Am I a good puppet? A review essay of Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy

Abstract

What would it truly mean to treat individuals “as real people” when designing public policies? This paper addresses this question by critically assessing the arguments put forth by Mario Rizzo and Glen Whitman’s Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy (2019). Rizzo and Whitman argue that the endeavor of Behavioral Economics to reintroduce psychology into economics and to critique the narrow concept of homo economicus used by neoclassical economics was commendable. However, Behavioral Economics failed to deliver the theoretical breakaway from Neoclassical Economics that it promised. They argue that while Behavioral Economics rejects neoclassical rationality descriptively, it still adheres to it normatively, a move the authors find unjustified. The authors critique libertarian paternalism, a normative branch of Behavioral Economics, for its narrow concept of rationality, emphasizing the ambiguity in determining decision failures and true preferences. Moreover, even when it is apparent that agents are behaving erroneously, implementing policy measures to rectify the situation would be an almost impossible task or, in a worst-case scenario, could have unintended negative consequences. Overall, the book excels in scrutinizing the methodological foundations of libertarian paternalism. Building on their critique, in the final chapter of the book, the authors endeavor to outline their vision for the future of behavioral public policy. They advocate for treating humans as intricate beings rather than mere marionettes.