The LA Times has an interesting article on whether the sorts of decision-making biases identified by behavioural economists should be used to promote public policy objectives.
The idea is based on the fact that we are more likely to choose certain options depending on how they’re presented. In fact, supermarkets take advantage of this in how they lay out their products to maximise the chances of us buying the premium brands.
The LA Times piece argues that this could be used for government objectives, such as increasing the number of people who take out pensions, while still maintaining the freedom to choose and without using explicit incentives.
The libertarian aspect of the approach lies in the straightforward insistence that, in general, people should be free to do what they like. They should be permitted to opt out of arrangements they dislike, and even make a mess of their lives if they want to. The paternalistic aspect acknowledges that it is legitimate for choice architects to try to influence people’s behavior in order to make their lives longer, healthier and better.
Private and public institutions have many opportunities to provide free choice while also taking real steps to improve people’s lives.
* If we want to increase savings by workers, we could ask employers to adopt this simple strategy: Instead of asking workers to elect to participate in a 401(k) plan, assume they want to participate and enroll them automatically unless they specifically choose otherwise.
The article gives several more examples and defends its use of the term ‘libertarian paternalism’ for the idea.
I’m left wondering whether governments shouldn’t be adopting exactly what the commercial sector have been doing for years, or whether we’re naive to think political choice engineering isn’t being used already.
Link to LA Times article ‘Designing better choices’.