Paternalism

Paternalism and Perfectionism: 

Paternalism and Perfectionism F.H. Buckley Sciences Po fbuckley@gmu.edu

The assignment from last dayWhy compulsory attendance?: 

The assignment from last day Why compulsory attendance? An externality problem? Does each person’s attendance confer external benefits on other students? (e.g., better questions). A self-binding strategy that responds to akrasia? On the other hand, does compulsory attendance weaken the signal of diligence? Or would that amount to excessive signaling?

The hubris of economists: 

The hubris of economists All learning aspires to the condition of economics…but for the data problem Ostensible critiques of economics are best understood from an economic perspective

Rational Choice: Five assumptions: 

Rational Choice: Five assumptions Four we saw already: Full Information Non-satiation Completeness or comparability No third party effects (externalities) Now--Perfect Rationality

Relaxing the Rationality Assumption: Transitivity: A Technical Definition: 

Relaxing the Rationality Assumption: Transitivity: A Technical Definition If A is preferred to B and B is preferred to C, then A is preferred to C A>B, B>C A>C AB, BC  AC

Transitivity: A>B, B>C A>C : 

Transitivity: A>B, B>C A>C Time 1 0 Time 2 C B A

Transitivity: Indifference curves can’t touch : 

Transitivity: Indifference curves can’t touch Time 1 a · · b · c 0 Time 2 A violation of transitivity If a ~ c and c~ b, then a ~ b. But b > a

Relaxing the rationality assumption:Paternalism: 

Relaxing the rationality assumption: Paternalism Suppose we knew we would harm ourselves in our choices in certain cases Might we not then wish to delegate to the paternalist to choose for us?

Relaxing the rationality assumption:Byron, The Prisoner of Chillon: 

Relaxing the rationality assumption: Byron, The Prisoner of Chillon At last Men came to set me free – I asked not why, and recked not where-- It was at length the same to me, Fettered or fetterless to be-- I learned to love despair… My very chains and I made friends, So much a long Communion tends To make us what we are, even I Regained my freedom with a sigh

Paternalism’s questionable historySo you want to help victims? How about…: 

Paternalism’s questionable history So you want to help victims? How about… Restrictions on women Slavery “The benevolent have a tendency to colonize, whether geographically or legally.” Arthur Leff

The New Paternalism: 

The New Paternalism Unlike the old Paternalism, the new Paternalism does not discriminate It is also based on better science

The New Paternalism:When might our desires misfire?: 

The New Paternalism: When might our desires misfire? When might we agree to let the Paternalist second-guess our decisions? Judgment Biases: Because we miscalculate what is good for us Akrasia: Because we lack the strength of will to pursue what we know is good for us

Paternalism: Judgment Biases: 

Paternalism: Judgment Biases Rationality as a scarce resource: the need to rely on heuristics and hunches Even if these are satisfactory in average cases, they seem to mislead in anomalous cases. The rise of cognitive paternalism

Judgment Biases: Some readings: 

Judgment Biases: Some readings Vern Smith, Nobel Address 2002 Kahneman, Slovic and Tversky, Judgment Under Uncertainty (1982) Gigerenzer, Adaptive Thinking (2000) Sunstein, Behavioral Law and Economics (2000)

Judgment Biases: Emotional and Moral Heuristics: 

Judgment Biases: Emotional and Moral Heuristics Our emotions are coded with knowledge Deep preferences as a solution to PD games Of disgust and hatred… Moral Heuristics Gigerenzer Romola

Paternalism:Some Judgment Biases: 

Paternalism:Some Judgment Biases The Availability Bias Pauline Kael on the 1972 election How likely is a divorce?

Some Judgment Biases: 

Some Judgment Biases The Anchoring Bias Suppose I tell you that there are 18 Canadian Nobel laureates. How many Chinese laureates do you think there are? How many Italian ones do you think there are? How many Russian (+Soviet) ones?

