Paternalism in the Modern Country

Introduction

To limit human freedom in a liberal democracy seems incongruous. Liberty denotes the freedom of action, which seems incompatible with paternalism, which is the "interference of a state or an individual with another person, against their will, and justified by a claim that the person interfered with will be better off or protected from harm." The key words in this definition, "interference... against their will", illustrate the fact that people simply dislike being told what to do, which leads them to describe their country as a ‘nanny state'. Liberal views which build on this unrest suggest the best-judge principle, the possibility that policymakers lack understanding of individuals, leading to policy errors, and the fact that paternalistic policies diminish faith in individuals' decision making. However, due to bounded rationality, limited cognitive abilities and human biases, it may seem necessary in some situations for the state governing an individual to limit their freedom, or at least to ‘nudge' in order to prevent faulty decision making from causing harm.

For paternalistic policies

It is agreed upon by academics that there is commonly significant cognitive error in rational individuals. We have limited mental capabilities, faulty memories and finite analytical skills. Thaler and Sunstein state that "in some cases people make inferior choices, choices that they would change if they had complete information, unlimited cognitive abilities, and no lack of willpower." We look no further for an example of this than the simple story of Adam and Eve. Eve picking an apple from the tree of knowledge is a great illustration of an inferior choice, as defined by Thaler and Sunstein, especially in regard to her lack of willpower. Despite the knowledge that Eve had about the consequences of eating from the tree, she lacked the willpower to abstain from doing so. Similar situations arise in everyday life, such as a person's choice to smoke cigarettes, or gamble in excess. One could argue that compulsive gamblers have complete information; they are aware that their actions could lead to the loss of a lot of money, and that the probability of winning is (in most circumstances) less than likely. The problem is that the gambler does not have sufficient willpower to refrain from betting; his analytical skills impaired by his desire to win. This quality, inherent in individuals, indicates the necessity for paternalistic policy making, as the state may be able to enforce policies upon people with "bounded willpower", and reduce the effect of inferior choices.

Peoples' ability to make rational, well-informed and cognitive decisions are also often due to some intrinsic "biases" of human beings. Among these is the "status quo bias". This states that "people shoulder larger risks to preserve the status quo than they would to obtain the item or achieve the goal in the first place." Often there is no beneficial reason to stick with the status quo; however individuals continue to rate this option higher than making what could be a more positive change. This bias is well recognized, commonly requiring state intervention in order to compensate for the bias.

A second bias which is commonly encountered in decision making is the "self-serving bias." This states that individuals tend to overstate their own abilities when assessing factors related to making a decision. Human beings are inherently biased towards their own judgement, which limits their ability to make quality decisions. If this situation arises, it may be beneficial for the state to intervene, to ensure that the outcome is not adversely affected by a biased judgement from the individual.

Against paternalistic policies

There are a number of arguments for why decision making should be left to individuals, rather than the state. Firstly, the best-judge principle states that it is those individuals who are most closely related to an activity that will be best able to undertake it. Those who have the most at stake in a situation is the individual who is most involved and has the most information, therefore they will be most likely to make the best decisions about the situation. For policymakers to justify paternalistic policies, they must be able to make a better decision than the people directly involved. For this reason, paternalism requires the state to have access to more information about the situation and the factors involved than individuals, which is often not the case. Because of the nature of context, it is difficult, if not impossible, for officials to produce policies encompassing every possible situation, therefore it could be beneficial for the judgement to be left in the hands of the people.

In a similar sense, neoclassical economists believe that they know more about an individual's behaviour than the person themselves, which leads to the perceived ability by these decision makers to predict people's behaviour based on their assumed preferences and rationality. Research shows that individual preferences differ depending on the context of the situation, in fact, "contextual influences render the very meaning of the term ‘preferences' unclear." This means that it is impossible for policymakers to implement paternalistic policy according to preferences.

The argument has been made that individuals display poor judgement and make inferior decisions (that are not caused by lack of information), and it is somewhat naïve to think that policymakers will not do the same. There is extensive research on this, with a common view that policymakers "could easily involve the same cognitive biases and sources of error identified in regular people." Ironically, it is possible that the self-serving bias applies not just to ordinary individuals, but to policymakers as well. This would create a bias toward their own (possibly flawed) judgement, limiting their ability to make quality decisions. Again, the context of the situation is likely to have a big impact on the best choice available, therefore it might be beneficial to leave the decision to the person who is most closely related to the situation.

Another argument against state intervention is that policymakers should allow individuals to make decisions on their own in order to enhance their "mental education… strengthen their mental faculties, and exercise their judgement." When a person makes a decision, they go through a series of analytical steps in order to assess the choices and make the right decision. Leaving this process to the individual will ensure regular decision making practice is undertaken, which could lead to stronger mental capabilities, and may result in better decisions being made in the future. In cases where the state intervenes and makes a decision for an individual, that individual is slightly degraded or belittled by the state, as they feel as if there is no faith in their abilities to make correct decisions. This could again be avoided if the decision was left in the hands of the people.

A final argument against paternalism is that many economists neglect theories of ‘hyperopia' (far-sightedness) in favour of ‘myopia' (short-sightedness) in analysing consumer decisions. Bodies of research often focus on consumers' lack of willpower and self-control, with the main idea being that "a future feeling is always less influential than a present one."