Paternalism, behavioural economics, irrationality and state failure
| Author | Mark Pennington |
| Published date | 01 October 2019 |
| Date | 01 October 2019 |
| DOI | http://doi.org/10.1177/1474885116647853 |
| Subject Matter | Review Articles |
E J P T
European Journal of Political Theory
2019, Vol. 18(4) 565–577
! The Author(s) 2016
Paternalism, behavioural
Article reuse guidelines:
sagepub.com/journals-permissions
economics, irrationality
DOI: 10.1177/1474885116647853
journals.sagepub.com/home/ept
and state failure
Mark Pennington
King’s College, University of London, London, UK
Julian Le Grand and Bill New, Government Paternalism: Nanny State or Helpful Friend?
Princeton University Press: Princeton, 2015, 232 pp. £24.00
Introduction
Liberal political economy has long been distinguished by scepticism towards
paternalistic government action. Although it has always supported restricting pri-
vate liberties when these directly harm other agents, liberals of all stripes have
opposed legislation which purports to ‘save people from themselves’. On this
view, coercive interference in the private realm impedes personal autonomy by
substituting individuals’ own judgement of what is good for them with the judge-
ment of public officials. Inspired by developments in behavioural economics, ‘lib-
ertarian paternalism’ suggests that given evidence that people are predictably
irrational governments can enable people to achieve their own ends but without
limiting freedom of choice.
Government Paternalism: Nanny State or Helpful Friend? by Julian Le Grand
and Bill New falls firmly within the libertarian paternalist canon. Le Grand and
New oppose governmental measures that limit personal choice. Equally, however,
they maintain that there is significant scope for governments to improve the chance
that people might successfully pursue their own ends.
I begin this essay by sketching the distinctions Le Grand and New draw between
cases when paternalist regulatory measures are and are not justifiable. I proceed to
critique the framework underlying the libertarian paternalist case and its normative
conclusions. More specifically, I argue that the behavioural economics literature
has failed to take on board important insights from the Coasean and Hayekian
traditions, and that proper attention to these insights may point towards very
different policy conclusions.
Corresponding author:
Mark Pennington, Department of Political Economy, King’s College, University of London, London WC1E
7HU, UK.
Email: mark.pennington@kcl.ac.uk
566
European Journal of Political Theory 18(4)
Le Grand and new on ‘good’ and ‘bad’ paternalism
In their opening chapters, Le Grand and New define the kinds of public policies
that constitute paternalism before considering which of these is justifiable on liberal
grounds. They define government intervention as paternalistic if it is intended
either to address a failure of judgement by an individual or to further the individ-
ual’s own good (23). They do not, however, consider interventions designed to
secure public goods – such as defence and various non-excludable consumption
goods – as falling under the category of paternalism. These interventions
are designed to overcome coordination problems arising from misaligned incen-
tives that might block people from securing the goods in question via a
non-governmental mechanism.1 Building on this definition Le Grand and New
proceed to distinguish between various paternalistic actions. Of these, they suggest
only ‘means-related’ or ‘non-perfectionist’ forms of government paternalism are
justifiable.
‘Means-related’ paternalism occurs when a regulator directs their attention at
the decisions people take to achieve certain ends. ‘Ends-related’ paternalism by
contrast is similar to a perfectionist stance, which holds that the government is
justified in taking a judgemental position on the activities people pursue and over
the character traits that should be encouraged (31). For perfectionists, these judge-
ments should be based on what is deemed good for a person, independent of any
views the individuals concerned may have about such goodness. As Le Grand and
New see it, paternalism of this species is not viable because citizens are unlikely to
look kindly on policies that make no reference to their own conception of their
ends. Even if the paternalist’s ends are in some objective sense ‘better’, they will
only improve the individuals’ life experience if the persons concerned actually
endorse them.
With these distinctions in place Le Grand and New analyse how governments
intervene in the lives of their citizens and the extent to which these measures reflect
paternalistic motives. Their principal targets here are non-paternalistic justifica-
tions for existing policy interventions. Typically, such arguments are based on
social welfare considerations which suggest that preference satisfaction may require
governments to intervene where there are potential externality problems, public
goods dynamics or information asymmetries that may lead to Pareto sub-optimal
outcomes in markets. Alternatively, non-paternalistic justifications for government
intervention are often made on social justice grounds. From health care through to
education and subsidies for the arts, many defenders of public provision or regu-
lation suggest that direct intervention is required to ensure the least advantaged
secure adequate access to the goods concerned (chapter 4).
Le Grand and New endorse market failure and equity based arguments for state
action, but they maintain that the kinds of interventions governments frequently
pursue do not map well onto these issues. Market failures might be better
addressed by providing consumers with more information or taxing externalities
yet governments often regulate directly through restrictions, which limit individual
choice, and this suggests that paternalistic motives may be at play (60–72). Equally,
Pennington
567
if social justice was the primary consideration, this would point towards the state
redistributing income to the least well off. In a context where the welfare net is
sufficiently generous people would be able to secure access to goods such as higher
education and the arts if they valued them. Although one could argue that large-
scale collective action problems may impede optimal provision via a market model,
Le Grand and New are sufficiently aware of public choice theory to know that
large-scale collective action problems also plague public provision. In his other
writings, Le Grand in particular has been an advocate of market-based reforms
to public services on the grounds that they offer the prospect of greater individual
choice and greater efficiency of supply.
For Le Grand and New, that governments often favour specifying how people
are to receive redistributive benefits through direct provision or regulation, even
when there are more choice-centred models available, implies a preference for
paternalistic provision (72–75). Le Grand and New do not, however, address
whether this alleged paternalism is supported by the population subject to it.
One might see such measures as a form of ‘popular paternalism’. Alternatively,
support for intervention might be explained by power imbalances within demo-
cratic structures or by voters being subject to the reasoning failures that Le Grand
and New subsequently analyse using the tools of behavioural economics – an issue
I will return to in the final section of this essay.
Insofar as paternalism does in fact better explain the character of many policy
interventions then the central question for Le Grand and New is whether these
measures are compatible with the means-related paternalism they wish to defend
and if not, what kind of measures would be appropriate to such motivations. It is in
this context that they invoke the findings of behavioural economics. These suggest
that people are subject to multiple cognitive and motivational biases which lead
them to make predictable mistakes. Le Grand and New present a comprehensive
account of the theoretical and empirical foundations of behavioural economics that
should be required reading for any political theorist interested in the issues raised
by the ‘behavioural revolution’ and the challenges it offers to standard rational
choice models. In presenting this account they focus on four specific categories of
behavioural failure identified in the literature (chapter 5).
A significant body of work in behavioural economics suggests that people lack
the skills to...
To continue reading
Request your trial