Some Judgment Biases: 

Some Judgment Biases The Anchoring Bias Suppose I tell you that there are 18 Canadian Nobel laureates. How many Chinese laureates do you think there are? 6 How many Italian ones do you think there are? How many Russian (Soviet) ones?

Some Judgment Biases: 

Some Judgment Biases The Anchoring Bias Suppose I tell you that there are 18 Canadian Nobel laureates. How many Chinese laureates do you think there are? 6 How many Italian ones do you think there are? 19 How many Russian (Soviet) ones?

Some Judgment Biases: 

Some Judgment Biases The Anchoring Bias Suppose I tell you that there are 18 Canadian Nobel laureates. How many Chinese laureates do you think there are? 6 How many Italian ones do you think there are? 19 How many Russian (Soviet) ones? 21

Some Judgment Biases: 

Some Judgment Biases The Anchoring Bias Suppose I had started by telling you that there were 261 U.S. Nobel laureates. Had that been the anchor, would your estimates of the number of Russian laureates been different?

Some Judgment Biases: 

Some Judgment Biases The Gambler’s Fallacy You are at a casino. At the roulette table, the numbers are either red or black. Black has come up six times in a row. What is the probability that it will come up black on the next turn? (Assume a fair table.)

Some Judgment Biases: 

Some Judgment Biases The Gambler’s Fallacy You are at a casino. At the roulette table, the numbers are either red or black. Black has come up six times in a row. What is the probability that it will come up black on the next turn? (Assume a fair table.) 50%. (You thought the table had a memory?)

Some Judgment Biases: 

Some Judgment Biases Regret You attend a boring lecture in law-and-economics. On returning to your flat you discover that you missed a visit from a long-lost friend. You feel great regret even though, ex ante, attending the lecture seemed the best thing to do.

Some Judgment Biases: 

Some Judgment Biases The Hindsight Bias You watch a baseball game. The pitcher (ERA of 2.11) has given up two walks in the eighth inning. The manager leaves him in. The next batter up hits a home run. “Idiot!,” you say. “I would have taken the pitcher out.”

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? Do we underestimate small probability events? Mandatory seat belt laws Mandatory no-fault divorce Incentives to put savings into a pension plan

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? Are our hunches dumb? Gigerenzer’s fast and frugal heuristics Ecological rationality: how well do our heuristics fit in the world we inhabit. Is there an inner logic to availability, regret and other heuristics?

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? Is there an inner logic to availability, regret and other heuristics? Anchoring and availability ordinarily are efficient Regret pierces through egotism The Hindsight Bias underlines the lesson we are taught.

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? Are some biases self-correcting? There is a 50-50 chance it will rain tomorrow, and a 10 percent chance of a bus strike. What is the probability that it will rain and that there will be a bus strike? But might the conjunction bias be self-correcting if the probabilities are not handed to one? Optimism and risk aversion

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? Are some biases corrected through learning? How to hit a curve ball. Can market processes help? Would inefficient heuristics tend to get excluded in markets?

Do judgment biases justify Paternalism?: 

Do judgment biases justify Paternalism? What about the Paternalist’s judgment biases? Lord Denning and the hindsight bias. The business judgment rule. The availability bias and inefficient pollution regulations.

Paternalism: Akrasia: 

Paternalism: Akrasia The akratic are “not-ruled” Pictures of akrasia Dostoyevsky’s gambler The disciples in the garden: “The spirit is willing but the flesh is weak.” St. Peter

Varieties of Akrasia: 

Varieties of Akrasia Overwhelming passion: Phèdre The Divided Self: To which self are we allied? Reversal of preferences: Mary Beth Whitehead Self-deception: Denial is not a river in Egypt… Discounting the future: criminals

Does Akrasia argue for paternalism?: 

Does Akrasia argue for paternalism? The akratic might wish for laws that address their weakness of will. Can you think of examples?

The Counter-arguments: 

The Counter-arguments Is addiction per se bad? Might it ever make sense ex ante to become an addict?

