Can behavioral economics improve public policy? Should it? Making the case for both in their 2008 best-selling book, Nudge, Richard Thaler and Cass Sunstein popularized the idea that small tweaks to policies can make those policies more alert to innate human habits and behavior. Such tweaks can thus “nudge” individuals to make choices that are more beneficial to themselves, and to society—stopping smoking during pregnancy, say, or saving more for retirement, or purchasing appliances that are more energy efficient. When President Barack Obama appointed Sunstein as the head of the Office of Information and Regulatory Affairs in 2008 to tinker with existing regulatory policies, it was seen as a sign that Obama would work to nudge the government toward more nudging. And indeed, the White House is now forming a team to explore how behavioral economics may contribute to “evidence-based policy-making” in the future.
Nudging has not found such a warm welcome in all quarters, though. Richard Williams, director of policy research at George Mason University’s Mercatus Center, recently argued that the Obama administration's growing interest in using behavioral economics signifies a renewed and creeping enthusiasm for massive government oversight and coercion of its citizens. Like many libertarians before him, he traces this critique back to an overall anxiety that a "nanny state" will interfere with our lives and take away our natural freedom.
Some of this, to be sure, typifies the kind of ideological advocacy that prevails in so many think tanks today. But we should take people at their word when they make arguments, and the fact that Williams’ anxiety centers on behavioral economics is, if not philosophically sophisticated, certainly interesting. At the least, it reveals something interesting about the confused nature of many contemporary political invocations of the ideal of freedom.
Libertarian anxieties about the “nanny state” tend to focus on governmental incursions into freedom, usually identified with new legislation: Don’t tell me I can’t do what I want!, the thinking goes. Williams updates this concern to address the more subtle form that policy “tweaks” in light of behavioral economics might take: And don’t make me want what I don’t want!
This new fear is not just that government will limit the exercise of our agency but that it might also shape it in some way. Thus the complaint that a government that uses behavioral economics to tailor its policies will "treat you like a child." What this assumes is that you are naturally an adult, someone who is in complete control of yourself, including your desires—absent government “nudging,” your selection when buying a car, to use Williams’ example, will be wholly innocent of influence from forces outside your own bare (and perhaps given) preferences. On this account, behavioral economics is not only a form of tyranny; it is also a form of creepy mind control.
But this anxiety rests upon a flawed and misleading picture of the human person, especially with regard to how desires are shaped. The fact is, our agency is always being shaped by external factors. We shouldn’t have needed behavioral economics to show us that we are not as rational and totally in control of our choices as we’d like. The homo economicus ideal of the rational utility-maximizing individual, impervious to outside influence, whose solitary choices and subjective preferences essentially construct his or her self, would have been laughed out of court by Plato, or Aristotle, or the Stoics, or Augustine, or Aquinas, or even Hume or Kant, had anyone been so clueless as to propose it to them. Modern thinkers as diverse as Nietzsche, Freud, and Bonhoeffer have also exposed the inadequacy of this picture of freedom. Even today, it doesn’t take a scientist to prove that such an account cannot make sense of the reality of our own lives. Not one of us grows to adulthood without being shaped by forces beyond ourselves, including our parents, our peers, our schoolteachers, and our cultural context.
And therein lies the rub: we are not simply "self-made" men and women, and our consciously held preferences, beliefs, and intentions never tell the whole story. Rather, we are powerfully shaped by our relationships and cultural habits, long before we come to self-aware possession of our ability to desire, deliberate, and act. The spectrum of criteria we use for making decisions is never simply up to us, but is always already shaped by forces beyond our own individual agency.
Behavioral economics didn’t make this discovery; it merely points out that it is occasionally possible to predict particular ways in which this is true, and that various non-rational factors shape our economic decisions. It identifies some of the surprisingly patterned ways our brains interact with reality: we consistently overvalue some things, we consistently undervalue others, and we are more likely to buy the box of cereal displayed at eye level, no matter what our stated preferences.
One of the key insights of behavioral economics, then, is the fact that when we face choices, the way we decide what to do is at least partially shaped by how those choices are presented to us. Furthermore, it makes it unavoidably clear that there is no way to avoid some shaping of our decision process by the presentation of those choices, for the choices inevitably, inescapably are presented to us in some structure.
