Tag Archives: Paternalism

Quality Regs Say ‘High Is Good’

95% think doctors should be licensed. … 96% oppose legalizing crystal meth. (more)

One of the main ways that our world is not libertarian is that it is full of government rules requiring minimum quality levels for many kinds of products and services. We see this for food, drugs, building codes, auto/plane rules, allowed investments, censorship, professional licensing, school accreditation, sports equipment, and much more. Once you look for them, you find such rules everywhere. So a key basic puzzle is: why do we have so many min quality rules?

Here are some clues to keep in mind:

  1. Though these rules limit consumer choices, they have strong voter support.
  2. Such rules were far less common in the ancient world.
  3. Today these rules are extremely widespread, across many areas of life and types of societies and governments.
  4. These rules are implemented via many channels: liability law, regulatory agencies, and legislation.
  5. Poor nations tend to have lower standards, like rich nations did when they were poor, yet we see few exceptions for poor people or neighborhoods.
  6. Product bans are far more common than are official quality evaluations.
  7. Many such rules are retained even when they seem quite ineffective, such as laws against vaping (little health harm), recreational drugs, and prostitution.
  8. We don’t make exceptions for customers who can show that they clearly understand that the product is considered low quality.

Continue reading "Quality Regs Say ‘High Is Good’" »

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Paternalism Is About Status

… children, whom he finds delightful and remarkably self-sufficient from the age of 4. He chalks this up to the fact that they are constantly lied to, can go anywhere and in their first years of life are given pretty much anything they please. If the baby wants the butcher knife, the baby gets the butcher knife. This novel approach may not sound like appropriate parenting, but Kulick observes that the children acquire their self-sufficiency by learning to seek out their own answers and by carefully navigating their surroundings at an early age. … the only villagers whom he’s ever seen beat their children are the ones who left to attend Catholic school. (more)

Bofi forager parenting is quite permissive and indulgent by Western standards. Children spend more time in close physical contact with parents, and are rarely directed or punished by parents. Children are allowed to play with knives, machete, and campfires without the warnings or interventions of parents; this permissive patently style has been described among other forager groups as well. (more)

Much of the literature on paternalism (including my paper) focuses on justifying it: how much can a person A be helped by allowing a person B to prohibit or require particular actions in particular situations? Such as parents today often try to do with their children. Most of this literature focuses on various deviations from simple rational agent models, but my paper shows that this is not necessary; B can help A even when both are fully rational. All it takes is for B to sometimes know things that A does not.

However, this focus on justification distracts from efforts to explain the actual variation in paternalism that we see around us. Sometimes third parties endorse and support the ability of B to prohibit or require actions by A, and sometimes third parties oppose and discourage such actions. How can we best explain which happens where and when?

First let me set aside situations where A authorizes B to, at some future date, limit or require actions by A. People usually justify this in terms of self-control, i.e., where A today disagrees with future A’s preferences. To me this isn’t real paternalism, which I see as more essentially about the extra info that B may hold.

Okay, let’s start with a quick survey of some of the main observed correlates of paternalism. Continue reading "Paternalism Is About Status" »

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A Model of Paternalism

Twenty years ago this month I started my job here at GMU. My “job talk paper”, which got me this job, was on a game theory model of paternalism. While the journal that published it insisted that it be framed as a model of drug regulation, it was in fact far more general. (Why would a journal be reluctant to publish a general result? The econ journal status hierarchy dictates that only top journals may publish general results.) Oddly, I’ve never before discussed that paper here (though I discussed related concepts here). So here goes.

Here’s the abstract:

One explanation for drug bans is that regulators know more than consumers do about product quality. But why not just communicate the information in their ban, perhaps via a “would have banned” label? Because product labeling is cheap-talk, any small market failure tempts regulators to lie about quality, inducing consumers who suspect such lies to not believe everything they are told. In fact, when regulators expect market failures to result in under-consumption of a drug, and so would not ban it for informed consumers, regulators ex ante prefer to commit to not banning this drug for uninformed consumers.

Consider someone choosing how much alcohol or caffeine to drink per day on average. The higher is the quality of alcohol or caffeine as a drink, in terms of food, fun, productivity and safety, then the more they should want to drink it. However, they are ignorant about this quality parameter, and so must listen to advice from someone who knows more. Furthermore, this advisor doesn’t exactly share their interests; for the same value of quality, this advisor might want them to drink more or less than they would want to drink. Thus the advisor has a reason to be not entirely honest with their advice, and so the listener has a reason to not believe everything they are told.

When the advisor can only advise, we have a standard “cheap talk signaling game”. In equilibrium, the advisor picks one of a limited number of quality options. For example, they might only say either “bad” or “good”. The person being advised will believe this crude advice, but would not believe more precise advice, due to the incentive to lie. The closer are the interests of these two people, the more distinctions the advisor can make and be believed, and thus the better off both of them are on average.

My innovation was to give the advisor the additional option to, instead of offering advice, ban the person from drinking alcohol or caffeine. The result of a ban is a low (though maybe not zero) level of the activity. When quality happens to be low, the advisor would rather ban than give the lowest possible advice. This is in part because the listener expects the advisor to ban when quality is low. So even when their interests differ by only a little, the advisor bans often, far more often than they would if the listener was perfectly informed about quality.