Gary Becker: Rational and irrational addiction: 

Gary Becker: Rational and irrational addiction Utility 0 Time Gary Becker, Accounting for Tastes (1996) Preferences for commodities over time

Gary Becker: Rational and irrational addiction: 

Gary Becker: Rational and irrational addiction Utility 0 A B Time Gary Becker, Accounting for Tastes (1996) classical music Over time the preference for classical music increases —but this is a benign addiction Subject suffers from “withdrawal” if music taken away from him

Gary Becker: Rational and irrational addiction: 

Gary Becker: Rational and irrational addiction Utility 0 A B C Time classical music coffee Unlike classical music, there comes a time when the subject would like to stop drinking coffee. Though he finds he cannot do so, his ex ante decision to start drinking coffee is still rational

Gary Becker: Rational and irrational addiction: 

Gary Becker: Rational and irrational addiction Utility 0 A D B C Time classical music coffee hard drugs Ex ante, the decision to start taking hard drugs is irrational

The Counter-arguments: 

The Counter-arguments Can the state distinguish between rational and irrational addiction? Just how would you categorize the taste for the following: Tobacco Ice cream Lotteries

The Counter-arguments: 

The Counter-arguments If we might be weak-willed, can we address the problem without the help of legal barriers? Social sanctions Self-binding

The Counter-arguments Self-binding as a response to akrasia: 

The Counter-arguments Self-binding as a response to akrasia Jon Elster, Ulysses and the Sirens (1984)

Examples of self-binding: 

Examples of self-binding Marriage Home purchases Leverage

The Counter-arguments: 

The Counter-arguments Is there such a thing as excessive self-control? Prohibition The addict and the teetotaler

Aristotle’s anaisthēsia: 

Aristotle’s anaisthēsia No booze for you, INSECT! Carrie Nation

Slide46: 

Is there such a thing as excessive will-power? Ainslie in Elster, Getting Hooked (1999) Bergson: “Life demands not only that we live but that we live well.” Chardin, The House of Cards ca. 1735

Impugning Individual Choice: We’ve just seen Paternalism Now Perfectionism: 

Impugning Individual Choice: We’ve just seen Paternalism Now Perfectionism Paternalism: Interfere with personal choices to make subject better off Perfectionism: Interfere with personal choices to promote a moral goal

Impugning Individual Choice: 

Perfectionism Paternalism Impugning Individual Choice The two strategies overlap

Impugning Individual Choice:Varieties of Paternalism: 

Perfectionism Soft Paternalism (good preferences) Impugning Individual Choice: Varieties of Paternalism Hard Paternalism (immoral preferences)

Impugning Individual ChoiceTwo kinds of paternalism: 

Impugning Individual Choice Two kinds of paternalism Soft Paternalism overrules personal choices in order to satisfy subject’s deepest preferences  Judgment biases and akrasia Hard Paternalism overrules personal choices when the subject’s deepest preferences are immoral and “he doesn’t know what’s good for him”

Impugning Individual Choice:Varieties of Paternalism: 

Perfectionism Soft Paternalism (good preferences) Impugning Individual Choice: Varieties of Paternalism Hard Paternalism (immoral preferences)

Now Perfectionism: 

Now Perfectionism Private Perfectionism overrules personal choice to make the subject a better person Social Perfectionism overrules personal choice to protect third parties from moral externalities

Varieties of Perfectionism: 

Social Perfectionism Soft Paternalism Varieties of Perfectionism Private Perfectionism (Hard Paternalism)

Private Perfectionism: 

Private Perfectionism The subject has immoral preferences which the perfectionist would reform The anti-perfectionist as a “neutralist”

Private Perfectionism: 

Private Perfectionism Neutralism can’t rest on mere subjectivism. And just how many subjectivists are there?

