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Should government 'nudge' people to do the right thing?

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Jay Pickthorn / AP / File

(Read caption) In this March 11, 2011 photo, Patrick Henry middle school sixth grader Bailey Bowers, 12, loads her plate up with fresh vegetables in the school's cafeteria in Sioux Falls, S.D. A school cafeteria is a classic example of the economic "nudge" concept, but is it a good illustration?

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I'm in Nassau (it's a hard life) at the Association of Private Enterprise Education meeting, where I've been catching up on some of the latest thinking on free-market and libertarian economic issues. This morning I got some interesting insights on the 'nudge' approach – constructing choices so that we all do the 'right' thing, such as saving more for our retirement or donating our organs to medicine – from a string of specialists including one with the engaging name of Adam C Smith.

Smith points out that the 'nudge' idea implies the existence of a policymaker who is doing the nudging. And as we know from Hayek, not to mention Buchanan, Tullock and Niskanen, policymakers are less than perfect. Indeed, economists figure that they have even more behavioural shortcomings than the rest of us. That's partly because the information they have, and on which they construct our choices for us, is less complete, and more out of date, than the information we have ourselves.

Another contributor, Dan Houser, contrasts a 'nudge' with a 'shove'. The latter, you feel. The former, you don't. The whole idea is that you are being manipulated without your knowledge. That, says Houser, is a very non-transparent policy. And non-transparency invites politicians and officials to promote their own, hidden agendas. It might even invite corruption. It certainly makes it difficult for the public or the media to check and control 'nudge' policies when they are, by design, unseen.

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