Libertarian Paternalism Is Not An Oxymoron
Cass R. Sunstein
Harvard Law School
Richard H. Thaler
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
University of Chicago Law Review, Forthcoming
The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice. Often people's preferences are ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer. Examples are given from many areas, including savings behavior, labor law, and consumer protection.
Number of Pages in PDF File: 45
Keywords: paternalism, savings, behavioral economics, libertarianism
JEL Classification: A00, A1, D23, D81, E61, H00, H1, K00, K32Accepted Paper Series
Date posted: May 9, 2003
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