Startseite The Paternalistic Turn in Behavioral Law and Economics: A Critique
Artikel
Lizenziert
Nicht lizenziert Erfordert eine Authentifizierung

The Paternalistic Turn in Behavioral Law and Economics: A Critique

  • Mario J. Rizzo EMAIL logo
Veröffentlicht/Copyright: 13. Dezember 2021
Veröffentlichen auch Sie bei De Gruyter Brill

Abstract

The application of behavioral economics to law and economics has taken a paternalistic turn. Behavioralists believe that the fundamental assumptions regarding individual behavior in standard theory do not reflect reality. If individuals are not “rational” in the standard economic sense, then there will be decisionmaking failures: people cannot be relied upon to make individually optimal decisions and thus to maximize welfare as they see it. This Article is organized as follows. Part One is a prelude and gives context. Part Two discusses the fundamental normative standard in behavioral public policy: true preferences. I then proceed to outline the causes of the divergence between true preferences and actual observed preferences. Part Three analyzes some of the knowledge problems is ascertaining the presence of cognitive and behavioral biases. Part Four presents a case study of the difficulties of behavioral policy analysis in the area of consumer credit. Part Five concludes.

JEL Codes: P48; D6; B53

Corresponding author: Mario J. Rizzo, Economics, New York University, 19 West 4th Street, 10012-1126, New York, USA, E-mail:

References

Ainslie, G. (2012). Pure hyperbolic discount curves predict “eyes open” self-control. Theor. Decis. 73: 3–34. https://doi.org/10.1007/s11238-011-9272-5.Suche in Google Scholar

Allcott, H. and Knittel, C. (2019). Are consumers poorly informed about fuel economy? Evidence from two experiments. Am. Econ. J. Econ. Pol. 11: 1–37. https://doi.org/10.1257/pol.20170019.Suche in Google Scholar

Antoñanzas, F., Viscusi, W.K., Rovira, J., Braña, F.J., Portillo, F., and Carvalho, I. (2000). Smoking risks in Spain: Part I. Perception of risks to the smoker. J. Risk Uncertain. 21: 161–186.10.1023/A:1007807323025Suche in Google Scholar

Augenblick, N., Niederle, M., and Sprenger, C. (2015). Working over time: dynamic inconsistency in real effort tasks. Q. J. Econ. 130: 1067–1115. https://doi.org/10.1093/qje/qjv020.Suche in Google Scholar

Bar-Gill, O. (2012). Seduction by contract: law, economics, and psychology in consumer markets. Oxford University Press, Oxford, UK.10.1093/acprof:oso/9780199663361.001.0001Suche in Google Scholar

Ben-Shahar, O. and Schneider, C.E. (2014). More than you wanted to know: the failure of mandated disclosure. Princeton University Press, Princeton, NJ.10.23943/princeton/9780691161709.001.0001Suche in Google Scholar

Berg, N. and Gigerenzer, G. (2010). As-if behavioral economics: neoclassical economics in disguise? Hist. Econ. Ideas 18: 133–165.10.2139/ssrn.1677168Suche in Google Scholar

Besharov, G. (2004). Second-best considerations in correcting cognitive biases. South. Econ. J.: 12–20. https://doi.org/10.1002/j.2325-8012.2004.tb00620.x.Suche in Google Scholar

Brandt, R.B. (1984). A Theory of the good and the right. Clarendon Press, Oxford, UK.Suche in Google Scholar

Camerer, C.F., Dreber, A., Forsell, E., Ho, T.H., Huber, J., Johannesson, M., and Wu, H. (2016). Evaluating replicability of laboratory experiments in economics. Science 351: 1433–1436.10.1126/science.aaf0918Suche in Google Scholar

Camerer, C.F., Dreber, V, Holzmeister, F., Ho, T.H., Huber, J., Johannesson, M, and Wu, H. (2018). Evaluating the replicability of social science experiments in nature and science between 2010 and 2015. Nat. Hum. Behav. 2: 637–644.10.1038/s41562-018-0399-zSuche in Google Scholar

Camerer, C., Issacharoff, S., Loewenstein, G., O’Donoghue, T., and Rabin, M. (2003). Regulation for conservatives: behavioral economics and the case for ‘asymmetric paternalism’. Univ. Penn. Law Rev. 151: 1211–1244.10.2307/3312889Suche in Google Scholar

Coase, R.H. (1960). The problem of social cost. J. Law Econ. 3: 1–44. https://doi.org/10.1086/466560.Suche in Google Scholar

Cohen, J., Ericson, K.M., Laibson, D., and White, J.M. (2020). Measuring time preferences. J. Econ. Lit. 58: 299–347. https://doi.org/10.1257/jel.20191074.Suche in Google Scholar

Dahremöller, C. (2013). Unshrouding for competitive advantage. J. Econ. Manag. Strat. 22: 551–568.10.1111/jems.12025Suche in Google Scholar

DellaVigna, S. and Malmendier, U. (2004). Contract design and self-control: theory and evidence. Q. J. Econ. 119: 353–402. https://doi.org/10.1162/0033553041382111.Suche in Google Scholar

