“Hard paternalism” interventions include recently proposed “sin” or “vice” taxes aimed at reducing the consumption of junk food, soda, and cigarettes.īehavioral legal perspectives appear to be gaining traction in the current regulatory landscape, evinced by increasing drive to influence or outright constrain individual choice. Other behavioral law and economics scholars advocate “hard paternalism” that renders disfavored choices impractical or illegal, even between willing and informed consumers and providers. Some members advocate “soft paternalism” that “nudges” consumers towards what certain scholars deem to be better choices. In addition to the behavioral economics literature, a “behavioral law and economics” school has emerged which typically believes that these studies provide a basis for government interventions in the market to prevent consumers from harming themselves. This literature consists of a number of studies in economics and psychology that find that consumers appear to make various systematic mistakes evaluating probabilities and discounting future values, and, further, that consumers make various choices that appear inconsistent with each other. Over the last thirty years, behavioral economics has made a significant contribution to increasing our understanding of when individual decision-making deviates from the rationality assumption at the heart of the conventional microeconomic theory. Indeed, the final chapter of Free to Choose was entitled “Turning the Tide,” and discussed Friedman’s view (along with his co-author and wife, Rose) that public opinion was “shifting away from a belief in collectivism and toward a belief in individualism and private markets.” Central to Friedman’s work was the view that the economic costs of substituting the judgment of government bureaucrats and regulators for those of individuals, even when the individuals could be expected to err, would far outstrip any benefits of such an approach. Thirty years later, the power of Friedman’s ideas and the ongoing development of markets around the world might have been expected to lead to the spread of this philosophy. Consistent with Friedman’s central ideas, both the television series and book advocated reliance on the individualized, dispersed power of markets rather than the consolidated power government to protect consumer and workers and fuel innovation and economic growth. Thirty years ago, Milton Friedman launched the PBS television series “Free to Choose” and published a book by the same title. A Symposium on Behavioral Law and Economics
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