Paternalist economic policies: foundations, options, and challenges
- This paper analyzes the inherent dangers of paternalist economic policies associated with the newly established economic sub-disciplines of behavioral economics, economic happiness research and economic psychology. While the authors in general welcome these sub-disciplines for enriching and critically evaluating mainstream economics – especially their criticism of the Homo oeconomicus-heuristic is of great value contributing to a more realistic idea of man –, the political-economic implications as well as inherent risks of paternalist economic policies should be received with concern and thus be subject to a critical review. The paper is structured as follows: In the first step, we recapitulate Kahneman’s, Thaler/Sunstein’s, and Layard’s versions of paternalism pointing at similarities and differences alike. We contrast libertarian or soft paternalism of behavioral economics (Thaler/Sunstein) and economic psychology (Kahneman) with (Layard’s) happiness economics and its hard paternalism. In the second step, we analyze the political and economic implications and consequences of paternalism. We give an overview of the main points of criticism of paternalism from a constitutional economics perspective. The Ordnungs- vs. Prozesspolitik argument is discussed as well as epistemological, political-economic or idea of man arguments. The paper ends with some concluding remarks.