Durkin, T.A., Elliehausen, G., and Zywicki, T.J. (2015). An assessment of behavioral law and economics contentions and what we know empirically about credit card use by consumers. Supreme Court Econ. Rev. 22: 1–54. https://doi.org/10.1086/682014.Suche in Google Scholar

Encyclopedia of Mind Disorders (2016). Self-control strategies, Available at: http://www.minddisorders.com/Py-Z/Self-control-strategies.html.Suche in Google Scholar

Fang, H. and Silverman, D. (2006). Distinguishing between cognitive biases. In: Behavioral public finance, Vol. 47–81. Russell Sage Foundation.Suche in Google Scholar

Frederick, S., Loewenstein, G., and O’Donoghue, T. (2003). Time discounting and time preference: a critical review. In: Loewenstein, G., Read, D., and Baumeister, R. (Eds.), Time and decision: economic and psychological perspectives on intertemporal choice. Russel Sage Foundation, New York, pp. 13–85.10.2307/j.ctvcm4j8j.11Suche in Google Scholar

Fujita, K. (2011). On conceptualizing self-control as more than the effortful inhibition of impulses. Pers. Soc. Psychol. Rev. 15: 352–366. https://doi.org/10.1177/1088868311411165.Suche in Google Scholar

Gabaix, X. and Laibson, D. (2006). Shrouded attributes, consumer myopia, and information suppression in competitive markets. Q. J. Econ. 121: 505–540. https://doi.org/10.1162/qjec.2006.121.2.505.Suche in Google Scholar

Gayer, T. and Viscusi, W.K. (2012). Energy regulations: protecting ‘irrational’ consumers from themselves? In: Research summary. Mercatus Center at George Mason University, Arlington, VA.Suche in Google Scholar

Gruber, J. and Köszegi, B. (2001). Is addiction ‘rational’? Theory and evidence. Q. J. Econ. 116: 1261–1303. https://doi.org/10.1162/003355301753265570.Suche in Google Scholar

Gul, F. and Pesendorfer, W. (2004). Self‐control and the theory of consumption. Econometrica 72: 119–158. https://doi.org/10.1111/j.1468-0262.2004.00480.x.Suche in Google Scholar

Handgraaf, M.J., de Jeude, M.A.V.L., and Appelt, K.C. (2013). Public praise vs. private pay: effects of rewards on energy conservation in the workplace. Ecol. Econ. 86: 86–92. https://doi.org/10.1016/j.ecolecon.2012.11.008.Suche in Google Scholar

Harsanyi, J. C. (1996). Utilities, preferences, and substantive goods. Soc. Choice Welfare 14: 129–145.10.1007/s003550050057Suche in Google Scholar

Hayek, F.A. (1945). The use of knowledge in society. Am. Econ. Rev. 35: 519–530.Suche in Google Scholar

Heidhues, P. and Kőszegi, B. (2010). Exploiting naïveté about self-control in the credit market. Am. Econ. Rev. 100: 2279–2303. https://doi.org/10.1257/aer.100.5.2279.Suche in Google Scholar

Infante, G., Lecouteux, G., and Sugden, R. (2016). Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics. J. Econ. Methodol. 23: 1–25. https://doi.org/10.1080/1350178x.2015.1070527.Suche in Google Scholar

James, W. (1899[1983]). On a certain blindness in human beings. In: Burkhardt, F.H., Bowers, F., and Skrupkelis, I.K. (Eds.), Talks to teachers on psychology and to students on some of life’s ideals, the works of William James. Harvard University Press, Cambridge.Suche in Google Scholar

Kagan, J. (2012). Psychology's ghosts. Yale University Press, New Haven, CT.Suche in Google Scholar

Kessler, J.B. and Vesterlund, L. (2015). The External validity of laboratory experiments: qualitative rather than quantitative effects. In: Frechette, G.R. and Schotter, A. (Eds.), Handbook of experimental economic methodology. Oxford University Press, Oxford, UK.10.1093/acprof:oso/9780195328325.003.0020Suche in Google Scholar

Kopczuk, W. and Slemrod, J. (2005). Denial of death and economic behavior. B E J. Theor. Econ. 5: 1–26. https://doi.org/10.3386/w11485.Suche in Google Scholar

Kudryavtsev, A., Cohen, G., and Hon-Snir, S. (2013). ‘Rational’ or ‘intuitive’: are behavioral biases correlated across stock market investors? Contemp. Econ. 7: 31–53. https://doi.org/10.5709/ce.1897-9254.81.Suche in Google Scholar

Levitt, S.D. and List, J.A. (2007). Viewpoint: on the generalizability of lab behaviour to the field. Can. J. Econ. 40: 347–370.10.1111/j.1365-2966.2007.00412.xSuche in Google Scholar

Loewenstein, G. (1999). Experimental economics from the vantage-point of behavioural economics. Econ. J. 109: F25–F34. https://doi.org/10.1111/1468-0297.00400.Suche in Google Scholar

