Rethinking Nudge: Libertarian paternalism and classical utilitarianism

Hiroaki Itai, Akira Inoue, and Satoshi Kodama in Special Issue on Nudging of The Tocqueville Review/La revue Tocqueville: “Recently, libertarian paternalism has been intensely debated. It recommends us to employ policies and practices that “nudge” ordinary people to make better choices without forcing them to do so. Nudging policies and practices have penetrated our society, in cases like purchasing life insurance or a residence. They are also used for preventing people from addictive acts that may be harmful to them in the long run, such as having too much sugary or fatty food. In nudging people to act rationally, various kinds of cognitive effects impacting the consumers’ decision-making process should be considered, given the growing influence of consumer advertising. Since libertarian paternalism makes use of such effects in light of the recent development of behavioral economics and cognitive psychology in a principled manner, libertarian paternalism and its justification of nudges attract our attention as an approach providing a normative guidance for our action. 

This paper has two aims: the first is to examine whether libertarian paternalism can give an appropriate theoretical foundation to the idea and practice of nudges. The second is to show that utilitarianism, or, more precisely, the classical version of utilitarianism, treats nudges in a more consistent and plausible manner. To achieve these two aims, first of all, we dwell on how Cass Sunstein—one of the founder of libertarian paternalism—misconceives Mill’s harm principle, and that this may prompt us to see that utilitarianism can reasonably legitimate nudging policies (section one). We then point to two biases that embarrass libertarian paternalism (the scientism bias and the dominant-culture bias), which we believe stem from the fact that libertarian paternalism assumes the informed preference satisfaction view of welfare (section two). We finally argue that classical utilitarianism not only can overcome the two biases, but can also reasonably endorse any system monitoring a choice architect to discharge his or her responsibility (section three)….(More)”