Libertarian paternalism is not an oxymoron

Sunstein, Cass R.; Thaler, Richard H.

Conference Paper

Libertarian paternalism is not an oxymoron

Abstract: The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice. Often people's preferences are ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer. Examples are given from many areas, including savings behavior, labor law, and consumer protection.

Keywords: Macroeconomics; Economics; Economic policy;

Status: Published in How humans behave: implications for economics and economic policy