Authors: Jayson Lusk
Recall that many behavioral economists contend that we do not have sufficient self-control to take care of our future selves. The supposed proof of this irrational behavior is said to be found in survey responses in which we say we wished we weighed less or saved more. But our current self will
always
wish that our previous self had dieted and saved more, because we are now in the position to reap the benefits without paying any of the costs. The paternalist has simply decided that your abstract future self is right and your current-acting self is wrong, and the only possible excuse the paternalist can give for his paternalism is his own preference for your actions.
Paternalists routinely point to the bad outcomes that accrue from unhealthy diets to justify their regulations. Seeing someone with diabetes or heart disease is supposedly proof of poor choices. Such conclusions confuse the undesirability of a bad outcome with a potentially reasonable choice made amid uncertainty. It is not as though anyone actually wants to have a heart attack. But we don’t choose whether we have a heart
attack; we make choices that influence the
likelihood
of having a heart attack.
In real life, we face choices such as whether we want a piece of chocolate cake that will certainly be tasty now but will increase the chances of a heart attack by, say, 0.00001 percent five years from now. It would make no more sense for the paternalist to call the choice of cake wrong than it would be for him to say it is wrong for you to play a lottery in which you have a 99.9 percent chance of winning $10,000 and a 0.01 percent chance of losing $10,000—even if you unluckily lose the money.
By saying that a heart attack is evidence of poor decision making, the paternalist is drawing a false comparison between the choice made by a fictitious, all-knowing being with perfect foresight and a real human faced with trade-offs and uncertain outcomes. By claiming to know how our dietary choices should be made, the elite are assuming the role of the all-knowing being with perfect foresight. As the economist Ludwig von Mises put it in 1949, “No man is qualified to declare what would make another man happier or less discontented. The critic either tells us what he believes he would aim at if he were in the place of his fellow; or, in dictatorial arrogance blithely disposing of this fellow’s will and aspirations, declares what conditions of this other man would better suit himself, the critic.”
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Given the almost obvious elitism, how is it that behavioral economists have been so effective selling books and promoting paternalistic policies? In part, their success can be explained by the use of a rhetorical illusion. Popular writings on behavioral economics place the reader in the role of the elite,
of the person who must decide what to do about all the seemingly irrational behavior. In the book
Nudge
, we are asked to put ourselves in the role of a
choice architect
. Of course, the reality is that very few of us will ever actually be in the position to invoke the paternalistic plans we might scheme. An honest appraisal of paternalism would put the shoe on the other foot. Paternalism doesn’t seem so bad when we envision ourselves as the ones with the power to pass laws overriding others’ decisions with our own preferences. The appeal quickly fades when we realize that it is most likely our own preferences that will be overridden by someone else. I also suspect the more manly sounding paternalism would lose much of its appeal if it went by its more accurate motherly sounding moniker: maternalism.
The food police tell us that we need experts and elites to enact regulations to help people avoid bad choices. But aren’t experts people, too?
The elites, of course, answer no. They aren’t
regular
people. The very concept of being elite implies being more enlightened—above the thinking and mistakes of the regular Joe. They claim to have special knowledge and insight that give them the responsibility and the authority to enact their preferred plans for others’ lives. It is true that many of the elite have PhDs from Ivy League institutions. But the knowledge of the elite tends to be a special kind—an academic knowledge about abstract concepts and theories. This
special knowledge
can be contrasted with what Thomas Sowell calls
mundane
knowledge
, the more practical knowledge of how things work in the real world; the knowledge of “plumbing, carpentry, or baseball.” The elites’ special knowledge is only one kind of knowledge, and one that is particularly impervious to refutation by real-world facts. When a plumber’s mundane knowledge is wrong, the feedback is immediate (and wet!), but a sociologist or psychologist may never receive any consequential feedback on the veracity of his conjectures.
Sowell argued that “the fatal misstep of such intellectuals is assuming that superior ability within a particular realm can be generalized as superior wisdom or morality over all.” Even though special knowledge is often held in higher esteem in our society than mundane knowledge, “in the aggregate, mundane knowledge can vastly outweigh the special knowledge of elites, both in its amount and in its consequences.”
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Elites mistakenly believe they know more than they actually do, and successes within their own specialties of knowledge lead them to overestimate their competence in other areas—such as policy setting. Are we really to believe that a nutritionist who measures vitamin content in carrots has any keen insight into what will happen within and beyond agriculture when the government subsidizes conversion to organics? The problem is that those with expertise in Shakespeare or string theory fail to realize their lack of knowledge in other areas. With regard to food, those other areas are just as important in determining how people will respond to government action.
This arrogance leads elites to overlook their own decision-making problems in areas outside their focus. Chess players,
for example, while able to solve exquisitely complicated reasoning problems on the chess board, utterly fail at solving similar reasoning problems outside of chess. The same is true of world-class poker players and professional soccer stars.
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Expertise is typically limited to a very narrow field of inquiry. This is why we should bristle when we read of experiments about free candy bars being used to justify health care interventions. At least when a chess player errs, his mistake only costs him the game. When the academic elite lobbying for more paternalistic food polices err, we all suffer.
The hard, cold reality is that experts make mistakes, too. One of the central themes in Thaler and Sunstein’s book,
Nudge
, is that we tend to suffer from a
status quo bias
. We tend to pick the option that we know, the status quo, for no reason other than that it is the default. How ironic it is, then, that government itself is perhaps more prone to the status quo bias than are individuals. There is a well-known adage in Washington that it is much easier to pass a new law than to remove an existing subsidy. Today even most environmentalists agree that ethanol subsidies are a bad idea, and yet they continue to exist for no better reason than that it is the status quo.
