Paternalism and self-responsibility

Who should make decisions for us and tell us what to do? Most human beings are irrational and regularly make very stupid choices, so it's not safe to let them make their own decisions. Should we instead rely on elected representatives, assuming that they are the smartest people around, always do the right thing as would be expected from good public servants and never make mistakes? Or should we all be left free to make our own choices, even if it later turns out that we made completely the wrong decision?

The rise of behavioural economics has by now killed off the notion of homo economicus, rational man, if indeed he ever existed. 

Modern legal scholars frequently and increasingly base their analyses not on neoclassical economics' assumption of rationality, but on the assumption that individuals are subject to a number of systematic behavioral biases. This assumption is itself grounded largely in a substantial experimental literature documenting bounded rationality, errors in judgment, and non-standard preferences.

Joshua D Wright, 'Behavioral Law and Economics, Paternalism, and Consumer Contracts:
An Empirical Perspective' (2007) 2 NYU JL & LIBERTY 470, 471.
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Proponents of free markets do not suppose that markets work because men always make rational choices; on the contrary markets work better than individual diktat precisely because individuals are irrational and prone to error.

Perhaps the best illustration of the current misconceptions of the individualism of Adam Smith and his group is the common belief that they have invented the bogey of the "economic man" and that their conclusions are vitiated by their assumption of a strictly rational behavior or generally by a false rationalistic psychology. They were, of course, very far from assuming anything of the kind. It would be nearer the truth to say that in their view man was by nature lazy and indolent, improvident and wasteful, and that it was only by the force of circumstances that he could be made to behave economically or carefully to adjust his means to his ends.

Hayek, Individualism True and False.
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​Thus the acknowledgment of irrational man is only the starting point. The more important question is whether we improve upon outcomes by resorting to the spontaneous order of free markets, or whether we improve upon outcomes by finding the few rational people left among us, and giving them power to make all decisions on our behalf.

It is of course wrong to suppose that law-makers are never subject to the behavioural biases or errors in judgment that plague all human beings, or that calling them 'government' automatically means that they can always be trusted to make rational decisions. The harm that can be caused by market rigidities is nothing compared to the harm that can be caused by one mad and cruel dictator who imagines himself to be a divine ruler who knows what's best for his people and is determined to force them to his will because 'it's for their own good'.

​Smith's chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst. It would scarcely be too much to claim that the main merit of the individualism which he and his contemporaries advocated is that it is a system under which bad men can do least harm.

Hayek, Individualism True and False.

Think about that when you see people all around you making stupid choices, eating too much sugar and fat, smoking, and engaging in other destructive behaviour. It is really tempting to say that the government should Do Something to help those poor people and save them from themselves. More laws should be passed. More taxes should be imposed. People should be forced to make smart choices whether they want to or not. It’s for their own good and also to Save Our NHS.
 
The only problem with this approach is that when infallible government officials are given power to make more and more decisions on behalf of the ignorant populace, human beings do not lose their propensity to make stupid choices. In fact, they become ever more stupid over time as they lose the ability to think for themselves. Lacking the experience of taking responsibility to think through their own decisions and learn from their own mistakes, they become even more helpless than they were before the government tried to help them.

Paternalistic regulations may lessen the incentive to engage in learning and the development of rational behavior or exacerbate irrational behavior by introducing moral hazard.

​Wright, 'Behavioral Law and Economics, Paternalism, and Consumer Contracts'.

Self-responsibility is part of being human. Taking that away through regulation-creep is costly.

The more people believe that the state or some other avuncular party will protect them and guide their choices, the less reason they have to invest in good self-management skills. As a result, paternalism can ironically lead to more of the behaviors it was supposed to correct. This, too, can generate a slippery slope: the worse self-management skills become, the more areas of life seem to invite corrective intervention.

Glen Whitman, Slippery Slopes and the New Paternalism: Why Context Matters.