Cato Unbound has an ongoing discussion on behavioral economics and regulatory policy this month, featuring Glen Whitman, Richard Thaler, and Jonathan Klick (with one more to come by Shane Frederick). The forum is here.
Glen’s basic critique is one that I’ve wondered about as well, which is the paternalistic slippery slope. In particular, if regulators know what is good for people why don’t regulators just compel people to do that? And what if people don’t respond to a “nudge” and just keep doing what the regulators don’t want them to do? Do regulators then just “shove” and compel them to do it? And if regulators are willing to shove when a nudge doesn’t work, why not just shove int eh first place?
Thaler seems to try to just dismiss this critique with a rhetorical response, but I’m not persuaded that he has really addressed the point. Maybe Frederick will explain the logical line-drawing here.