Private Perfectionism defies stereotypes: 

Private Perfectionism defies stereotypes Right-wing perfectionism Drug laws Sexual immorality Same sex marriage Left-wing perfectionism Smoking Civil Rights laws Same sex marriage

Social Perfectionism: 

Social Perfectionism Mill’s harm principle: “The only purpose for which power can rightfully be exercised over any member of a civilized community, against his will, is to prevent harm to others.” Mill, On Liberty (1859) But what counts as a harm?

Physical spillovers: 

Physical spillovers Exxon Valdez 1989

Moral spillovers?: 

Moral spillovers? Couture, Les Romains de la decadence, 1847

Social Capital: 

Social Capital Das Kapital: physical capital Human Capital: Information economies Social Capital: Kingdom of Cooperation Republic of Defection (Montegrano)

Social Capital: 

Social Capital Social Capital So what kind of social virtues would one look for? The Bourgeois virtues: honesty, fidelity, prudence, moderation, reciprocity The Romantic virtues: Transcendence, Passion You can have the latter without the former; but does the former exclude the latter?

Social Capital: 

Social Capital Social Capital So what kind of social virtues would one look for? Is this an empirical question? Look at the direction of immigration flows.

Social Capital: 

Social Capital Social Capital So how to preserve social capital? And how is it destroyed?

Devlin’s Disintegration ThesisDevlin, The Enforcement of Morals (1965): 

Devlin’s Disintegration Thesis Devlin, The Enforcement of Morals (1965) The Hart-Devlin debate Is there a connection between a change in (sexual) moral codes and the disintegration of a society

Devlin’s Disintegration ThesisDevlin, The Enforcement of Morals (1965): 

Devlin’s Disintegration Thesis Devlin, The Enforcement of Morals (1965) So a society disintegrates. So what? Of snail-darters and communities of people Communitarian values

Devlin’s Disintegration ThesisDevlin, The Enforcement of Morals (1965): 

Devlin’s Disintegration Thesis Devlin, The Enforcement of Morals (1965) James Fitzjames Stephen: Would we accord a moral sense to our feelings of repugnance? Cloning Late term abortions How do these feelings change. And is that always a bad thing?

Devlin’s Disintegration ThesisDevlin, The Enforcement of Morals (1965): 

Devlin’s Disintegration Thesis Devlin, The Enforcement of Morals (1965) Spillover effects: Divorce and families 1964 Civil Rights Act

Neutralism and Slippery Slopes: 

Neutralism and Slippery Slopes The Battle of the Slippery Slopes. Will a slight change in moral habits lead to the Decline and Fall of our civilization? Or would any effort to arrest a moral decline by legislative means amount to and Iranian Holy Fascism?

Can the state be trusted to legislate morals?: 

Can the state be trusted to legislate morals? No one expects the Spanish Inquisition!

Varieties of State Interference with Preferences: 

Varieties of State Interference with Preferences Criminalizing behavior Civil or Administrative Sanctions Taxing vice and subsidizing virtue Law’s expressive effects

Things we’ve covered: 

Things we’ve covered The ex ante and ex post perspectives The importance of incentive effects of legal rules How collective rationality differs from individual rationality in PD games (“The Tragedy of the Commons”) Solutions to PD games: Legal rules, self-binding, union, reputation and the iterated PD game, internalized norms

Things we’ve covered: 

Things we’ve covered Free Riders and Hold Outs Risk neutrality and risk aversion The Coase Theorem Contractarianism and Transaction Costs Three meanings of least cost risk avoiders Marginalism: Minimizing Costs at MC = MB Rawls and Utilitarianism Agency Costs and Monitoring

Things we’ve covered: 

Things we’ve covered Edgeworth Box Function Pareto-superiority, Pareto-optimality Kaldor-Hicks Efficiency The Market for Lemons Efficiency Equivalence of SL and Negligence Paternalism and Perfectionism

Things we’ve covered: 

Things we’ve covered All in a 20 hour course…

And to quote Jack Nicholson…: 

And to quote Jack Nicholson…

And to quote Jack Nicholson…: 

And to quote Jack Nicholson… That’s as good as it gets!