Does behavioral economics justify paternalism?

That is the question I attempt to answer in a paper forthcoming in the European Journal of Agricultural Economics.  The paper is a summary the plenary address I will give in a couple months at the European Association of Agricultural Economics congress.

The issue at play:

The traditional economic approach justifies government regulation when there are market failures. Thus, economists have traditionally confined their advocacy for government regulation to well-defined classes of market failures that exist when there are issues like externalities, public goods, market power or information asymmetries. Although these traditional motivations are often mentioned when advocating food policies, the new and particularly influential weapon that has been added to the arsenal is the argument that there are cognitive failures. The identification of the cognitive failures, and their policy implications, is the subject of behavioural economics.

The article goes on critique the idea that behavioral economic findings necessarily justify paternalistic regulations.  For example:

If we really suffer from time inconsistent preferences, then resources like allow us constrain (or impose costs) on our future-selves. The fact that many people are unwilling to create commitment contracts only serves to emphasise that although we often say we want to behave differently in the future, we are unwilling to actually constrain ourselves. So, there is no real inconsistency in our preferences; only an inconsistency in what we actually do and the stories we tell ourselves about what we wished we were doing in a world with no difficult choices or consequences. But, in cases where time inconsistent preferences actually exist, we do not need paternalists to constrain our future choices; we face ample incentive (and opportunity) to make that determination ourselves.


If we no longer use individual’s own choices to define what is or is not ‘good’, then whose do we use? The paternalist seeks to replace each individual’s judgment of the ‘good’ with their own. But, if we forgo the traditional economic notion of consumer welfare analysis, we lose any logical basis for claiming that one policy is superior to another from the consumers’ standpoint.

The article concludes with some suggestions for future research, such as this one:

Fourth, it might be constructive to use behavioural insights to, rather than devise new policies, learn how to better determine what consumers want, and perhaps even to help consumers better learn and ascertain their own preferences. In Norwood and Lusk (2011), we propose one such value elicitation approach, but there are other ways these concepts can be applied and implemented. Rather than seeking to discover ever new behavioural biases, perhaps we should learn how people make choices when they are warned of their biases and are offered opportunities to state their preferences in environments that minimise them. If using willingness-to-pay values in cost–benefit analysis is only credible if the values arise from well-defined preferences, it makes sense to think about designing approaches to help consumers learn and reveal those preferences.