In other words, it shows us that our "choice architecture," the structure of options through which we make our decisions, is a quite important part of our agency. And this choice architecture is something that humans decide on, deliberately or not. It is, that is to say, contingent, and determined by human decisions. For there is always some box of cereal at eye level, whether that's because the government decided to promote something, or, more realistically, because Kellogg's pays for the prime shelf space.
So if, on the one hand, behavioral economics teaches us that we are less free than we might like to think—because our agency is inescapably influenced by forces outside ourselves—it also teaches us that we are more free than we currently acknowledge, because we can change those environmental forces.
The issue, then, is not between freedom and tyranny. The issue is whether we will choose to consciously and deliberately shape those forces, or rather let them be determined by purely economic factors, as is the current status quo, such as in the case of the eye-level Kellogg’s cereal. (And if you don’t think that companies and ad agencies are using behavioral economics right now to fine-tune their appeals to you, we have some prime swampland in Florida to sell you.) That is, the choice is not between a paternalistic “bureaucrat in Washington DC” and "you," or between being “nudged” or manipulated by someone else or having your own innocent agency; the choice is between having the nudger be responsive to political leaders whom you put in power and the nudger be, say, some advertising executive over whose decisions you never have any say.
Behavioral economics is thus not against freedom. Rather, as a tool it may make us more free, by making us more conscious about the nature of our freedom, and prompting us to recognize a certain responsibility for determining the architecture that influences our choices.
In so offering itself, behavioral economics presents an unlikely ally to those in the humanities who want not only to question the model of the rational, choosing self that has dominated economics for so long but also to question the naturalization of worldviews that have relied upon this unrealistic account of freedom. That is to say, this ideal has functioned as an invisible “nudge” of its own by, among other things, legitimating the political worldview inhabited by many libertarian concerns.
Consider Williams again. His description of the political sphere as one in which "traditionally consumers empower governments to protect them,” for example, expresses a historically located and contestable consumerist account of politics, one less about the collective pursuit of substantive common goods than about preserving maximally productive markets with minimal externalities. (To be clear, there is nothing "traditional"’ about this particular account of government; it would be profoundly alien—if not antithetical to the beliefs of—founders such as John Adams, Thomas Jefferson, and James Madison.) More generally, this picture of politics is often rooted in the view that libertarian economics is an "obvious” reality that the world presents to us, that freedom of consumer choice (the sheer presence of it—never mind the choice between what, or under what circumstances) is as substantial as freedom really ever needs to be, and that outcomes of procedurally free markets are at least “natural,” if not socially desirable.
Now, this whole line of thought is dubious. If it were true, libertarianism would be attractive across societies as their natural default position. Yet it has rarely emerged except when it has been the beneficiary of enormous financial subvention by wealthy proponents. As a worldview, libertarianism is the product of tremendous amounts of public shaping, over decades, meshing with a deep if hidden history of unacknowledged privilege and resentment at those who are "on the dole" at our (really quite minimal) expense.
This sort of talk, that is to say, reveals a political imagination that has been "nudged" into its particular formation by history and culture, not one that has developed in some sort of isolated, ex nihilo way. Although we should take this perspective seriously, we should not do so by granting it the privilege of being the common sense view of reality.
Williams is right to point out that government use of behavioral economics is a topic worthy of public reflection. We certainly ought to have input on the ends toward which our decisions are being shaped. But he's wrong that this development poses a new and nefarious threat to freedom. If anything, as we’ve said, it allows more freedom than does government regulation, since under a world that takes account of behavioral economics, the sugar cereal is not illegal, but it just may be more expensive (because, perhaps, the future health care costs for those who choose to eat it are somewhat factored in), and it may be placed on the highest shelf. Moreover, the public use of behavioral economics allows more reflective control over the directions we are being nudged than does pretending that we are not being nudged constantly, from all angles, and for profit or other motives.
If reflecting on this state of affairs brings up uncomfortable questions about whether there is such a thing as unconditioned consumer agency at all, and about how markets work in the first place (are “slotting fees” a good idea? do they make cereal markets less “free”?), so much the better.
Charles Mathewes is the Carolyn M. Barbour Professor of Religious Studies at the University of Virginia and a faculty fellow at the Institute for Advanced Studies in Culture. Christina McRorie is a doctoral candidate in religious studies and a doctoral fellow at the Institute for Advanced Studies in Culture.