The concept of ‘nudging’ can be thought of as a practical expression of the philosophy of ‘libertarian paternalism’ and as such I will be considering both the theoretical aspect (libertarian paternalism) and whether that violates sovereignty as paternalism would imply, as well as the attempt to glean practical policy advice (‘nudging’) and whether the ideas advocated constitute ‘coercion’.
The theoretical Libertarian paternalism is the idea that it is both possible and legitimate for private and public institutions to affect behaviour while also respecting freedom of choice. (Sunstein & Thaler, 2003) The fundamental of the idea is reconciling the emergence of bounded rationality (Gigerenzer & Selten, 2002), the study of the limits of human rationality, with the principles of libertarianism (Boez, 2016) and neo-liberalism; which are widely accepted, but traditionally hinge upon the rationality of humans as economic actors (Smith, 2016). As such, it advocates policies designed to help people who behave irrationally and so are not advancing their own interests (referred to as ‘humans’ in their writings), while interfering only minimally with people who behave rationally (referred to as ‘Econs’). This is a very important consideration when regarding the question, as theories encouraging consumer sovereignty, such as libertarianism, assume the preponderance of ‘Econs’ whereas behavioural studies have shown that people usually act as ‘humans’. This is an important hole in the theories. Leading to such problems as massive Ponzi schemes and asset bubbles for everything from housing to flowers; huge problems that should not happen if we are to assume that people act rationally on a consistent basis. It is in light of such facts that people as far back as Plato have advocated for hard paternalism, outright controls from press censorship to the Hays Code to Totalitarianism, as a way to ‘save people from their baser natures’ (Popper, 2002) Libertarian paternalists seek to avoid this outcome and so would like to modify libertarianism with some paternalistic aspects in light of reality. The critical concept is something called ‘choice architecture’, contending that the how choices are presented can affect the choice eventually made. This assertion has been shown to be true in various experimental trials (Thaler and Sunstein mention cafeteria trials first thing) (Thaler & Sunstein, 2008), which is interesting because most traditional economics only accounts for the possible array of choices, effectively discounting this aspect. To explain this phenomenon they use an application of dual process theory (Chaiken & Trope, 1999) which states that, while people certainly are capable of rational thinking and nearly always believe they are, they do not always do so and should not be expected to. This can be due to various reasons, from simple inexperience (the book mentions that no-one would expect a novice chess player to make the right decisions), to Heuristic errors, but the point is that it is possible for choice architects to design systems such that these effects are accounted for. Since choice architecture does not affect ‘Econs’ they should pass through the process undisturbed, thus maintaining sovereignty. A general point made is that choice architecture must always happen, as there is always context when making choices. One could conclude that nudging is evil and then attempt to design so as to minimise the effect of the design upon choices, but it would be impossible to know what choices reflect zero influence if the influence is always present (a ‘forest for the trees’ situation). Simple random assignment, while seeming fair initially, ultimately would subject people to the caprice of chance (Children at a cafeteria with prominent desert would end up unhealthier, with the attendant consequences) and seems like an equal violation, if such has occurred. Crucially, they claim that by “ensuring all choices remain open [and] keeping the costs of making a choice as close to zero as possible” (Thaler & Sunstein, 2008) and making sure that paternalism is implemented strictly through behavioural techniques (elaborated upon later) “that would have no effect on rational, aware actors” (Thaler & Sunstein, 2008) liberty is not compromised.
