71 Pages Posted: 7 Apr 2006
The literature on heuristics and biases in decision-making, as well as on emotional influences on judgments, is burgeoning. Commentators reviewing such work have begun to discuss its practical implications for the law. Most recently, they have focused in particular on what the research might suggest for an increased third-party role to help protect individuals from their own biases. That is, the most recent discussion has focused on the findings' implications for the appropriateness and scope of paternalistic policies.
This paternalism discussion, however, has been incomplete in a number of contexts. First, despite a substantial focus on the implications of the first line of scholarship (documenting cognitive biases), commentators have addressed the implications of emotional biases far less. Second, much of the most recent discussion has been in the context of intervention by private parties (such as a company's conduct encouraging employees to participate in 401(k) plans), rather than addressing potential governmental steps, legislative or judicial, to protect individuals from their errors. Finally, although commentators have recently noted the importance of comparing the costs and benefits of paternalistic interventions, there has been little specification of those costs and benefits. In particular, commentators in this area have largely avoided the question of how difficult it might be to correct such biases, and thus how effective any such interventions might in fact be.
In this Article I evaluate and extend this developing discussion of using social science data to justify paternalism, addressing these three gaps in the literature as well as other issues and examples. After a critical review of the existing literature, including discussion of whether paternalistic intervention is justified in the first place, I move to remedy some of these gaps. I document not only cognitive but emotional biases that people are subject to, including a number that have been little discussed in legal academia. I note the importance of such emotional biases to legal decision-making and illustrate potential legal errors to which they may lead. I also mention implications of such errors for paternalistic intervention by government, both by legislatures and by courts. In the distinct contexts of cognitive and emotional biases, one sort of government intervention may be appropriate where another is not. Finally, I take steps toward evaluating the effectiveness of measures to correct cognitive and emotional biases, a step mentioned but not pursued in discussions of social science and paternalism. Specifically, I draw on empirical social science literature to examine whether effective mechanisms exist to correct various cognitive and emotional biases at the individual level, with implications for policy at the larger interpersonal and societal level. Throughout, I identify potential objections to some of the points I raise, summarizing and concluding with further speculation about the appropriateness of paternalistic intervention by the State.
Keywords: paternalism, emotion, social science, psychology, contracts, decision-making
JEL Classification: A12, D7, D8, D9, K00
Suggested Citation: Suggested Citation