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Libertarian Paternalism is Not an Oxymoron

45 Pages Posted: 9 May 2003  

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Richard H. Thaler

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Abstract

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.

Keywords: paternalism, savings, behavioral economics, libertarianism

JEL Classification: A00, A1, D23, D81, E61, H00, H1, K00, K32

Suggested Citation

Sunstein, Cass R. and Thaler, Richard H., Libertarian Paternalism is Not an Oxymoron. University of Chicago Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=405940 or http://dx.doi.org/10.2139/ssrn.405940

Cass Sunstein (Contact Author)

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Richard Thaler

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5208 (Phone)
773-702-0458 (Fax)

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