question about what we should do about it, and also who the “we” refers to. Maybe this will not have an answer, but formalizing and taking the story forward in search of that answer would be worthwhile.

There are two critiques that will, one can anticipate, come from the mainstream against the main theses in this book, one that can be disposed of easily, and another that cannot. The first is the charge of paternalism. As soon as one recognizes, as this book does, the presence of a monkey on the shoulder, misdirecting the ordinary consumer or laborer, it gives rise to the question of correcting this through the intervention of the state or a regulator or, for a nicely neutral term, a guardian. The charge that is leveled against this kind of analysis and research is that of paternalism, namely, that of trampling over the preferences of individuals.

Indeed, this is a question that cannot be dismissed out of hand.<sup>18</sup> Once we open the window to interfere with a person’s individual choice, there is a risk of hurting individual freedom and, worse, of the guardian, be it the regulator or the state, taking advantage of it. Since Akerlof and Shiller do not take on this pervasive criticism directly, it may be worth pausing to fill in the caveat.

In taking on the criticism, it is important to distinguish between two kinds of paternalism: one where the state compels people to make certain choices or desist from certain others, and one where the state influences people’s choice by, for instance, appropriate framing or providing critical information. Let us refer to the former as “paternalism by compulsion” and the latter as “paternalism by influence.”<sup>19</sup> A law _requiring_ people to wear seatbelts in cars or helmets on motorcycles is an example of the former. Giving people the _choice_ of donating or not donating their body organs in the event of an accident and, for instance, reminding them that there is a great need for organs is an example of the latter. Indeed, there are studies showing that if you give people the choice between donating their body organs and not donating, which one you make the default option (that is, in the event of not explicitly making a choice, what the answer is presumed to be) makes a huge difference to the number of people who opt to donate their organs after their death.<sup>20</sup> One of the most striking examples of this comes from Johnson and Goldstein (2003).

18 This was a critique frequently leveled against the World Development Report on Mind, Society, and Behavior (World Bank, 2015) in the early stages of that report.

19 “Paternalism by influence” is similar to the concept of “libertarian paternalism,” as developed by Thaler and Sunstein (2003) and Sunstein and Thaler (2003), and also “asymmetric paternalism” in Camerer et al. (2003).

20 This is just one example of many studies that show how features of a choice situation, which standard economics would consider irrelevant, make a difference to what people choose and how they behave. A recent study conducted in Sierra Leone shows that if one person in a pair is given some money and then given the choice to give some of it away to the other person in the pair (the “dictator game”), they give away 19% more if there is a white man standing in the room (Cilliers, Dube, and Siddiqi, 2015). I think it would be safe, further, to hazard that if 10