Nudge and Counter-Nudge

I’ve been exposed to some of this neuroeconomics (or behavioural economics) and the psychology of foreign policy making recently in one of my courses. It’s an infant field and I do approach it with a certain amount of reservation. The idea is that a variety of actors (corporations, governments, organizations, etc.) should provide “nudges” in decision-making processes in order to stimulate the rational-thinking part of your brain, which goes into auto-pilot sometimes with the plurality and frequency of choice in the modern world.

I disagree with the idea of “libertarian paternalism” which is an oxymoron in itself, since libertarians abhor the idea of any oversight. In this case, the paternalism indicates a sort of reverse psychology and setting up of decision points, so that the subject can make optimal choices factoring in “irrationalities” (ex: buying a candybar instead of yogurt). However, the definition as put forward in Thaler & Sunstein’s Nudge provides no meaningful distinction between coercion and liberty. There is nothing paternalistic whatsoever in enabling the quality of choice for consumer preferences and even then, traditional economics always assumes that individuals will have pareto efficiencies as well as non-satiation (aka: maximize benefits and more is better). The perspective presented is NOT libertarian paternalism, but paternalistic liberalism if you really wanted to dictate the hierarchy of choices beneficial to an individual’s development.

Behavioral economics asserts that people are not always rational despite assumptions that they are and always make optimal choices. It also devotes a great deal of time to bashing traditional models of economics theory. True, I’m no fan of the Keynesian model, but I think Hayek has articulated a better critique of this model than Thaler & Sunstein in his Road to Serfdom. Additionally, I only think the book is stating the obvious by saying that people make irrational decisions. What I don’t agree with is interfering in the existing patterns and processes of decision-making for these individuals who don’t always make optimal choices (myself included!).

I personally believe that it is the individual’s own responsibility to self-educate and interrogate his or her own patterns of behaviour, whether in the marketplace or personal life. The majority of people are ignorant or do put themselves on auto-pilot, which is the key dilemma that Plato presents in the analogy of the cave (yes, I will keep resurrecting this theme). I’m not bluntly implying that the majority of people are stupid and there’s nothing we can do about it, but I am saying that the individual alone is the best judge of his or her own life philosophy and how to achieve its aims.

Here we come to the major problem of the book: It talks about getting people to make better choices, but it dictates its own narrative of what those choices should be. There is no plurality of better choices OR the authors are not cautious or articulate enough in making an objective standard of the best choices. If “libertarian paternalism” is implemented, I want to know: Who is nudging me? In what direction am I being nudged? In whose interest would it be if I was nudged in that direction? Does a normative guilt follow if I do not follow the direction of the nudge? – There are a host of other power relations still inherent in this framework, which would arguably be reduced by true libertarians. Thaler & Sunstein’s book contains merely a pretty re-hashing of John Stuart Mill, who they probably haven’t read either…


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