The unsolved Hayekian knowledge problem in behavioral economics

There is a limit to the productive exchange of generalizations about public policy. At some point, as William James reminds us, we must go beyond an initial insight or generalization and get into the weeds. This is what we plan to do in our response to Cass Sunstein’s article ‘Hayekian Behavioral Economics’. While an exegesis of just where Hayek himself would draw the limits of permissible government intervention may be interesting, this is not the main point of Sunstein’s article. What he intends is to persuade the reader that behavioral economic policy has reached the stage where it either can or plausibly could overcome the problems of inadequate knowledge that the two of us have claimed it faces (Rizzo & Whitman, 2009a, 2020). While Sunstein mentions us only once in a footnote, we are not aware of other attempts to elaborate this ‘Hayekian knowledge problem’ in detail. We do not point this out because we are desirous of citations, but because it is indicative of a failure to seriously and comprehensively address the relevant issues. In our prior work, we have laid out a series of specific knowledge problems that behavioral policymaking – particularly of the paternalist stripe – must confront. Sunstein’s latest work does little to address them.