Of course, there are many problems with this idea; and consequently there are many who would argue that libertarian paternalism as a concept The most obvious is that ‘psychological techniques’ can be extremely high pressure, to the point of compelling false confessions to crime even without traditional ‘coercion’ (Malloy, Shulman, & Cauffman, 2014) and thus the caveat is not enough. Moreover, some suggest that“[They] neglect alternative approaches to dealing with irrational choice behaviour… “Libertarian paternalism, as currently formulated, is not designed to liberate individuals from their irrational tendencies but to capitalize on irrational tendencies to move citizens in directions that the paternalistic planner deems best.” (Mitchell) (Indeed, Thaler and Sunstein state that their ideas very closely mirror those of asymmetric paternalism (Thaler & Sunstein, 2008), modified to reach libertarian standards) When describing the system it is very clear that they meant the advice for government policy bodies, the ruthless logic of the free market suggesting that any private companies driving for competitiveness should would have adopted any insights from behavioural psychology very soon after the information was discovered. It is in this sense that the argument in favour of ‘libertarian paternalism’ becomes meaningful. Hence our discussion is entirely focused on the ‘libertarian paternalistic’ role of the State. ”The problem of how the government is exactly defining ‘good’ and ‘bad’ choices is not addressed exactly. In their writings, Thaler and Sunstein seem to presuppose the existence of a benevolent, decision making layer of society that they are pitching their ideas to, not unlike Plato’s philosopher-kings. Although societies have tried to create such a layer it invariably fairs poorly, leading to abhorrent totalitarianism (very much a violation of consumer sovereignty) on both the left (soviet) and right (fascist) (Popper, 2002), or at the very least to remarkable inefficiency, of the sort they originally set out to avoid in making their proposed adjustments. Indeed, it might be said that “They escape the [totalitarian] conclusion of their proposed ideas [only] by not attempting to develop them into a system, i.e., not developing the institutions necessary for the implementation of their idea. However, any idea in the long run must take an institutional form.”(Veetil, 2011)
To be sure, libertarian paternalism lacks the characteristics of a system and the non-specific, powerful government is worrying… as a theoretical framework. However, it is very clear to me that libertarian paternalism is not that meant this way. Rather it meant as reasonably practical advice to existing systems of government/management, this being why such things are presumed in Thaler and Sunsteins writings. We do not currently live in a society that is defined by any theoretical framework (certainly not libertarian), essentially being too complicated. The original intent of libertarian paternalism is to apply knowledge from a new or unconventional source (behavioural psychology) to improve an existing model (In this case, a neo-liberal consensus) in a practical fashion, in much the same way that a supposedly free society might end up banning its citizens from choosing to work certain conditions. Thus, a real answer to the question must come from an examination of the practical advice. In Nudge, a great deal of time is spent detailing the possible errors choice architecture can account for, allowing us to do just that (It’s almost like I planned it or something).
Heuristics are a major category of bounded rationality, they can be thought of as simple, efficient ‘rules-of-thumb’ which people often use to form judgments and make decisions. They are mental shortcuts that work well under most circumstances, but lead to “cognitive biases” (Tversky & Kahneman, 1974), systematic errors in judgement. Being systematic they are very predictable and as such easy for a good choice architect to adjust for.
Anchoring and adjustment- A shortcut involving starting from a readily available number -the ‘anchor’- when estimating and shifting either up or down to reach an answer that seems plausible. This is done unknowingly (Yudkowsky, 2008) and it has been shown that people will latch onto even absurd numbers; when asked about the timing of Einstein’s visit to the United States, even a suggested date of 1215AD skewed answers (Yudkowsky, 2008). Deliberately suggesting an anchor serves as a ‘nudge’ in this context.
Availability- When gauging probability people assess likelihoods by how likely examples come to mind. This leads to drastic errors; “homicides are more available than suicides and so people tend to believe, wrongly, that more people die from homicides” (Thaler & Sunstein, 2008) Nudge then suggests reminding people of suitable dangers to play-up or play-down possibilities.
