Banishing the inner Econ and justifying paternalistic nudges

Abstract

Paternalistic nudging and framing aim to correct flaws in deliberation by relying on the same cognitive mechanisms that create those flaws. Regarding some choices as flawed and in need of correction requires some standard of correctness. In their well-known book, Nudge, Thaler and Sunstein take the individual's own “purified” preferences to be that standard, which is inconsistent with the finding of behavioral economics that individuals do not have a stable preference ranking of alternatives, but instead construct their preferences when faced with a choice. This essay defends an alternative, readily usable standard to judge whether individuals are choosing badly and whether nudges can help them to choose better.