Review of Behavioral Economics > Vol 8 > Issue 3-4

Libertarian Paternalism: Making Rational Fools

D. Wade Hands, Department of Economics, University of Puget Sound, USA,
Suggested Citation
D. Wade Hands (2021), "Libertarian Paternalism: Making Rational Fools", Review of Behavioral Economics: Vol. 8: No. 3-4, pp 305-326.

Publication Date: 09 Dec 2021
© 2021 D. W. Hands
Individual Decision Making,  Behavioral Decision Making,  Public policy
JEL Codes: B4, D6, D9
Behavioral economicsnudgingpaternalismrational choicewelfare


Open Access

This is published under the terms of CC-BY.

In this article:
1. Introduction 
2. Paternalism, Behavioral Economics, and the Inner Rational Agent 
3. Knowledge Problems 
4. So What is to be Done? 
5. Conclusion 


This paper examines criticisms of libertarian paternalism, focusing in particular on so-called knowledge problems: the set of problems associated with the question of whether a choice architect would, or even could, have sufficient information to implement a successful libertarian paternalist policy. The paper builds on arguments presented in Mario Rizzo and Glen Whitman’s book Escaping Paternalism: Rationality, Behavioral Economics and Public Policy (2020). Although the paper supports Rizzo and Whitman’s arguments about knowledge problems, it moves in a different, more social, direction when it comes to the implications of these criticisms for microeconomic-based governmental policy more generally.



Review of Behavioral Economics, Volume 8, Issue 3-4 Special Issue: Escaping Paternalism: Articles Overiew
See the other articles that are part of this special issue.