We Can Make You Better Off, Like it Or Not
WHY YOU SHOULD CARE
Because right now, someone is arguing that they know how to look after you far better than you do. Welcome to the new paternalism.
By Harold Winter
Meet Billy. He is a heavy smoker and excessive drinker. He also tends to overeat, and the medical profession would classify him as being obese.
But Billy has a social conscience. He never bothers anyone with second-hand smoke or gets behind the wheel of a vehicle if he’s intoxicated. His family has the means to cover his medical bills, which are well above average due to his many indulgences, so he is not a financial burden to the health insurance system.
Billy is a heavy smoker and excessive drinker. He’s also 14 years old.
Still, one can easily argue that Billy is harming himself, and maybe we should consider a social policy that would protect Billy from his own indulgences. This form of policy intervention is considered paternalistic — policy not designed to protect others from Billy, but to protect Billy from himself.
Paternalistic policy intervention has traditionally been largely ignored by economists. Believing that people fundamentally behave rationally and in their own best interest, why should we care what Billy does as long as he doesn’t bother others?
But I forget to mention one thing: Billy is 14 years old. Does paternalism make sense now?
As it becomes more palatable for scholars and policy officials to call on paternalistic policy to protect adults from their indulgences, we should look at what appear to be far easier justifications for paternalism — protecting children from themselves. Then we can consider how well these justifications apply to the adult setting. Typically we blame parental neglect for children who indulge to such an extreme degree. But parents are not always in the best position to protect their children. They can’t set a minimum legal smoking or drinking age or impose fines on retail outlets that violate these laws. Nor can they regulate fast food restaurants to restrict advertising directed at children. So parents often welcome paternalistic public policy to protect their children. But paternalism is starting to cast a wider net.
Who are these paternalists and how can we be sure they know what is in someone else’s best interest?
The first common justification is that children lack the cognitive maturity to make rational decisions and act in their own best interest. The second is that we make children better off by curbing their indulgences — especially extreme ones like smoking, drinking and overeating. The first justification is sound; the second is problematic. Does paternalism truly make children better off?
When we ask if Billy would be better off, we need to determine from whose perspective. From Billy’s, the answer is likely no. If you were to intervene and prevent Billy from indulging, would he thank you? If he lacks the maturity to appreciate the effect his indulgences have on his health, doesn’t he also lack the maturity to appreciate policies designed to curb his behavior? If Billy wants to indulge, and we say no, we make Billy worse off in his own mind.
From the paternalist’s perspective, however, be it the parents or the state, we are making Billy better off by holding him to what we consider to be more appropriate behavior. But who gets to decide what is appropriate?
If you are new to social welfare analysis, it’s all about finding ways to make society better off. You start with a social objective and then propose policies to achieve that objective. Keep in mind, though, that what you think is best for society is simply your opinion. There is no “correct” social welfare objective. But if you believe society is better off if children don’t smoke, we achieve that goal by implementing policies that don’t let children smoke.
This is both the strength and weakness of paternalism. Paternalism can protect people who are not in the best position to protect themselves. But then we’re allowing the paternalists to define socially ideal behavior. Who are these paternalists and how can we be sure they know what is in someone else’s best interest?
We are making Billy better off by holding him to … more appropriate behavior. But who gets to decide what is appropriate?
And what if Billy is 25 years old instead of 14? Is he now cognitively mature enough to look after his own best interests? If he doesn’t appreciate intervention to curb his indulgences, should we still hold him to the paternalist’s ideal behavior?
There is a fairly new branch of economics, known as behavioral economics, that argues that even adult behavior is not governed by full rationality but by behavioral quirks and flaws. So yes, the argument goes, some adults may not be cognitively mature enough to protect themselves, and we should design policies to help them out, even if these policies don’t seem helpful to them.
In the end, behavioral economists believe that in some settings we need to protect adults from their indulgences for pretty much the same reasons we need to protect children. These paternalists are smart, and sincere, but they should tread very carefully before telling others what to do. If not, someone might start telling them what to do, or where to go.
- Harold Winter, OZY Author Contact Harold Winter