Advantages And Disadvantages Of Libertarian Paternalism

Many economists, such as Mitchell, G., understand libertarian paternalism to be an oxymoron. Thaler and Sunstein however, do not agree with this. Thaler and Sunstein (2003) defined libertarian paternalism as “the idea that it is both possible and legitimate for private and public institutions to affect behaviour while also respecting freedom of choice, as well as the implementation of that idea”. Libertarian paternalism is paternalism in the way that it tries to guide people, and it is libertarian in the way that no choices are taken away from the people themselves (Gigerenzer, 2015). Nonetheless, libertarian paternalism should not be confused with nudging. The goal of nudging is to “alter people’s behaviour in a predictable way” (Thaler &

The question arises as to what extent you would choose nudging over educating people. Gigerenzer’s view on libertarian paternalism is very different than Thaler’s and Sunstein’s. He thinks it misleadingly suggests that educating people is hopeless, and that therefore institutions nudge individuals in order to take advantage of this. Taking advantage of individuals that are not aware of what is happening, and are taking decisions without knowing all the information available is not ethical and it shouldn’t be in the institution’s best interest, but in the individual’s best interest. Furthermore, it is a danger that nudging may become an excuse for not protecting consumers (Gigerenzer, 2015). If the institutions use nudging only for their interest, the individuals may be making decisions they are not aware of, which might harm their health or wealth. Gigerenzer stated that nudging is used to educate people, so if institutions use nudging for different reasons than educating, nudging means infantilizing the public (Gigerenzer,

There are many different opinions about this concept. Thaler and Sunstein thought that people do not always make rational decisions and suffer from inertia, and therefore need institutions to nudge them to make decisions which will benefit them. Whereas Gigerenzer thought that people in fact can be rational thinkers and have their own individual minds. He suggests nudging is something that has been happening for a while by governments and institutions, and it provides information to the people so they can make their own decisions consciously with a little help from the nudges. However, he thinks institutions would take this a step further and abuse this and take advantage of nudging, and choosing this rather than educating the individuals so they can make their own