Representativeness- When categorising, people judge how likely something belongs to a category by comparing it to a ‘stereotype’ they have. Severe problems arise when reality clashes with expectation however. For instance, our expectation of random patterns (actually more like an even distribution) clashes sharply with true randomness. This can even lead to conspiracy theories, such as the distribution of V2 bombings in London (Gilovich, 1991)
Status quo biases- An inbuilt tendency to overly value things remaining the same. Manifests as both a literal overvaluation of not changing anything and a tendency to over ‘value’ potential losses by a rough factor of two. (Kahneman, KInetsch, & Thaler, 1990)
These suggest a pretty comprehensive list of flaws within the human mind. In the end, the problem with suggesting that ‘nudging’ violates consumer sovereignty is that it involves admitting consumer sovereignty may not exist in the first place. If one suggests that exploiting the specific bounds of rationality nudge mentions constitute a ‘coercive’ violation of sovereignty then how did consumer sovereignty exist in the first place? It is clear to me that these limitations are inherent, even if people don’t realise it is so (Yudkowsky, 2008), so how were people ever making their own decisions? However, in reality we have seen that people perform reasonably when making their own choices, sometimes by orders of magnitude. (In the Soviet Union, it is noted that ~28% of agricultural output came from the ~1% (Geller & Nekrich, 1988)) Clearly, the bounds are not as strong as they may seem. This may be due to weaknesses in experimental technique. There are, in fact, differences between the lab and the real world. For instance, there is some evidence to suggest that organisations tend to engage in what may be called ‘cognitive repairs’ when certain cognitive features of individuals have detrimental consequences. (Heath, Larrick, & Klayman, 1998) Whatever the precise nature of the truth it seems clear to me that, if one accepts that can people exercise sovereignty over their own decisions then ‘nudge’ techniques do not constitute a meaningful violation.
Bibliography
Boez, D. (2016, March 20). Libertarianism. Retrieved from Encyclopædia Britannica: http://www.britannica.com/topic/libertarianism-politics
Chaiken, S., & Trope, Y. (1999). Dual-process theories in social psychology. Guilford Press.
Geller, M., & Nekrich, A. (1988). Utopia in Power: The History of the Soviet Union from 1917 to the Present. Pocket Books.
Gigerenzer, G., & Selten, R. (2002). Bounded Rationality: The Adaptive Toolbox. Cambridge, Massachusetts: MIT press.
Gilovich, T. (1991). How we know what isn’t so: The falability of humanreason in everyday life. New York: Free Press.
Heath, C., Larrick, R., & Klayman, J. (1998). Cognitive repairs: How organizational practices can compensate for individual shortcomings. Research in Organizational Behavior, Volume 20, es 1-37.
Kahneman, D., KInetsch, J., & Thaler, R. (1990). Experimental Tests of the Endownment Effect and the Coase Theorem. Journal of political economy, 1325-48.
Kershaw, I. (n.d.). The Nazi Dictatorship: Problems and Perspectives of Interpretation. London: Arnold.
Malloy, L. C., Shulman, E. P., & Cauffman, E. (2014). Interrogations, confessions, and guilty pleas among serious adolescent offenders. Law and Human Behavior, 181-193.
Mitchell, G. (n.d.). Libertarian Paternalism Is an Oxymoron. Northwest University law review.
Popper, K. (2002). The Poverty of Historicism. Routledge.
Smith, N. (2016, March 20). neoliberalism. Retrieved from Encyclopædia Britannica: http://www.britannica.com/topic/neoliberalism
Sunstein, C., & Thaler, R. (2003). Libertarian Paternalism is Not an Oxymoron. University of Chicago Law Review, pp. 1159–1202.
Thaler, & Sunstein. (2008). Nudge. Penguin Books.
Thaler, R., & Sunstein, C. (2003). Libertarian Paternalism. The American Economic Review, pp. 175–179.
Tversky, A., & Kahneman, D. (1974). Judgement under uncertainty: Heuristics and Biases. Science, pp. 1124-31.
Veetil, V. P. (2011). Libertarian paternalism is an oxymoron: an essay in defence of liberty. European Journal of Law and Economics, 321-334.
Yudkowsky, E. (2008). Cognitive biases potentially affecting judgment of global risks. In N. Bostrom, & M. M. Ćirković, Global catastrophic risks (pp. 91–129). Oxford University Press.