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Desai on Thaler & Sunstein on Libertarian Paternalism

By Lawrence Solum

Anuj C. Desai (University of Wisconsin Law School) has posted Libertarian Paternalism, Externalities, and the ?Spirit of Liberty?: How Thaler and Sunstein are Nudging Us Toward an ?Overlapping Consensus? (Law and Social Inquiry, Vol. 36, No. 1, 2011) on SSRN. Here is the abstract:

In their 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness, Richard Thaler and Cass Sunstein use research from psychology and behavioral economics to argue that people suffer from systematic cognitive biases. They propose that policymakers mitigate these biases by framing people?s choices in ways that help people act in their own self-interest. Thaler and Sunstein call this approach ?libertarian paternalism,? and they market it as ?The Real Third Way.? In this essay, I argue that the book is a brilliant contribution to thinking about policymaking, but that ?choice architecture? is not just a solution to the problem of cognitive biases. Rather, it is a means of approaching any kind of policymaking. I further argue that policymakers must take externalities into account, even when using choice architecture. Finally, I argue that ?libertarian paternalism? can best be seen as motivated by what Sunstein has celebrated in his work on constitutional theory: a humility about the possibility of policymaker error embodied in Learned Hand?s famous aphorism about the ?spirit of liberty?; and an attempt to reduce social conflicts by searching for what John Rawls called an ?overlapping consensus.?

Full post as published by Legal Theory Blog on July 13, 2010 (boomark / email).