February 15, 2007

Helping People Help Themselves - New York Times

Helping People Help Themselves - New York Times:

Behavioral economics will continue to be a political football between conservatives and liberals.

The point I didn't find in this column is the premise that government acting in a citizen's 'best interest' now, without a choice by the person, to avoid a more costly outcome in the future for government (e.g., forced health checkups to prevent or find early diseases that are very costly to treat) is OK or not?

This is sensitive territory between personal freedoms and public policy. Not having studied the science (or art) of behavioral economics, I am skeptical by nature that a large, faceless government bureaucracy following rules and regulations, instigated by laws based on behavioral economics is, in all cases, better for a person.

If the prevailing wisdom favors BE, than we'd best be prepared to walk the road to a socialist state because that's the inevitable outcome.

I prefer not to take that walk. On the other hand, I know that people do not always make good choices for their best interests, even when addiction is not an issue, although I think addiction comes in many forms that we don't always recognize.

With this conflicted view of humanity in a market society, does that make me a libertarian?

"Â?...The presumption that individual choices should be free from interference is usually based on the assumption that people do a good job of making choices, or at least that they do a far better job than third parties could do,Â? wrote Richard H. Thaler Â? another presumptive candidate for the Nobel Prize Â? and Cass R. Sunstein, both of the University of Chicago, in a recent essay. Â?As far as we can tell, there is little empirical support for this claim.' The question for policy makers is not whether people can be counted on to consistently make rational decisions that maximize their welfare Â? demonstrably, they cannot. The question is whether corporations or government or can do a better job. And the challenge is to answer the question based on evidence, not unexamined beliefs. At times, market solutions to market problems have clearly been effective, such as reducing acid rain by developing a system to trade pollution credits. But if typical human biases undermine a policy goal, and those same biases present a profit opportunity Â? selling cigarettes, for example Â? itÂ?s silly to pretend that the market will act as a corrective. Â?ThereÂ?s no reason to think that markets always drive people to do whatÂ?s good for them,Â? Mr. Thaler was quoted saying in a University of Chicago Magazine feature on behavioral economics. Â?Markets also drive people to do whatÂ?s good for the people selling.Â?"
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