Response to Rabin

In Adam Oliver (ed.), Behavioural Public Policy. Cambridge University Press (2013)
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Abstract
This chapter analyses the behavioural economist Matthew Rabin's work on biases in decision-making. Rabin argues that these biases cause self-harm and that we should tax individuals to ensure that they do not give in to these biases. The chapter's core question is whether there is a soft-paternalistic justification for these taxes. The answer is nuanced. It argues that Rabin’s description of these biases as “irrational” is not always appropriate—sometimes, for example, they are merely a form of preference change. When they are due to the latter, the behaviour is fully voluntary, and there exists no soft-paternalistic justification for coercive intervention. It also argues that even when these biases do lead to substantially non-voluntary choices, we should prefer policies that improve self-knowledge and self-control to taxes. However, the paper notes that Rabin’s analysis reveals circumstances under which these autonomy-enhancing strategies will not be effective. In such cases, and only in such cases, Rabin’s taxes have a soft paternalistic justification.
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2012-10-18

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