Scream this from the rooftops

Ed Glaeser writes in his new abstract:

Does bounded rationality make paternalism more attractive? This Essay argues that errors will be larger when suppliers have stronger incentives or lower costs of persuasion and when consumers have weaker incentives to learn the truth. These comparative statics suggest that bounded rationality will often increase the costs of government decisionmaking relative to private decisionmaking, because consumers have better incentives to overcome errors than government decisionmakers, consumers have stronger incentives to choose well when they are purchasing than when they are voting and it is more costly to change the beliefs of millions of consumers than a handful of bureaucrats. As such, recognizing the limits of human cognition may strengthen the case for limited government.

Yes, some NBER Working Paper Abstracts should be screamed from the rooftops.  Here is the paper itself.  Glaeser also offers some arguments against "soft paternalism":

1. Soft paternalism is an emotional tax on behavior which yields no government revenues.

2. Soft paternalism can cause bad decisions just as easily as hard paternalism.

3. Public monitoring of soft paternalism is much more difficult than public monitoring of hard paternalism.

4. While hard paternalism will be limited by public opposition, soft paternalism is particularly attractive because it builds public support.

5. Soft paternalism can build dislike or even hatred of subgroups of the population.

6. Soft paternalism leads to hard paternalism.

7. Soft paternalism complements other government persuasion. 

Get this:

Soft paternalism requires a government bureaucracy that is skilled in manipulating beliefs.  A persuasive government bureaucracy is inherently dangerous because that apparatus can be used in contexts far away from the initial paternalistic domain.  Political leaders have a number of goals, only some of which relate to improving individual well-being.  Investing in the tools of persuasion enables the government to change perceptions of many things, not only the behavior in question.  There is great potential for abuse.

Thanks to Daniel Klein for the pointer.


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