Andrew Ferguson explains the ruling phylosphy of the governing class:
Nudge Nudge, Wink Wink
Behavioral economics—the governing theory of Obama’s nanny state.
The premise of behavioral economics is “predictable irrationality.” (Another catchphrase—you have to get used to them.) We all know we do dumb things. But the behavioralists say they’ve discovered that we do dumb things systematically; we act against our own best interest (eating pie, failing to save for the future) with a consistency that smart people can observe, catalogue, anticipate, and exploit. If you as choice architect, for example, know about the “status quo bias”—people are disinclined to alter their immediate circumstances even in the face of a clear long-term benefit—you’ll switch the default option on the 401(k). A list of the irrational quirks, or cognitive biases, that behavioral science claims to have uncovered would be endless. In addition to status quo bias, there’s delusional optimism, loss aversion, the representativeness heuristic, the law of small numbers, disaster myopia, the availability heuristic, the planning fallacy, the mere-measurement effect, the mere-exposure effect, even the “yeah, whatever heuristic,” so named by Sunstein and Thaler, who have a bias for whimsy, often fatal.
This grounding in the real world, confirmed by social science, is supposed to make behavioral economics superior to traditional economics as a guide to regulating human activity. Traditional economics—rational choice economics, or neoclassical economics—gets a rough going over from behavioral economists. By their reading, its gravest error is to accept homo economicus, the notion that man is a rational economic actor who is acting always and everywhere in his own best interest, however conceived. Traditional economists don’t really believe this, at least not with the dogmatic insistence they’re accused of, but pretending that they do allows behavioral economists to position themselves as hard-headed realists trying to correct the airy abstractions of out-of-touch dreamers—a clever reversal of the cliché that usually makes liberals out to be the softies and right-wingers the no-nonsense types. Behavioral economics, wrote a smitten correspondent for the New York Times, “is the study of everyday life as it actually happens, not as some textbook says it should.”
It’s been 15 months now since behavioral economics was enthroned as the administration’s reigning regulatory philosophy. If it does indeed break with a century of conventional wisdom in economics, as its partisans claim, then we should be seeing its effects already.
“It’s all over the place,” Thaler told me. “It’s hard to find a domain where you don’t see aspects of this way of doing things.” He mentioned a recent proposal to require all employers to enroll their employees automatically in retirement accounts, drawing on the opt-out model championed in Nudge. The nudge given to employees, however, comes only after Congress levels an unnudgey mandate on employers. Thaler also pointed to Michelle Obama’s public campaign against obesity, in which she has delivered stern lectures to grocers, food processors, parents, and schools about how fat their customers, kids, and students are. Yet Mrs. Obama’s pestering is just an example of the bully pulpit—government officials and first ladies have never required behavioral science to pound the podium.
But they do, because they know what’s best for you.
And they know, even when clearly they don’t. Take a look at Michelle Obama’s Mirror’s Blog – a perfectly-named blog for this era where we’re jumping through the looking glass while hearing terms such as ““libertarian paternalism,” which makes me grind my teeth. MOMB shows you the people at the First Lady’s child obesity task force:
I’m not quite clear on what the purpose of the meeting was, but Lady M kicked it off and it sounded really important. Next, Petey O showed off his knowledge of behavioral economics (the fact that everyone there knew what behavioral economics is tells you about everything you need to know.) Then Surgeon General Regina B noted that corporations should provide female employees with a clean and private place to breast-feed because, she said, research has shown that children who are breast-fed for the first six months of their lives are less likely to become obese.Who knew! And here’s good news: someone on some Congressman’s staff was totally up to speed on this critical research (that I’m certain is backed up by a first rate epidemiological study) because someone already stuck that requirement in the Obamacare Bill.
Forgive me for being crass about it, but who gives the right to these people (and don’t get me started on the Constitution; let’s just stick with “practice what you preach” for the moment) to rule your life and tell you how to behave/feed your children when the Surgeon General herself is at least sixty pounds overweight and doesn’t even have enough sense to find a tailor to properly hem her trousers?
Maybe it’s because liberals are irony-poor people. Not only do we have an obese Surgeon General attending child obesity prevention planning meetings, we also have a “behavioral economics” expert spout off these pearls of wisdom:
“If there’s a regulatory philosophy in behavioral economics, it’s that we should recognize that people in the economy are human and that there are people out there trying to take advantage of them.”
Yes – the administration. Your elected officials and their political appointees are the people out there trying to take advantage of you, mostly in the form of separating you from your hard-earned money, and telling you should be happy about it. All because they know what’s best for you, and you don’t.
In this sense, behavioral economics is just conventional 1960s liberalism—and conventional 1960s economics, too—that assumes the free market itself is a kind of unending con game, with the smart guys exploiting the saps. As an advocate for the market’s hapless victims, the government has the responsibility to undo the con, a task that will require only the smartest administrators operating according to only the latest scientific research and making the most exquisite moral judgments.
“Behavioral economics” is like the old arguments you would have with your mom when you were a child (and yes, once you become the parent):
It is the same move that Ferguson’s article describes because it presumes to know what you don’t — viz., the set of rational outcomes. As an exercise in paternalism, it reminds me of conversations as a child with my mother — viz., it wasn’t a conversation in which we had come to reason together to conclusions that we each might reach, even to agree to disagree. No, the conversation wasn’t over until I had come to agree with her. That’s deliberative democracy in a nutshell — and Ferguson describes the same move recapitulated as social science, in the form of behavioral economics.
Welcome to the 21st Century, America. The Obama century.