Manzini, P. and Mariotti, M. (2009). Choice over time. In Anand, P. and Pattanaik, C. (Eds.), The handbook of rational and social choice. Oxford University Press, Oxford, UK.10.1093/acprof:oso/9780199290420.003.0011Suche in Google Scholar

Mitchell, G. (2002). Why law and economics' perfect rationality should not be traded for behavioral law and economics' equal incompetence. Geo. LJ. 91: 67–167.10.2139/ssrn.306562Suche in Google Scholar

Myrseth, K.O.R. and Fishbach, A. (2009). Self-control: a function of knowing when and how to exercise restraint. Curr. Dir. Psychol. Sci. 18: 247–252. https://doi.org/10.1111/j.1467-8721.2009.01645.x.Suche in Google Scholar

Normann, H.-T. and Wenzel, T. (2015). Shrouding add-on information: an experimental study. In: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik – Session: Industrial Organization II, No. B11-V2.10.1111/sjoe.12319Suche in Google Scholar

O’Donoghue, T. and Rabin, M. (2003). Studying optimal paternalism, illustrated by a model of sin taxes. Am. Econ. Rev. 93: 186–191. https://doi.org/10.1257/000282803321947029.Suche in Google Scholar

O’Donoghue, T. and Rabin, M. (2006). Optimal sin taxes. J. Public Econ. 90: 1825–1849.10.1016/j.jpubeco.2006.03.001Suche in Google Scholar

O’Donoghue, T. and Rabin, M. (2015). Present bias: lessons learned and to be learned. Am. Econ. Rev. 105: 273–279. https://doi.org/10.1257/aer.p20151085.Suche in Google Scholar

Posner, R.A. (1973). Economic analysis of law. Little Brown & Co., Boston, MA.Suche in Google Scholar

Read, D. and Rabin, M. (2001). Is time-discounting hyperbolic or subadditive? J. Risk Uncertain. 23: 5–32.10.1023/A:1011198414683Suche in Google Scholar

Rizzo, M.J. (1980). Law amid flux: the economics of negligence and strict liability in tort. J. Leg. Stud. 9: 291–318. https://doi.org/10.1086/467641.Suche in Google Scholar

Rizzo, M.J. (2016). Behavioral economics and deficient willpower: searching for akrasia. Georgetown JL & Pub. Policy 14: 789.10.2139/ssrn.2731818Suche in Google Scholar

Rizzo, M.J. and Whitman, G. (2020). Escaping paternalism: rationality, behavioral economics, and public policy. Cambridge University Press, Cambridge, UK.10.1017/9781139061810Suche in Google Scholar

Rizzo, M.J. and Whitman, G. (2021). The unsolved Hayekian knowledge problem in behavioral economics. Behavioural Public Policy 3: 1–13. https://doi.org/10.1017/bpp.2021.18.Suche in Google Scholar

Schelling, T.C. (1984). Choice and consequence. Harvard University Press, Cambridge, MA.Suche in Google Scholar

Spiegler, R. (2015). On the equilibrium effects of nudging. J. Leg. Stud. 44: 389–416. https://doi.org/10.1086/684291.Suche in Google Scholar

Stango, V. and Zinman, J. (2020). We are all behavioral, more or less: a taxonomy of consumer decision making (No. w28138). National Bureau of Economic Research, Cambridge, MA.10.3386/w28138Suche in Google Scholar

Sunstein, C.R. (2012). The storrs lectures: behavioral economics and paternalism. Yale Law J. 122: 1826.10.2139/ssrn.2182619Suche in Google Scholar

Thaler, R.H. and Sunstein, C.R. (2003). Libertarian paternalism. Am. Econ. Rev. 93: 175–179. https://doi.org/10.1257/000282803321947001.Suche in Google Scholar

Thaler, R.H. and Sunstein, C.R. (2008). Nudge: improving decisions about health, wealth, and happiness. Yale University Press, New Haven, CT.Suche in Google Scholar

Viscusi, W.K. (1990). Do smokers underestimate risks? J. Polit. Econ. 98: 1253–1269. https://doi.org/10.1086/261733.Suche in Google Scholar

Wenzel, T. (2014). Consumer myopia, competition and the incentives to unshroud add-on information. J. Econ. Behav. Organ. 98: 89–96. https://doi.org/10.1016/j.jebo.2013.12.002.Suche in Google Scholar

Wikipedia (2021a). Average percentage rate, Available at: https://en.wikipedia.org/wiki/Annual_percentage_rate (Accessed 25 June 2021).Suche in Google Scholar

Wikipedia (2021b). List of cognitive biases, Available at: https://en.wikipedia.org/wiki/List_of_cognitive_biases (Accessed 25 June 2021).Suche in Google Scholar

Zinman, J. (2014). Consumer credit: too much or too little (or just right)? J. Leg. Stud. 43: S209–S237. https://doi.org/10.1086/676133.Suche in Google Scholar

Published Online: 2021-12-13

© 2021 Walter de Gruyter GmbH, Berlin/Boston

Heruntergeladen am 11.10.2025 von https://www.degruyterbrill.com/document/doi/10.1515/rle-2021-0056/html
Button zum nach oben scrollen