Behavioral Economics

Libertarian Paternalism?

Human beings have the capacity to reason. But we often don’t do it nearly as well as we could. We all make choices in our lives that add up to socially suboptimal outcomes. Could the government do better making some choices for us? Should it?

Consider the libertarian argument for the claim that a just society is one in which individual rights are rigorously and consistently protected by law. The key premise in this argument is that these rights — i.e., to life, liberty and property — are of paramount importance because each individual person requires these as conditions for the exercise of rationality. But if human beings don’t in fact exercise this capacity as they might (and perhaps as they should) would this ensure that the case for… Continue reading

American Egalitarianism – How Much Equality Do We Want?

John Rawls’ A Theory of Justice introduced a memorable thought experiment related to the nature of a just society. Rawls asked what principles would we chose to regulate the basic structure of society if we had to chose those them from behind a “veil of ignorance” as to our own position in that society. One of those was the “difference principle,” that is, that economic (and social) inequalities, to the extent that they exist, must be relatively advantageous to the most unfortunate members of society vs. a strict egalitarian distribution of wealth and income.

In a recent article (“How Americans view wealth and inequality“), behavioral economist Dan Ariely reviews data from a survey in which Americans were asked how much inequality there should be in… Continue reading