Paternalistic Economic Policies: Foundations, Implications and Critical Evaluations

ORDO Yearbook of Economic and Social Order 66 (2015)

41 Pages Posted: 12 Jul 2014 Last revised: 7 Jul 2015

See all articles by Rainer Klump

Rainer Klump

University of Frankfurt - Economics and Business Administration Area

Manuel Wörsdörfer

University of Maine

Date Written: January 29, 2015

Abstract

The paper analyzes the inherent risks of paternalistic economic policies associated with the newly established economic sub-disciplines of behavioral economics, happiness economics and economic psychology. While the authors in general welcome these sub-disciplines for enriching and critically evaluating mainstream economics – especially their criticism of the Homo-oeconomicus heuristic is of great value contributing to a more realistic idea of man –, the derived implications and recommended lessons for economic policy should be received with concern and, thus, be subjected to a critical (‘ordnungs-political’) review. The paper also shows that the new economic sub-disciplines are not necessarily accompanied by a paternalistic style of politics; traditional, constitutional-political recommendations can also be derived from the (new) ‘normative economics’: Frey’s et al. approach, for example, not only avoids the inherent risks of a paternalistic state, it also stands in the Kantian and constitutional economics tradition taking the autonomy and (citizen) sovereignty of people, human dignity and human rights seriously. It, thus, seems to be better suited for a modern version of Ordnungspolitik.

Keywords: Libertarian/soft paternalism; hard paternalism; Frey; Kahneman; Layard; Thaler/Sunstein; constitutional political economy; Ordnungspolitik/regulatory policy.

JEL Classification: B25, B5, D02, D03, D87, P16, P48, Z1

Suggested Citation

Klump, Rainer and Wörsdörfer, Manuel, Paternalistic Economic Policies: Foundations, Implications and Critical Evaluations (January 29, 2015). ORDO Yearbook of Economic and Social Order 66 (2015). Available at SSRN: https://ssrn.com/abstract=2465109 or http://dx.doi.org/10.2139/ssrn.2465109

Rainer Klump (Contact Author)

University of Frankfurt - Economics and Business Administration Area ( email )

Schumannstrasse 60
D-60325 Frankfurt am Main
Germany
+49 69 798-22288 (Phone)
+49 69 798-28121 (Fax)

Manuel Wörsdörfer

University of Maine ( email )

Orono, ME 04469
United States

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