Libertarian paternalism & drug policy issues

I got a buzz from reading the Becker-Posner blog on libertarian-paternalism. Their argument is in part a criticism of C. Sunstein & R. Thaler’s ‘Libertarian Paternalism is Not an Oxymoron’ .

Sunstein & Thaler claim it is both possible and legitimate for private and public institutions to affect behaviour while respecting freedom of choice because people's preferences are ill-formed and their choices are influenced by behavioural quirks such as default rules, framing effects, and starting points. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists seek to steer choices in welfare-promoting directions without eliminating freedom of choice. This view, in turn, was responded to by Daniel Klein’s ‘Status Quo Bias’. This debate has impacts on the sorts of arguments posed for restricting smoking or the intake of obesity-causing foods.

Libertarians believe individuals should be allowed to pursue their own interests unless their behaviour negatively impacts on others. So individuals should be allowed to buy the food they want but drunk drivers should be constrained because they harm others. But modern research shows that individuals may not have enough information to effectively pursue their interests so, it is argued, government regulations and rules might help guide them to the better pursuit of interests they would have if they had additional information. A libertarian paternalist accepts these information arguments for government regulation but also stresses considerations such as bounded rationality and self-control.

Consider a person who smokes, but has an internal conflict between his stronger ‘self’ who wants to quit, and his weaker ‘self’ who continues to smoke when he feels under pressure or in social situations. The weaker self does not stop smoking because of limited self-control. Paternalism here seeks to help the more dispassionate self gain control over the choices made by the conflicted individual because of his dual selves. Such paternalism might take the form of high cigarette taxes, so that weak selves would not want to smoke so much or of ordinances to limit smoking in restaurants, bars, and other social situations to protect weak selves from temptation. The argument is that individuals are ‘happier’ if given a helping hand to exercise self-control. They might even be happier with high cigarette taxes though Posner notes smokers never lobby for higher taxes!

But Posner notes that libertarianism does not assume adults always know their interests or even are always able to act on their interests when they know them. It does assume that adults know their own interests better than government officials or professors. In addition being able to make mistakes through having the right to make one's own choices leads to more self-reliant, competent, and independent individuals. For example prisoners often lose the ability to make choices for themselves after spending many years in prison where life is rigidly regulated. Thus libertarians claim is that the ‘process’ of making choices leads to individuals more capable of making good choices.

Also it is difficult to distinguish libertarian paternalism from unadulterated paternalism because it is difficult to decide with objective criteria where ‘bounded rationality and bounded self-control’ are important and where they are not? Posner claims that models of rational addiction do as well if not better than models of bounded self-control when applied empirically to smoking behaviour. Why adopt models of bounded self-control in this case?

Take another illustration: Is the obesity problem due to bounds on rationality and control? If so, why did it not happen earlier, or why is the gain in weight so much greater in certain countries? If it cannot answer these questions is not libertarian paternalism simply substituting an intellectual's (or bureaucrat's, politician’s) beliefs about should be done for the judgment of others. Libertarians recognize the temptation in us to control choices made by others and so are in favour of allowing people to make their own choices unless there are external effects. Moreover, even well-intentioned government officials are subject to the cognitive defects that are supposed to affect choices by others. Can one have confidence that they will promote individual interests better than these individuals do themselves?

Posner therefore believes that the case for classical libertarianism is not weakened by the literature motivating libertarian paternalism. Indeed, when similar considerations are applied to government officials and intellectuals the case for classical libertarianism is strengthened!

Posner’s arguments go to the heart of the case for government intervention in certain markets to restore self-control. The key issues are:

1. Are individuals better placed to make sound consumption decisions than others can for them? 2. Does assigning people freedom of choice lead to better decision-making?
3. Do models of rational choice account for behaviour better than models of self-control?
4. Are those making policy judgements subject to the same behavioural defects as citizens subject to self-control problems?

My answer to 1. is certainly ‘no’ for young individuals whose brains are still developing. Most decisions to initiate smoking arte taken when smokers are young but most smokers wish they had never initiated the habit. My response to 2. is ‘not necessarily’. Addictive consumption choices need not lead to better longer-term decision-making. Certainly though, making individuals responsible for their choices, will overcome the ‘moral hazard’ implications of offering ‘treatment’ and ‘care’ to those who make poor consumption choices. To be clear here I favour such care and treatment options because of their moral hazard costs.

I think point 3. is incorrect. The existence of substantial self-control problems is evident throughout the addictive consumption and obesity literature. To take Thomas Schelling’s famous example – rational choice theory cannot explain why a cocaine addict will agree to sign a document admitting use of illegal drugs and give this document to the manager of a drug treatment clinic with the instruction that if cocaine is detected in his urine the document is to be forwarded to the police. Closer to home – as an ex-smoker - I find it fantastic for anyone to claim that individuals do not struggle to quit smoking even though they seriously want to.

Point 4. has value. Some anti-drugs crusaders do suffer from cognitive defects but many are scientists and doctors who do have good knowledge. The case against smoking is motivated by abundant medical evidence and the self-control issues that smokers face are documented in a vast body of neurobiological evidence. Its playing a silly game to claim it is wrong to believe that ‘experts’ are always right. Of course they are not always right – nor are they inevitably wrong or less well-informed than others.