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BOOK REVIEW

The Tyranny of Utility: Behavioral Social Science and the Rise of Paternalism

OCTOBER 03, 2012 by DWIGHT R. LEE

It is clear from Saint-Paul’s opening pages that he wants to prevent the “gradual elimination of individual freedom as ‘social science’ makes progress in documenting behavioral biases, measuring happiness, and [favorably] evaluating the effects of coercive policies, while information technology provides ever more efficient tools of control to the government.” But he argues that trying to make the case for freedom on instrumental, or utilitarian, grounds will fail as new theories and evidence, such as those found in behavioral economics and happiness research, undermine the unitary individual assumption on which economic analysis rests. As the view of rational, utility-maximizing behavior is undermined, it is replaced with support for paternalistic policies.

Throughout the book Saint-Paul provides examples of paternalistic policies eroding freedom. He gives little hope, however, that this paternalistic trend can be contained, much less reversed. I kept hoping to find some discussion of Public Choice to inject political realism into how paternalistic policies would actually work. Only in the book’s final semi-optimistic pages is there a discussion of political agency, followed up with reasons why such arguments are “not likely to be very convincing to the paternalists.” Surely true, but maybe they’d be convincing to others.

Saint-Paul recognizes that standard economics provides justification for a liberal social order where social welfare is tied closely to individual welfare, and even when markets are seen to fail, economics suggest they are best remedied by policies that minimize restrictions on freedom. Yet in terms of protecting freedom, he sees the “fundamental philosophical flaw of the economic approach [as being] that it does not value individual freedom per se.” His explanation for this statement is the consequentialist approach of economics, according to which economics only cares “about the allocation of resources at the end, not about the process by which resources were allocated” (emphasis added).

This seems to me as if Saint-Paul is giving up the game as far as protecting freedom is concerned. Again quoting him, “Once the premises of consequentialism are accepted, we can only object to some government intervention on instrumental grounds. . . .This stands in contrast to principled objections, which state that the intervention violates some fundamental principle upon which society is built” (emphasis in original).

Process is important in ethical arguments, but while freedom is a consequence of markets (not necessarily defined in terms of strict laissez faire), it is also an essential ingredient in the market process. Moreover, it is a fundamental principle on which society is built and which paternalistic policies violate, as Saint-Paul’s discussion and examples make clear. Indeed, at the end of his book he sees hope in achieving “[l]imits to government . . . not . . . from the fear that excess government intervention might get out of control and have harmful consequences but from the principle that one cannot interfere with freedom of choice and individual responsibility.”

But why shouldn’t the fight for freedom also include an instrumental concern about, and attack on, the harmful consequences of excessive government? After all, Saint-Paul’s book is loaded with examples of instrumental arguments for paternalistic policies that have apparently been effective. As he states, “There are countless examples of a public debate about a law that would strip people of their individual rights revolving around the existence or lack of academic studies showing that exercising that right has a statistical effect on undesirable outcomes.” Saint-Paul reemphasizes this point after briefly discussing three examples with the comment, “In all these cases the arguments are purely instrumental.”

It was known long before the work of behavioral economists and happiness scholars that real-world markets failed to achieve textbook efficiency. But as Public Choice scholars began pointing out in the 1950s, the relevant question with regard to this failure is: Compared to what? And when the realistic alternatives (primarily some type of political or collective process) are subjected to the same analytical scrutiny that uncovers market failure, those alternatives are found to generate their own failures. Of course that suggests a consequentialist approach in which those failures must be compared against some measure of good or bad. Again, despite his criticism of consequentialism early in his book, Saint-Paul recognizes its potential in the fight against paternalism when he states, “[W]hile paternalism may help solve some behavioral biases on paper, it ignores the actual workings of government. Thus the consequentialist approach should also be applied. . . .”

Even though my comments have focused mainly on the concerns I have with Saint-Paul’s presentation, I recommend this book to anyone who, like myself, appreciates insightful critiques of what seems to be an endless supply of arguments in favor of expanding government to accomplish good, without any consideration of the harm caused by the accumulating restrictions on our freedom.

ASSOCIATED ISSUE

October 2012

ABOUT

DWIGHT R. LEE

Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.

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