Paternalist visions

Will Wilkinson and a colleague at The Economist have been sparring over paternalism. Where M.S., Wilkinson's colleague, argues paternalistic policy is an acceptable democratic way of getting towards desirable social goals, Wilkinson reminds us that a liberal democracy tries to leave a lot of decisions about the good to the individual.

Notice that we may convert any paternalistic argument into a benignly "democratic" argument simply by asserting that the intended subject of the proposed law is the character of society as a whole. Well, do we want a society in which the influence of heretics is left wholly unchecked, threatening public spiritual health? Torquemada didn't. The Taliban doesn't! Suppose we concede, just for the sake of argument, that this sort of public-spiritedness isn't paternalistic. Is it better than paternalism? It may be democratic. But is it liberal?

Liberal democracy is liberal in the first instance because it removes the protection of basic rights from the domain of collective deliberation. Do we want to be the kind of society that allows people to worship any way they like? That allows poor people to vote? That lets folks say sexy things, communist things, impertinent things, stupid things, Thomas Friedman things. Yes, yes, and mostly yes. Indeed, we think this stuff is so important, we mostly agree it ought to be illegal to put it up for a vote! My colleague suggests that there's something downright anti-social in making a principled argument against limiting the scope of peaceful individual choice. But I love society. Especially liberal ones.

The liberal society allows the existence of a personal sphere that's outside of the political sphere; I really like bright line rules keeping the two separate.

But I share Wilkinson's concerns about "Thomas Friedman things".

Brian Wansink and David Just, two of the academics on whose work Bloomberg leaned when pushing his ban on big soda cups, warn that their work really can't justify Bloomberg's ban; people forced to consume less than they'd like tend to compensate on other margins. Canada's Dan Gardner disagrees, suggesting changes in social norms coming from the changed cup size can, in the longer term, change consumption:

It wasn’t so long ago, remember, that no one expected to be able to buy 64-ounce soft drinks. Or even conceived of such a thing. If “mega jugs” were to go the way of leaded gasoline, the banning of which was also fought and resented, they would some day be forgotten. Like leaded gasoline.

It's an empirical question whether the ban winds up affecting anything. But there's a categorical difference between bans on leaded gasoline and bans on large soft drinks. Leaded gasoline increases concentrations of environmental lead and imposes harms on others; bigger drinks at the cinema might make a bigger mess if spilled on a non-drinker but otherwise only really affect the drinker.

If the state has no place in the bedrooms of the nation, why does it get a seat beside me in the theatre?

Paternalism - for children, and for the lower orders

Will Wilkinson's excellent post at The Economist highlights the less-than-hidden classist underpinnings of New York's soda ban.

GIGANTIC sugared soft drinks are disgusting. Let's just get that out of the way. Can we also agree that the high-calorie drinks rich people like to consume—red wine, artisanal beer, caramel frappuccinos, mango smoothies with wheatgrass and a protein boost—aren't at all disgusting? At any rate, we yuppie pinot-drinkers know how to look after ourselves. In contrast, the wretched classless hordes, many of them being of dubious heritage, lack the refinement of taste necessary to make autonomy unobjectionable. Those who abuse their liberty, filling the sidewalks of our great cities with repulsive shuffling blimps, can't expect to keep it, can they? 

But should we really be surprised that paternalistic regulation would be so-targeted? When I work backwards from the set of paternalistic regulations to the most plausible underlying motives, I still wind up with the conclusion I'd reached a year ago:

The behaviours of the lower orders disgust me [the regulator]. They give in to base animalistic sensory pleasures. We need to fix them. Tax and regulate them until they stop being noticeably annoying. We'll say it's for their own good, but we'll really stick to the kinds of things that annoy us. So things like making sure everyone in low decile schools takes a course in basic personal finance so they understand how hire-purchase works and avoid making mistakes with loans, we'll not worry about that. But we'll tax fatty foods because obese people are unpleasant to look at and we'll tax the kinds of booze that the lower orders drink because few things are more unpleasant than poor drunk idiots.

It's not implausible that poorer cohorts are more in need of paternalistic regulation than higher income cohorts, if only because of differences in intelligence across cohorts. Do flip back to the linked post and consider the stylized facts there presented:

• The kinds of alcohol that poor people like get taxed far more heavily relative to overall price than do the kinds of alcohol that rich people like. That isn't unreasonable where the external costs of alcohol use are proportionate to the pure alcohol consumed, but when we start going for minimum price regulation and specific taxes on RTDs, it looks an awful lot more targeted.
• Official government agencies ignore the evidence on the J-curve and instead promote an abstinence only line. The only sense I can make of this is the noble lie: dumb people who'd otherwise be tempted to drink too much if they drink at all shouldn't drink; smart people can see through the official line.
• The war on drugs is more heavily enforced against poor people than against rich people.
• "Fat taxes" would disproportionately hit the poor. The tax will be a greater portion of the purchase price of hamburger meat compared to scotch fillet, even if the fat proportions are identical. And, the higher the proportion of ingredient cost in total price (as opposed to say the input of a high quality chef), the greater will be the the proportionate burden of an ingredient tax. Any bets on whether the price of a McDonald's burger goes up by more, percentage-wise, than a Ruth's Chris steak if we put in a fat tax?
• If the point of an "internality" tax like a fat tax is to force the individual to weigh the health costs to himself when purchasing, we'd need to scale those taxes by income if we think that rich people respond less to a small per unit increase in food prices than do poor people but suffer from similar behavioural anomalies; if we think that smart rich people are already weighing up those costs and compensating with increased exercise, then it doesn't matter that the per unit charge has less effect on the that group.
• There's all kinds of talk of mandating that fast food restaurants prominently display nutritional information and calorie counts. But folks tend to overestimate calorie counts at fast food places and underestimate them at the fancier restaurants where rich people eat. Because everybody expects fast food to have lots of calories.
• Finally, high IQ folks may be better able to route around whatever regulations are put in place.

It still looks to me as though paternalistic regulation is generally targeted at annoying behaviours exhibited by poor people, with sufficient route-arounds to keep the regulations from being too annoying for higher income cohorts. Bloomberg's soda restrictions were just a bit more blatant than most. Again, pulling from last year's post:

One of the better critiques of policy prescriptions based on behavioural economics is that it requires the modeller to step out of the system and to assume that he and the regulator who implements his policies are less subject to the problems ascribed to the regulation's subjects. Public choice folks worry that the paternalistic regulators suffer from the same behavioural foibles as everyone else but have worse incentives than do individuals who have to suffer the consequences of their own decisions. But if the implicit model is that all of this behavioural stuff really only applies to those people over there - poor dumb people, then there's good reason to keep the modeller out of the system.

Recall that Berggren found very few articles in behavioural economics advancing policy prescriptions consider the possibility that regulators might also be subject to behavioural anomalies; I think it's because of a general assumption that they do in fact sit above those they're regulating.