Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, November 30, 2005

I Have a Ph.D. and so You Should Trust Me to Make Good Decisions on Your Behalf

To be quite honest, after I received my B.A., I thought I knew everything. I thought that I, and lots of people like me, could make the world a better place if only people would let us make more of the decisions.

This was waayyyy back in the previous century, before people talked about bounded rationality. But that's what we had in mind. Essentially, our hubris permitted us to imply, "We're smart, and you're not, so let us run your world for you."

And then when people in power continued to make decisions with which I disagreed, I made a rather precipitous slide into quasi-libertarianism.

This paper ($) summarizes the problems of hubris-laden paternalism. Here is a summary which helps explain my change, way back then:
Soft paternalism requires a government bureaucracy that is skilled in manipulating beliefs. A persuasive government bureaucracy is inherently dangerous because that apparatus can be used in contexts far away from the initial paternalistic domain. Political leaders have a number of goals, only some of which relate to improving individual well-being. Investing in the tools of persuasion enables the government to change perceptions of many things, not only the behavior in question. There is great potential for abuse.
[h/t to Tyler Cowen at Marginal Revolution. Be sure to read the comments, too!]
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