The Uncertain Psychological Case for Paternalism

INTRODUCTION Human beings are fallible creatures. They often make poor choices, seizing upon irrelevant considerations to support their decisions even as they ignore important ones.1 Even choices that seem well-considered are often based on simplistic reasoning processes that are inconsistent with deductive logic.2 Cognitive psychologists who study judgment and choice contend that these foibles arise because people rely on an imperfect set of heuristics or mental shortcuts, rather than deductive logic to make judgments.3 These heuristics serve people well in many circumstances,4 but they also create vulnerability to the predations of advertisers, political spin doctors, trial attorneys, and ordinary con artists.5 The free market and the free exchange of ideas seem destined to produce a "sucker every minute and two to take him. " Recognition of the fallibility of human judgment and the research that identifies this fallibility commonly inspire calls for imposing constraints on individual choice.6 If experienced hucksters can identify defects in people's reasoning processes as part of an effort to swindle them, then lawmakers and regulators ought to be able to identify the same defects and develop rules that protect people from themselves. Numerous calls for restraints on the marketplace, rules governing political campaigning, and restrictions on contract formation draw support from psychological evidence that individuals cannot make good choices.7 Furthermore, many existing constraints might be justified by reference to the same individual limitations.8 To the extent that individual judgment cannot be trusted, paternalistic constraints on choice emerge as a remedy. So runs the psychological case for paternalism. If people make systematic errors in judgment, then they will make bad choices even when they have the incentives and information needed to make good ones, and hence, do themselves harm if left to their own devices.9 To be sure, this conclusion addresses neither the costs of supplanting individual choice nor other justifications for rules that constrain individual choice. Nor does it address the concern that rules that might seem designed to protect people are actually designed to protect some interest groups. Nevertheless, the psychological research arguably provides support for paternalism, which does not otherwise exist.10 In fact, virtually every scholar who has written on the application of psychological research on judgment and choice to law has concluded that cognitive psychology supports institutional constraint on individual choice. " So far, this seems to be the primary lesson of cognitive psychology for legal scholars. Furthermore, although the application of the psychology of judgment and choice to law is relatively new, it might already be having some effect on judicial and regulatory decisions.12 The most common response to the psychological case for paternalism has been that the psychological research is mistaken in some way.13 Some argue that the supposed mistakes in judgment are not mistakes.14 Others contend that the psychological phenomena might disappear with monetary incentives or that they are not important because market forces drive out bad judgment.15 These criticisms fail both empirically and conceptually.16 Empirically, the cognitive phenomena on which the case for paternalism rests are well understood and have support from hundreds of studies that have used a wide variety of subjects, contexts, and incentives.17 One recent exhaustive review of the psychological research on heuristics identified only a handful of empirical studies that provide even indirect support for these criticisms.18 Conceptually, the criticisms also fail. Arguments that incentives or real-world circumstances cure people of their reliance on misleading information fail to identify exactly how this would occur. The extra motivation that comes with monetary incentives and real decisions cannot just "work by magic. …