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Binder, Martin
Lades, Leonhard K.
Year of Publication: 
Series/Report no.: 
Papers on Economics and Evolution No. 1304
Max Planck Institute of Economics, Jena
Behavioral economics has shown that individuals sometimes make decisions that are not in their best interest. This insight has prompted calls for behaviorally-informed policy interventions popularized under the notion of libertarian paternalism. This type of soft paternalism aims at helping individuals without reducing their freedom of choice. We highlight three problems of libertarian paternalism: the difficulty to detect what is in the best interest of an individual, the focus on freedom of choice at the expense of a focus on autonomy, and the neglect of the dynamic effects of libertarian paternalistic policy interventions. We present a form of soft paternalism called autonomy- enhancing paternalism that seeks to constructively remedy these problems. Autonomyenhancing paternalism suggests using insights from subjective well-being research in order to determine what makes individuals better off. It imposes an additional constraint on the set of permissible interventions highlighting the importance of autonomy in the sense of the capability to make critically reflected, i.e. autonomous, decisions. Finally, it acknowledges that behavioral interventions can change the strength of individual decision making anomalies over time as well as influence individual preference learning. We illustrate the differences between libertarian paternalism and autonomy-enhancing paternalism in a simple formal model in the context of optimal sin nudges.
libertarian paternalism
behavioral economics
subjective well-being
preference learning
welfare economics
Document Type: 
Working Paper

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