Libertarian Paternalism: Making Rational Fools

Abstract

This paper examines criticisms of libertarian paternalism, focusing in particular on so-called knowledge problems: the set of problems associated with the question of whether a choice architect would, or even could, have sufficient information to implement a successful libertarian paternalist policy. The paper builds on arguments presented in Mario Rizzo and Glen Whitman's book Escaping Paternalism: Rationality, Behavioral Economics and Public Policy (2020). Although the paper supports Rizzo and Whitman's arguments about knowledge problems, it moves in a different, more social, direction when it comes to the implications of these criticisms for microeconomic-based governmental policy more generally.

Keywords: Behavioral Paternalism, Libertarian Paternalism, Behavioral Welfare Economics

JEL Classification: B21, B41, D03, D60