Despite the fact that nudges, by definition, do not limit liberty, many people often have a feeling of discomfort about governments using nudges. I typically find it difficult to elicit from them what precisely is the problem, but often it comes down to the difference between freedom and autonomy.
If one is concerned with autonomy as well as freedom, narrowly conceived, then there does seem to be something paternalistic, not merely beneficent, in designing policies so as to take advantage of people’s psychological foibles for their own benefit. There is an important difference between what an employer does when she sets up a voluntary retirement plan, in which employees can choose to participate, and what she does when, owing to her understanding of limits to her employees’ decision-making abilities, she devises a plan for increasing future employee contributions to retirement. Although setting up a voluntary retirement plan may be especially beneficial to employees because of psychological flaws that have prevented them from saving on their own, the employer is expanding their choice set, and the effect of the new plan on employee savings comes mainly as a result of the provision of this new alternative. The reason why nudges such as setting defaults seem, in contrast, to be paternalist, is that in addition to or apart from rational persuasion, they may “push” individuals to make one choice rather than another. Their freedom, in the sense of what alternatives can be chosen, is virtually unaffected, but when this “pushing” does not take the form of rational persuasion, their autonomy—the extent to which they have control over their own evaluations and deliberation—is diminished. Their actions reflect the tactics of the choice architect rather than exclusively their own evaluation of alternatives.
And not only might nudges diminish autonomy, they might be simply disrespectful.
One reason to be troubled, which Thaler and Sunstein to some extent acknowledge (p. 246/249), is that such nudges on the part of the government may be inconsistent with the respect toward citizens that a representative government ought to show. If a government is supposed to treat its citizens as agents who, within the limits that derive from the rights and interests of others, determine the direction of their own lives, then it should be reluctant to use means to influence them other than rational persuasion. Even if, as seems to us obviously the case, the decision-making abilities of citizens are flawed and might not be significantly diminished by concerted efforts to exploit these flaws, an organized effort to shape choices still appears to be a form of disrespectful social control.
But what if you believe that paternalistic policies are in some cases defensible? Are nudges the milder version?
Is paternalism that plays on flaws in human judgment and decision-making to shape people’s choices for their own benefit defensible? If one believes, as we do, that paternalistic policies (such as requiring the use of seat belts) that limit liberty are sometimes justified, then it might seem that milder nudges would a fortiori be unproblematic.
But there may be something more insidious about shaping choices than about open constraint. For example, suppose, for the purposes of argument, that subliminal messages were highly effective in influencing behavior. So the government might, for example, be able to increase the frequency with which people brush their teeth by requiring that the message, “Brush your teeth!” be flashed briefly during prime-time television programs. Influencing behavior in this way may be a greater threat to liberty, broadly conceived, than punishing drivers who do not wear seat belts, because it threatens people’s control over their own evaluations and deliberation and is so open to abuse. The unhappily coerced driver wearing her seat belt has chosen to do so, albeit from a limited choice set, unlike the hypothetical case of a person who brushes his teeth under the influence of a subliminal message. In contrast to Thaler and Sunstein [authors of Nudge], who maintain that “Libertarian paternalism is a relatively weak and nonintrusive type of paternalism,” to the extent that it lessens the control agents have over their own evaluations, shaping people’s choices for their own benefit seems to us to be alarmingly intrusive.
Hausman and Welch outline three distinctions that can help us think about whether nudges should be permissible (which I am somewhat sympathetic to).
First, in many cases, regardless of whether there is a nudge or not, people’s choices will be shaped by factors such as framing, a status quo bias, myopia and so forth. Although shaping still raises a flag because of the possibility of one agent controlling another, it arguably renders the action no less the agent’s own, when the agent would have been subject to similar foibles in the absence of nudges. When choice shaping is not avoidable, then it must be permissible.
Second, although informed by an understanding of human decision-making foibles, some nudges such as “cooling off periods” (p. 250/253) and “mandated choice” (pp. 86–7/88) merely counteract foibles in decision-making without in any way pushing individuals to choose one alternative rather than another. In this way, shaping apparently enhances rather than threatens an individual’s ability to choose rationally. …
Third, one should distinguish between cases in which shaping increases the extent to which a person’s decision-making is distorted by flaws in deliberation, and cases in which decision-making would be at least as distorted without any intentionally designed choice architecture. In some circumstances, such as (hypothetical) subliminal advertising, the foibles that make people care less about brushing their teeth are less of a threat to their ability to choose well for themselves than the nudging. In other cases, such as Carolyn’s, the choices of some of the students passing through the cafeteria line would have been affected by the location of different dishes, regardless of how the food is displayed.
There remains an important difference between choices that are intentionally shaped and choices that are not. Even when unshaped choices would have been just as strongly influenced by deliberative flaws, calculated shaping of choices still imposes the will of one agent on another.
One funny line about all this, however, is whether it is actually possible to choose “rationally”. Hausman and Welch see this point:
When attempting to persuade people rationally, we may be kidding ourselves. Our efforts to persuade may succeed because of the softness of our smile or our aura of authority rather than the soundness of our argument, but a huge difference in aim and attitude remains. Even if purely rational persuasion were completely impossible—that is, if rational persuasion in fact always involved some shaping of choices as well—there would be an important difference between attempting to persuade by means of facts and valid arguments and attempting to take advantage of loss aversion or inattention to get someone to make a choice that they do not judge to be best. Like actions that get people to choose alternatives by means of force, threats, or false information, exploitation of imperfections in human judgment and decision-making aims to substitute the nudger’s judgment of what should be done for the nudgee’s own judgment.