in evaluating evidence.

I emphasize #2 and #5 and the CFPB itself in The Manipulation of Choice—in particular the last point in #2 about information—but Zywicki and Smith delve much more deeply and broadly into problems with the CFPB itself, contributing a much needed public choice perspective to the issue and concluding with recommendations to improve the operation of the CFPB. This is an essential read for anyone interested in behavioral law-and-economics or "nudges," regulation, or paternalism in general, as well as the CFPB in particular.


Special issue of Economics and Philosophy on the work of Amartya Sen

Mark D. White

SenThe first issue of Economics and Philosophy in 2014 (30/1) is a special issue on "Themes from the Work of Amartya Sen: Identity, Rationality, and Justice." For the time being the symposium articles are open access. The symposium articles and abstracts follow:

Amartya Sen, "Justice and Identity"

This paper discusses the relationship between justice and identity. While it is widely agreed that justice requires us to go beyond loyalty to our simplest identity – being just oneself – there is less common ground on how far we must go beyond self-centredness. How relevant are group identities to the requirements of justice, or must we transcend those too? The author draws attention to the trap of confinement to nationality and citizenship in determining the requirements of justice, particularly under the social-contract approach, and also to the danger of exclusive concentration on some other identity such as religion and race. He concludes that it is critically important to pay attention to every human being's multiple identities related to the different groups to which a person belongs; the priorities have to be chosen by reason, rather than any single identity being imposed on a person on grounds of some extrinsic precedence. Justice is closely linked with the pursuit of impartiality, but that pursuit has to be open rather than closed, resisting closure through nationality or ethnicity or any other allegedly all-conquering single identity.

Mozaffar Qizilbash, "Identity, Reason and Choice"

In criticizing communitarian views of justice, Amartya Sen argues that identity is not merely a matter of discovery but an object of reasoned choice subject to constraints. Distinguishing three notions of identity – self-perception, perceived identity and social affiliation – I claim that the relevant constraints implied by this argument are minimal. Some of Sen's arguments about perceived identity and social context do not establish any further constraints. Sen also argues that a model of multiculturalism and some forms of education can restrict, or fail to promote, reasoned and informed identity choice. This argument is better understood in the light of Sen's work on capability and justice, notably his concern with ways in which underdogs can adapt and his emphasis on public reasoning. It highlights limitations on information and opportunities for reasoning. I suggest that these lead to genuine constraints on (reasoned and informed) identity choice. The paper focuses on Sen's work, though its claims are also relevant to George Akerlof and Rachel Kranton's analysis of identity.

Ann E. Cudd, "Commitment as Motivation: Amartya Sen's Theory of Agency and the Explanation of Behavior"

This paper presents Sen's theory of agency, focusing on the role of commitment in this theory as both problematic and potentially illuminating. His account of some commitments as goal-displacing gives rise to a dilemma given the standard philosophical theory of agency. Either commitment-motivated actions are externally motivated, in which case they are not expressions of agency, or such actions are internally motivated, in which case the commitment is not goal-displacing. I resolve this dilemma and accommodate his view of commitment as motivation by developing a broader descriptive theory of agency, which recognizes both agent goal-directed and goal-displacing commitments. I propose a type of goal-displacing commitment, which I call ‘tacit commitment’, that can be seen to fit between the horns. Tacit commitments regulate behaviour without being made conscious and explicit. This resolution suggests a means of bridging the normative/descriptive gap in social-scientific explanation.

Rutger Claassen, "Capability Paternalism"

A capability approach prescribes paternalist government actions to the extent that it requires the promotion of specific functionings, instead of the corresponding capabilities. Capability theorists have argued that their theories do not have much of these paternalist implications, since promoting capabilities will be the rule, promoting functionings the exception. This paper critically surveys that claim. From a close investigation of Nussbaum's statements about these exceptions, it derives a framework of five categories of functionings promotion that are more or less unavoidable in a capability theory. It argues that some of these categories may have an expansionary dynamic; they may give rise to widespread functionings promotion, which would defeat the capabilitarian promise that paternalist interventions will be exceptions to the rule of a focus on capabilities. Finally, the paper discusses three further theoretical issues that will be decisive in holding this paternalist tendency in check: how high one sets threshold levels of capability protection, how lengthy one's list of basic capabilities is, and how one deals with individual responsibility for choices resulting in a loss of one's capabilities.

