Another (Big) Problem with “Nudging”

I’ve written recently about Richard Thaler’s Nobel prize and my objections to his (and Cass Sunstein’s) cheerleading for “nudging”. That’s a polite term for the use of business and government power to get people to make the “right” decisions. (“Right” according to Thaler, at least.) It’s the government part that really bothers me. Ilya Somin of The Volokh Conspiracy is of the same mind:

Thaler and many other behavioral economics scholars argue that government should intervene to protect people against their cognitive biases, by various forms of paternalistic policies. In the best-case scenario, government regulators can “nudge” us into correcting our cognitive errors, thereby enhancing our welfare without significantly curtailing freedom.

But can we trust government to be less prone to cognitive error than the private-sector consumers whose mistakes we want to correct? If not, paternalistic policies might just replace one form of cognitive bias with another, perhaps even worse one. Unfortunately, a recent study suggests that politicians are prone to severe cognitive biases too – especially when they consider ideologically charged issues….

Even when presented additional evidence to help them correct their mistakes, Dahlmann and Petersen found that the politicians tended to double down on their errors rather than admit they might have been wrong….

Politicians aren’t just biased in their evaluation of political issues. Many of them are ignorant, as well. For example, famed political journalist Robert Kaiser found that most members of Congress know little about policy and “both know and care more about politics than about substance.”….

But perhaps voters can incentivize politicians to evaluate evidence more carefully. They can screen out candidates who are biased and ill-informed, and elect knowledgeable and objective decision-makers. Sadly, that is unlikely to happen, because the voters themselves also suffer from massive political ignorance, often being unaware of even very basic facts about public policy.

Of course, the Framers of the Constitution understood all of this in 1787. And they wisely acted on it by placing definite limits on the power of the central government. The removal of those limits, especially during and since the New Deal, is a constitutional tragedy.