Sunstein’s Libertarian Paternalism

By Ken Niemann

Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery?

-Patrick Henry, March 23, 1775.

Social architect Cass Sunstein is a former Obama White House regulatory czar (having held the position of Administrator of the Office of Information and Regulatory Affairs) who has partnered with behavioral economist Richard Thaler to spearhead an approach to ethics known as Libertarian Paternalism. Generally, they defend the idea that the libertarian viewpoint which champions autonomy (self-rule) is compatible with paternalism. They hold that the term is not an oxymoron but significantly resolves the classic dilemma between autonomy and social welfare.

Economist Glen Whitman well summarizes Thaler and Sunstein’s programme:

“New paternalism has gone by many names, including “soft paternalism,” “libertarian paternalism,” and “asymmetric paternalism.” Whatever the name, it arose from the burgeoning field of behavioral economics, which studies the myriad ways in which real humans — unlike the agents who populate most economic models — deviate from pure rationality. Real people suffer from a variety of cognitive biases and errors, including lack of self-control, excessive optimism, status quo bias, susceptibility to framing of decisions, and so forth. To the extent such imperfections cause people to make choices inconsistent with their own best interests, paternalistic interventions promise to help them do better.” 1

 Thus, according to Thaler and Sunstein, people do not always make rational choices and those choices would present themselves quite differently if they had unlimited cognitive abilities and unlimited willpower.2 For example, the two argue that people generally do not have the self-discipline to save money for their retirement. It makes sense, therefore, to have workers automatically enrolled in 401k’s as the “default” position. Those who are more investment savvy may opt out and pursue their own financial planning. The Libertarian should not object because, while it is paternalistic to automatically enroll the worker, no one is being coerced to participate in the program. People are taken care of yet remain free. Another salient point made by Thaler and Sunstein is that paternalism is often unavoidable. They state “What people choose often depends on the starting point, and hence the starting point cannot be selected by asking what people choose”. 3

That is, people choose what they do because paternalistic influences are nearly always present anyway (though they may be well camouflaged) – so why not make the starting point, the default position, a good one? This understanding, in their view, also makes the anti-paternalistic position incoherent- no one is truly free from paternalistic influences in principle. The two further argue that their position is well defended empirically. For example, the Save More Tomorrow plan has employees staying in the plan until they opt out and this, in one study by Thaler, demonstrated an increase in savings rates from 3.5% to 11.6%. Thaler and Sunstein declare “This is successful libertarian paternalism in action.”4 Central planners of every hue, they argue, can make a powerful and beneficial impact in people’s lives if they adopt this posture, yet it still leaves people free to make their own decisions because they can opt out.

It will first be shown that who Cass Sunstein is and what he does is not irrelevant to the case he makes. Sunstein, a committed statist who believes in censorship, was recently appointed to an oversight panel on NSA surveillance while holding the view that the U.S. government should “infiltrate” social networks, message boards, and chat rooms.5,6,7,8,9 He also tightens central planning with his view that the President should interpret law rather than judges.10 His radical leftist positions always point toward two things- decreasing individual liberty and increasing government control. Critics of creeping communism and socialism often point out that incrementalism is a common strategy of the central planners- in this case, complaining that libertarian paternalism is a slippery slope. Whitman, for example, states that “the new paternalism carries a serious risk of expansion.”11 He suggests that “the danger is especially great if policymakers exhibit the same cognitive biases attributed to the people they’re trying to help.”11 Thus, Sunstein and Thaler have a problem with self-reference. If starting points are always unreliable, biased, under framing influences, etc. then this would apply to the central planners as well. As Gregory Mitchell points out, there exists no well-developed theory of when choice frames control choice.12 It may be more prudent to better study the problems in choice framing and then educate people how to make better choices rather than perpetuate paternalism. There may be a host of debiasing techniques that lead people to better decisions, educate them on how to dismiss irrelevant factors in choice, foster autonomy, and decrease costs in the process. Further, people often have what is known as small change tolerance defined as “a willingness to tolerate changes perceived as relatively small movements from the status quo.”13 Thus, large scale yet incremental loss of autonomy is a very real threat under Sunstein and Thaler’s view. Moreover, paternalism hasn’t demonstrated itself to be always practically effective and Sunstein and Thaler beg the question when they insist that this is the case. Not only do they seem to cherry pick examples but, in particular, 401k’s are considered by many financial experts to be a scam.14 Of late, suspicions have been raised that the federal government is making a move to grab $5 trillion in privately held IRA funds and replace them with more government bond debt. Perhaps a framing bias on the part of the central planners?

Nor are outcomes always objective. For example, the tobacco user may find that curtailing the more unproductive last years of life is worth the mentally stimulating effects of nicotine. The right choice is often user defined and it is presumptuous of a third party to always know what is best for someone. Libertarian Paternalism thus suffers the same criticisms as utilitarianism- it lacks “some cardinal measure of utility or some objective measure of welfare”.15 Mitchell further argues that this may lead to a redistribution of resources from rational choosers to non-rational ones. That is, the non-rational choosers are helped and accommodated at the expense of the rational chooser. For example, higher taxes may be required of the rational or disinterested parties in order to accommodate the irrational.

Finally, even if we suppose that Thaler and Sunstein succeeded in their practical case for Libertarian Paternalism, it should be rejected in principle. That is, even though people make irrational decisions, it does not follow that a mediator has carte blanche to usurp their autonomy and make decisions for them. Sunstein and Thaler’s view is a non sequitur. As Gregory Mitchell explains, autonomy should be the default position and fidelity to the Libertarian position would be to paternalistically ensure and maximize autonomy.


1. Whitman, G. (2010, April 05). [Web log message]. Retrieved from

2. Thaler, R. (2003). Libertarian paternalism. AEA Papers and Proceedings, May, 175-179.

3. Ibid.

4. Ibid.

5 Sunstein, Cass R. and Vermeule, Adrian, Conspiracy Theories (January 15, 2008). Harvard Public Law Working Paper No. 08-03; U of Chicago, Public Law Working Paper No. 199; U of Chicago Law & Economics, Olin Working Paper No. 387. Available at SSRN: or

6. Klein, A. (2012, January 12). Obama czar proposed government ‘infiltrate’ social network sites. WND Politics, Retrieved from

7. (n.d.). A guide to the political left. Retrieved from

8. Levine, M. (2013, August 21). White house picks panel to review nsa programs. Retrieved from

9. Klein, A. (2009, November 23). Cass Sunstein: Censor Hannity, right-wing rumors. Retrieved from

10.  Klein, A. (2009, September 18). Sunstein: Obama, not courts, should interpret law. Retrieved from

11. Whitman, G. (2010, April 05). [Web log message]. Retrieved from

12. Mitchell, G. (2005). Libertarian paternalism is an oxymoron. Northwestern University Law Review, 99(3), 1245-1277.

13. Whitman, G. (2010, April 05). [Web log message]. Retrieved from

14.  Tuchman, M. (2012, December 19). Is your 401(k) a total scam?. Retrieved from

15. Mitchell, G. (2005). Libertarian paternalism is an oxymoron. Northwestern University Law Review, 99(3), 1245-1277.

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