Ian Carter, "Is the Capabilities Approach Paternalist?"

Capability theorists have suggested different, sometimes incompatible, ways in which their approach takes account of the value of freedom, each of which implies a different kind of normative relation between functionings and capabilities. This paper examines three possible accounts of the normative relation between functionings and capabilities, and the implications of each of these accounts in terms of degrees of paternalism. The way in which capability theorists apparently oscillate between these different accounts is shown to rest on an apparent tension between anti-paternalism (which favours an emphasis on capabilities) and anti-fetishism (which favours an emphasis on functionings). The paper then advances a fourth account, which incorporates a concern with the content-independent or ‘non-specific’ value of freedom. Only the fourth account would remove all traces of paternalism from the capability approach. Whatever reasons advocates of the capability approach might have had for rejecting this fourth account, those reasons are not internal to the capability approach itself.


Questioning Unconscious Influences on Decision-Making (in Behavioral and Brain Sciences)

Mark D. White

Forthcoming from Behavioral and Brain Sciences is the article "Unconscious influences on decision making: A critical review" by psychologists Ben R. Newell (University of New South Wales) and David R. Shanks (University College London):

To what extent do we know our own minds when making decisions? Variants of this question have preoccupied researchers in a wide range of domains, from mainstream experimental psychology (cognition, perception, social behavior) to cognitive neuroscience and behavioral economics. A pervasive view places a heavy explanatory burden on an intelligent cognitive unconscious, with many theories assigning causally effective roles to unconscious influences. This article presents a novel framework for evaluating these claims and reviews evidence from three major bodies of research in which unconscious factors have been studied: multiple-cue judgment, deliberation without attention, and decisions under uncertainty. Studies of priming (subliminal and primes-to-behavior) and the role of awareness in movement and perception (e.g., timing of willed actions, blindsight) are also given brief consideration. The review highlights that inadequate procedures for assessing awareness, failures to consider artifactual explanations of “landmark” results, and a tendency to uncritically accept conclusions that fit with our intuitions have all contributed to unconscious influences being ascribed inflated and erroneous explanatory power in theories of decision making. The review concludes by recommending that future research should focus on tasks in which participants' attention is diverted away from the experimenter's hypothesis, rather than the highly reflective tasks that are currently often employed.

As is the practice at BBS, the target article is followed by a number of short comments by invited scholars, in this case including Roy Baumeister and Ap Dijksterhuis (all in the same PDF file).

It's a shame Daniel Kanheman, Timothy D. Wilson, or Jonathan Haidt didn't contribute commentary, as they have all written in support of a strong role for the unconscious in decision-making. Nonetheless, this promises to be a interesting challenge to the current trend in behavioral science away from conscious rational processes in decision-making (a trend which is troubling to a philosopher/economist concerned with processes of ethical judgment!).


New book: The Manipulation of Choice (including free chapter)

Mark D. White

ManipMy latest book, The Manipulation of Choice: Ethics and Libertarian Paternalism, was released earlier this month by Palgrave Macmillan in both paperback and hardcover. In the book, written for popular audiences, I discuss the ethical and practical problems with the idea of "nudges" as popularized by Richard Thaler and Cass Sunstein in their book of the same name.

Walter Olson of the CATO Institute writes that "the 'libertarian paternalism' theory promises to use the state to help correct citizens' wrong decisions without asking their consent, yet also without truly entering the realm of coercion. Too good to be true? Indeed it is, as this book helps to show. Mark White gives us the sort of analysis we need to nudge back." Our own Jonathan B. Wight also comments that: "The Manipulation of Choice states that paternalists impose their own values and goals onto hapless consumers and citizens. Hence, public policies designed to correct the imperfections of behavioral irrationality are coercive. This is an important point and one that needs to be debated."

