Cass Sunstein Doesn’t Understand Rationality

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People are still apparently paying attention to Cass Sunstein and his insidious brand of “nudge” economics, and so it is necessary to continually expose the economic, ethical, and moral fallacies inherent in his philosophy.

By Logan Albright @ Mises

In brief, Sunstein contends that humans want to make the right choice, they want to eat healthier food, quit smoking, and save more money for retirement, but because humans are irrational, they need a little help. It is therefore the role of government, not to force these people to act in their own self-interest – that would be too extreme – but to design the world in such a way that people are gently nudged in the direction of making the choice they would have made anyway if only they were as enlightened and self-disciplined as dear Uncle Cass.

There’s a lot to unpack here, so let’s start with the notion of “irrationality.”

In Epistemological Problems of Economics,  Ludwig von Mises points out that all action is by definition rational, since every action involves an individual taking steps to achieve a goal. Although people may have insufficient or incorrect information that causes their actions to be ineffective or inefficient, they can never be irrational, as they always embody a means towards a particular ends. Mises notes that people who allege irrational action are actually just saying that they disagree with the goals of others.

“The assertion that there is irrational action is always rooted in an evaluation of a scale of values different from our own. Whoever says that irrationality plays a role in human action is merely saying that his fellow men behave in a way that he does not consider correct.”

Alleging irrationality is a way of delegitimizing the choices and priorities of others. It is not that I disagree with your decision to drink full fat milk instead of skim, it is that you are wrong.  You are not thinking clearly. And it is up to government to correct your behavior, for your own good.

Underlying this mindset is, of course, the conceit that the regulator, the “nudger”, is somehow immune from irrationality, and that his priorities will always be correct. The myth of bureaucratic omniscience is a necessary feature in Sunstein’s philosophy, for omniscience is indeed required if we presume to know people’s goals better than they themselves do.

This is the very height of elitism. The only possible way to know people’s goals is through the indirect method of observing their actions. This is what economist call “revealed preferences,” as the field in general has long recognized that we can’t directly know what goes on in people’s minds and, at best, can only guess based on what they do. If someone says he wants to stop smoking, yet continues to get through a pack a day, it is not because he is irrational, it is because he values the benefits he gets from smoking more than the benefits he would get from stopping. It’s as simple as that.

This brings us to the dangers of nudging as public policy. Sunstein’s defenders will argue that it does no harm to put unhealthy foods on more difficult to reach shelves or requiring drivers to opt-out of organ donation instead of opting in. After all, people still have the freedom to choose, right? The problem is that, like anything done by government, these proposals are never as voluntary as they seem.

First of all, anything done by government is done with funds that were obtained through coercion (taxes). Second, government incentives for grocery stores or private employers to follow their nudge recommendations tend to involve implicit or explicit threats of punishment for failure to comply.

Finally, the notion that it is some bureaucrat’s business what I eat or how much I save, and that they should be allowed to manipulate my decision making for their own purposes is insulting and ethically questionable at best.

Cass Sunstein refers to nudge economics as “libertarian paternalism,” proving that he doesn’t understand the word “libertarian” at all. Any kind of paternalism imposed by government on its citizens is dangerous, and should be opposed by anyone who cares about the freedom of individuals to run their own lives.

This article originally appeared at Mises