One of the big problems with experts is overconfidence. After analyzing decades of expert forecasts, psychologist Philip Tetlock concludes that, by and large, experts’ predictions are no more accurate than the guesses of a chimp. As Tetlock reveals, the experts aren’t discouraged by their fallibilities; they tend to be overconfident and in many cases dogmatic.
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So much for relying on the experts and their supposed special wisdom to guide our food choices.
Although karma is a concept often associated with Eastern mysticism, it is actually an idea deeply embedded in the thinking of most Americans. We have a fundamental belief that people should get what’s coming to them. A key factor driving anger at Wall Street in the most recent financial disaster was the bank bailout. The entities that many blame for the cause of the financial meltdown were the very recipients of a government handout. The banks’ actions seemed to justify bankruptcy and CEO firing, but instead we saw bailouts and bonuses. Such actions violated a fundamental sense of fairness among many Americans: it violated karma.
The emergence of behavioral economics and the food police has led to at least one unintended consequence: it has fostered a culture in which there is an implicit abdication of personal responsibility. Behavioral economics, at its best, serves to remind us that we are not perfect. But it has also helped normalize abnormality. By arguing that we lack the ability to choose wisely, some behavioral economists have implicitly promoted the idea that we therefore cannot be judged for making poor choices. We do not punish a toddler the first time he spills milk, because we understand that he lacks the ability to control his actions or to comprehend the consequences of his choices. Likewise, behavioral economics research promotes a climate in which it seems inappropriate to let people suffer the consequences of their poor choices because it suggests that those people are too irrational or unknowledgeable to do better. When the food police use behavioral economics to promote everything from fat taxes to bans on restaurant advertising, the notion that people should not be held accountable for
their actions becomes institutionalized and reduces the incentive for our taking personal responsibility.
If people believe their government will step in and solve problems that arise from decisions to save too little or eat unhealthily, then there is little incentive to alter current bad behavior. It has been argued that one of the many problems that led to the 2008 financial crisis was that banks knew they would be bailed out, even if they made poor decisions and took unwise risks.
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Likewise, no matter how caring they seem (and in some cases are), generous government-funded retirement plans and health care serve to bail out people who chose not to consider the future and, in the process, to reduce our incentives to take care of our future selves. We are smart enough to know not to save for retirement if someone else does it for us.
I am not arguing that the poor and elderly should be ignored. Concerns for equity can legitimately motivate actions to help. Nevertheless, we move into dangerous territory when such actions are justified on the grounds of cognitive failures. Observing that people act foolishly in some circumstances does not excuse said behavior. Food police who seek to rescue us from our own fallibilities will, in the process, compound the problem by diminishing our incentives to rescue ourselves.
Brian Wansink’s book
Mindless Eating
points out the myriad ways our food choices are influenced by small and irrelevant details. But, interestingly, Wansink doesn’t call for government action to limit plate sizes or ban buffet lines. Rather, he recognizes the power of individuals to make use of behavioral economics research to better their own lives. He promises to show “how to remove the cues that cause you to overeat and how to reengineer your kitchen and your
habits … You can eat too much without knowing it, but you can also eat less without knowing it.”
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We don’t need the government to nudge us. We can nudge ourselves. The power to nudge should be left in the hands of those who know when the nudge is needed.
We are often told that there is no alternative to paternalism; that the government and others must make some decision that will influence our choices. To make their point, Thaler and Sunstein ask us to put ourselves in the role of a cafeteria manager. “Consider the problem facing the director of a company cafeteria who discovers that the order in which food is arranged influences the choices people make. To simplify, consider three alternative strategies: (1) she could make choices that she thinks would make the customers best off; (2) she could make choices at random; or (3) she could maliciously choose those items that she thinks would make the customers as obese as possible.”
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What should we do?
The first thing we should do is reject the premise of the question. There is an alternative noticeably absent from the list: arrange the foods in a way to maximize profit.
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Profit seeking often has a negative connotation, but a surefire way for firms to make profits is to give consumers what they want. Detractors of profit seeking falsely envision an evil monopolist at work, but the reality is that firms are in fierce competition for our business—especially restaurants, which routinely go bust when they cannot supply what the customer wants at a price he is willing to pay. Thus, in a sense, the cafeteria manager has very little control over where to arrange the desserts;
if the manager wants to stay in business, she will place the desserts in a location that is most likely to induce consumers to buy them.
Even if the behavioral economists are right and the consumers do not actually know what they want, enterprising cafeteria managers will try out different combinations of food arrangements until they find the one that yields the most money. Their competitors will simultaneously try the same, each using whatever means is at his disposal to convince (or nudge) people that his arrangement is best. This dynamic competition embodied in the marketplace, predicated on voluntary exchanges between willing buyers and sellers, can be said to “give people what they want and are willing to pay for, when they want it and are willing to pay for it.”
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We may change our minds tomorrow about what we want, but an energetic marketplace will seek to anticipate our mood swings and satisfy our changing preferences. And even if our preferences are incoherent in a way that makes traditional economic welfare analysis nonsensical, we can take joy living in a world that attempts to anticipate our changing needs and presents us with a variety of options. Freedom and choice have intrinsic value. As economist Robert Sugden put it, “[B]eing able to choose how to live one’s life is an aspect of individual well being in its own right.”
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Nobel Prize–winning economist Amartya Sen has argued, “Choosing may itself be a valuable part of living, and a life of genuine choice with serious options may be seen to be—for that reason—richer.”
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