If you're interested, Palgrave has made the first chapter available for free, and I have written several blog posts recently tied into the book, including one at this blog commenting on Cass Sunstein's recent review of another book on paternalism at The New York Review of Books, and a post at Psychology Today on the nudge concept in general. (See also past posts at this blog on paternalism.)


Interview with Julian Reiss, author of Philosophy of Economics: A Contemporary Introduction

Mark D. White

Phil of econThe good people at Routledge have posted an extensive Q&A with Julian Reiss, Professor of Philosophy at Durham University, regarding his forthcoming book Philosophy of Economics: A Contemporary Introduction. From the lead-in:

Philosophers since Aristotle have asked questions and offered opinions about economics, broadly defined. But during the 20th century economics developed into a field which was, as Julian points out in the beginning of his upcoming work, “hostile to philosophical reflection.” Economics became a science: economists began to see in “the economy” a space made up of empirically observable facts interpretable by the assumptions, methods, and models familiar to students enrolled in Econ 101 classes. In recent years, though, certain economic realities—the financial crisis, e.g.—have challenged those assumptions, methods, and models. A writer for the Economist described the consequence of recent challenges to the science of economics: “OF ALL the economic bubbles that have been pricked [since 2008], few have burst more spectacularly than the reputation of economics itself.”

Julian’s book introduces readers to the field in which many of those challenges are now being articulated. Questions of ethics, of the nature of human rationality when faced with economic decision-making, of the verifiability of economic models—these questions and more are all now being asked anew about economic practices and decisions. This interview hopes to open those questions to all curious readers.

Read the entire interview here.


Decision-making is not math: A lesson in the subjectivity of value

Mark D. White

Last month, The Economist published an article (based on research published in Journal of Marketing) on consumers' irrationality when compared discounts and added content:

Consumers often struggle to realise, for example, that a 50% increase in quantity is the same as a 33% discount in price. They overwhelmingly assume the former is better value. In an experiment, the researchers sold 73% more hand lotion when it was offered in a bonus pack than when it carried an equivalent discount (even after all other effects, such as a desire to stockpile, were controlled for).

In a recent issue, the magazine printed a letter by Rory Sutherland of Ogilvy & Mather UK, succinctly and humorously pointing out the problem with attributing irrationality to such consumers:

You mentioned research which revealed that shoppers often prefer “50% extra free” to a notionally more generous 30% reduction in price, and you cited this as evidence of irrationality or poor mathematical ability on the part of consumers. I think you may be wrong and consumers may be right.

There is, as the advertising sage Jeremy Bullmore observed, a significant difference between a bonus and a bribe. A price tells you much more about a product than merely what it costs. A price cut may be sensibly perceived as a mark of mild desperation on the part of the seller and it is not unreasonable to infer from a price cut that a product is an inferior good. Charging the full price but adding something extra does not convey the same desperation. In any case this whole debate is silly.

If people value 50% extra free more highly than 33% off, then that is an end of the matter. Since all value is subjective, what you are doing by offering the former is simply creating more perceived value at a lower cost. Whether or not the resulting behaviour conforms to some autistic neoclassical idea of rationality is irrelevant.

If the sole purpose of life was to be rational, we would have banned golf years ago.

Mr. Sutherland said it better than I ever could--and I've tried, in many places and many contexts, including previous posts (such as here), book chapters, and my forthcoming book, The Manipulation of Choice: Ethics and Libertarian Paternalism. Economists--of both mainstream and behavioral varieties--all too often see irrationalities where none exist because they insist on interpreting choice through the lens of their narrow understand of decision-makers and the overly simplistic choices they assume on consumers' parts.

