Monday, November 2, 2015

Is Richard Thaler Serious?

Richard Thaler, author with Cass Sunstein, of Nudge: Improving Decisions About Health, Wealth, and Happiness, has a column in today's NYT bitching about private sector nudges.

One regarding a paywall at The Times of London and a ticketing nudge by United Airlines.

Of course, what should be noted is that Thaler was able to detect both these nudges and opt completely out of the game. He admits this in the column:

On the positive side, opting out of these offers was easy...
This is not something you can do when you are caught in the government nudge game, or only opt out at great cost. It ain't easy.

Consider the government-runTSA  passenger screening program. They try to nudge you into going through cancer causing screening machines by creating the alternative of being groped. Since government runs the entire program, if you want to fly, you have to choose one bad alternative or the other. If screening was left to each airline, that is the private sector, no doubt alternative screening techniques would emerge, but the government traps you.

Thus, government nudges are much worse than private sector nudges.

Thaler knows this but he reaches an absurd conclusion:
Some argue that phishing — or evil nudging — is more dangerous in government than in the private sector. The argument is that government is a monopoly with coercive power, while we have more choice in the private sector over which newspapers we read and which airlines we fly.

I think this distinction is overstated. In a democracy, if a government creates bad policies, it can be voted out of office. Competition in the private sector, however, can easily work to encourage phishing rather than stifle it.
Is this guy serious? Does he really think nudges are easier removed by the democratic voting process than by consumers "voting" daily? Does he not even realize that in the private sector multiple alternatives can emerge, whereas in the government sector special interests rule over the masses and it's an all for one program?

 -RW

2 comments:

  1. Thaler: "The argument is that government is a monopoly with coercive power..."

    There was a time that only libertarians (and, perhaps more precisely, Rothbardians) talked like this. Clearly, they are reading the book. That they have to address this point is progress.

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  2. ─I think this distinction is overstated. In a democracy, if a government creates bad policies, it can be voted out of office. Competition in the private sector, however, can easily work to encourage phishing rather than stifle it.─

    Isn't the author assuming too much here? How does he know a) that governments that pursue bad policies will indeed be voted out of office and b) that private sector COMPETITION would encourage phishing (or other seemingly nefarious practices) rather than stifle it? When has it happened that bad government policies have ever changed the makeup of a government substantially, and when has it happened that suspicious business practices have been encouraged by competition? Just like Robert, I conclude this guy is making stuff up. The "throw the bums out" argument is the most often-used canard by the statists and Marxians yet the very moment a popular movement appears that pretends to throw the bums out in reaction to bad policies, these same statists and Marxists are the first to berate the movement as "dangerous" and "anti-democratic" ─ see the Tea Party.

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