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The Economist as Therapist: Methodological Ramifications of 'Light' Paternalism

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Emily Celia Haisley

Yale School of Management

February 28, 2007

We review methodological issues that arise in designing, implementing and evaluating the efficacy of 'light' paternalistic policies. In contrast to traditional 'heavy-handed' approaches to paternalism, light paternalistic policies aim to enhance individual choice without restricting it. Although light paternalism is a 'growth industry' in economics, a number of methodological issues that it raises have not been adequately addressed. The first issue is how a particular pattern of behavior should be judged as a mistake, and, relatedly, how the success of paternalistic policies designed to rectify such mistakes should be evaluated - i.e., the welfare criterion that should be used to judge light paternalistic policies. Second, paternalism, and especially light paternalism, introduces new motives for attempting to understand the psychological processes underlying economic behavior. An enhanced understanding of process can help to explain why people make mistakes in the first place, and, more importantly, provide insights into what types of policies are likely to be effective in correcting the mistakes. Third, there is an acute need for testing different possible policies before implementing them on a large scale, which we argue is best done in the field rather than the lab. Fourth, in addition to methodological issues, there are pragmatic issues concerning who will implement light paternalistic policies, especially when they involve positive expenditures. We discuss how economic interests can be rechanneled to support endeavors consistent with light paternalism.

Number of Pages in PDF File: 50

Keywords: Behavioral economics, asymmetric paternalism, libertarian paternalism, behavioral public policy, welfare criteria

JEL Classification: A30, B40, C93, D60, A00

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Date posted: February 12, 2007  

Suggested Citation

Loewenstein, George and Haisley, Emily Celia, The Economist as Therapist: Methodological Ramifications of 'Light' Paternalism (February 28, 2007). Available at SSRN: http://ssrn.com/abstract=962472 or http://dx.doi.org/10.2139/ssrn.962472

Contact Information

George F. Loewenstein (Contact Author)
Carnegie Mellon University - Department of Social and Decision Sciences ( email )
Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)
Emily Celia Haisley
Yale School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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