The factors that consumers take into consideration when make choices are much more complicated than economists recognize--as Mr. Sutherland points out. And while behavioral economists are making headway in identifying some of these factors, they still don't account for qualitative ones like principles and ideals. Nor do they consider the complex and subjective interests of consumers (and all decision-makers), choosing instead to assume simple unitary goals like wealth-maximization. Until they take these common influences on choice into account, they will see irrationalities wherever they look--which reflects more on the shortcoming of their models than on the decision-makers themselves.


Not so sweet: Crossing the line from science to opinion in the sugar wars

Mark D. White

In a New York Times op-ed this morning, Daniel E. Lieberman, an evolutionary biologist at Harvard, makes a strong case for our strong attraction to sugar, but a weak case for paternalistic action on the part of the government to limit our consumption of it.

The problem is captured by the question he poses after he lays out the scientific reasoning: "What should we do?" Professor Lieberman somehow makes the leap from "people are eating too much sugar" to "the government should do something to stop this" without appreciating the size of the chasm he's jumping. (Just ask David Hume.) He fails to explain why this is a problem that justifies government intrusion into the choices of individuals--he simply takes it for granted that because we have evolved to crave more sugar than he thinks is optimal, the government is entitled to adjust our sugar consumption to bring it in line with what he thinks is optimal.

This is yet another example of the most offensive aspect of paternalism: value substitution. We are lucky to have access to Professor Lieberman's scientific insights regarding why we crave sugar so much. But then he asserts his opinion that we eat too much sugar, based on his opinion regarding our optimal diets (based on our ancestors' nutritional nirvana long before Coca-Cola and Nabisco). This much is fine--everyone is entitled to his (or her) opinion, and he is fortunate that The New York Times gives him a platform to express it. But like all who endorse paternalism based on what they think we can do better, Professor Lieberman crosses a line when he shifts from expressing his opinion regarding our behavior to endorsing government action to adjust our behavior based on that opinion.

But isn't it commonsense that we should eat less sugar (and salt, and trans fats) and more healthy foods? Of course. But is that all our only concern? Is it our only interest? Should it be? Not only does value substitution mispresent our true interests, but it only greatly oversimplifies them. I know I shouldn't eat too much sugar. But I also think a sugary treat or drink is a fine complement to a meal, or the cornerstone of a celebration, or a nice way to acknowledge a job well. People's interests are complex, and while they do include health, they also include a myriad of other things, things that are ignored when a scientific expert or government regulator proclaims, "Too much! Too much!"

After making a reasonable case for limiting unhealthy foods in schools--a proposal I have very little problem with--Professor Lieberman proclaims that "adults need help too." This is the paternalistic mindset in a nutshell: you need help because we know better than you how you should run your life. Again, he makes a tremendous leap, from "you are being tempted by cheap sugar from the food industry" to "you need the government to step in and counter this influence." First, there is no way to know how much sugar consumption is due to "irresistible temptation" and how much is due to open-eyed choice. Paternalistic regulation--whether in the form of prohibition, taxes, or nudges--is a blunt tool that misses the nuances of human decision-making.

Second, this treats people as slaves to their passions--there's Hume again--which must be manipulated by the state to counter manipulation by industry. Professor Lieberman devotes just two sentences to spreading information, but decides that it hasn't done enough--"enough," of course, based on his opinion regarding what should have happened. But here's another possibility: people know how bad sugar is from them, and armed with that information plus all of their multifaceted interests, they nonetheless choose to eat more sugar than Professor Lieberman would like them to.

Professor Lieberman concludes with this: "We have evolved to need coercion." I hope he's not making that claim on the basis on his scientific expertise, because science cannot tell us what we need. Science can help explain why we do what we do--as Professor Lieberman well details in the early part of his article--but it has nothing to contribute to what we need. Such a proclamation requires knowledge of our goals, interests, or "purpose"--the last one a teleological notion which scientists normally disavow--and none of which science or government knows better than people themselves.