My model wasn’t about alcohol in particular; it applies to any one-dimensional choice of an activity level, a choice influenced by an uncertain one-dimensional quality level. Thus my model can help us understand why people placed into a role where they can either advise or ban some activity would often ban. Even when both parties are fully rational, and even when their interests only differ by small amounts. The key is that even small differences can induce big lies and an expectation of frequent bans, which force the advisor to ban often because extreme advice will not be believed.

My model allows for relatively general functional forms for the preferences of both parties, and how those depend on quality. It can also handle the case when the advisor has the option to “require” the product, resulting in some high consumption level. (Though I never modeled the case where the advisor has both the option to ban or require the product, in addition to giving advice.) The model can also be easily generalized to varying levels of info for both parties, and to random errors in the choices made by both parties. The essential results don’t change much in those variations.

The main theorem that I prove in my paper is for the case where the advisor’s differing interest makes that advisor prefer a higher activity level for any given quality level. For example, the advisor might be an employer and the listener might be their employee. In this case, for any given quality level, the employer might prefer their employee to drink more caffeine than the employee would choose, in order to be more productive at work. What I prove is that on average both parties are better off in the game where the advisor is not able to ban the activity; this is because the option to ban reduces the activity level on average.

Similarly, when the advisor prefers a lower activity level for any given quality level, both parties are better off when the advisor is not able to require the activity. This could apply to the case where the activity is alcohol, and the advisor is the government. Due to the possibility of auto accidents, the government could prefer less alcohol consumption for any given level of alcohol quality.

This main theorem has direct policy relevance for things like medicines, readings, and investments. If policy makers tend to presume that people on average consume too few medicines, read too little, and invest too little, then they should regret having the ability to ban particular medicines, readings, or investments, as this ability will on average make both sides worse off.

So that’s my model. In my next post, I’ll discuss how much this actually helps us understand where we do and don’t see paternalism in the world.

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Help Me Imagine 2

Back in April I asked readers to help me imagine:

[Your] community was … so successful … that one hundred exact copies of [it] were made then and spread around the world. They copied all the same people, work and play roles and relationships, even all the workspaces and homes. … Consider … your attitude toward the other copies of your group. On one hand, … you might want to have nothing to do with those other copies. … On the other hand, you might be eager to maximize your chances to share insights and learn from the other groups. (more)

Today let me ask for help imagining a different situation.

A copy of you was made when you were ten years old. That was a century ago. Since then many thousands of (exact) copies have been made from that one copy. Most of these copies have grown up to do one of the few jobs where there is a big demand for copies of you. (Copies of you have tried other jobs, but so far they’ve not been competitive.) Every year a few dozen more copies are made and trained for these same few careers, but using slightly newer methods, to adapt to changing customers, techs, etc. Older versions of you often help to train younger versions.

Now here are my key questions:

  1. As an older copy, how free would you feel to push advice on younger copies? You could advice them on work, friends, love, etc. When there were consequences for you, how strongly would you want to insist that they follow your advice?
  2. As a younger copy, how much would you trust the advice of older copies of yourself? How eager would you be to get and follow such advice, even when you didn’t understand it? How willing would you be to get into situations where you had to do what they told you?

Today as parents, teachers, mentors, etc. we often give advice to kids, students, and junior co-workers. But our eagerness to advise is tempered by knowing that they are often quite different from us, and in addition times can change, reducing the relevance of our earlier experience. Our eagerness to listen to such advice when young is also tempered by the same reasons. Even so, the two sides often find themselves in conflict, with older folks pushing more advice than the younger folks want to take.

When the advisor-advisee relation is between an older and younger copy of at the same person, instead of between two quite different people, is there more or less conflict in the relation? Is more or less advice given and taken to heart? Do people feel more or less free and autonomous?

Added 5p: Today if asked in the (far-view) abstract, people say they’d want to take advice from those more experienced than they. But they often feel different when they get a specific (near-view) piece of advice that they don’t want to follow, or when they feel a rivalry with the person giving the advice. Then people look for excuses not to follow the advice. I’d think the same processes would happen even with copies of yourself. So I ask you to imagine particular near-view situations, and not just to consider the question in far-view.

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Idealizing Research

On Institutional Review Boards (= IRBs), I wrote in March:

It makes little sense to have extra regulation on researchers just because they are researchers. That mainly gets in the way of innovation, of which we already have too little.

To decide if academic studies are “ethical,” IRBs ask if the benefits of a proposed study to the world and to its subjects (= people studied) outweigh the risks to its subjects. And a standard rule is that financial payments to subjects do not count as benefits.

To an economist, this paternalism sounds pretty crazy. In the latest Bioethics, Alan Werthmeimer agrees. First he notes that no explicit arguments are offered for this “money isn’t benefit” rule:

Although the standard view has become a virtual mantra in research ethics, no [official] document contains an argument in its defense. … The scholarly literature also contains little defense of that view. For example, [an] important article … [says] ‘otherwise simply increasing payment or adding more unrelated services could make the benefits outweigh even the riskiest research.’

So Werthmeimer makes up seven reasons:

  1. A subject might think that having the money to purchase a big screen TV makes it sensible for him to accept certain medical risks. … IRBs should not incorporate such impoverished conceptions of a person’s interests into their decisions.
  2. IRBs are not well positioned to determine how much weight to assign to the benefit of payment as compared to risk.
  3. The standard view [is] a way to provide extra insurance that payment does not constitute an undue inducement.
  4. [Otherwise,] it would allow IRBs to approve risky research with economically vulnerable populations so long as investigators are prepared to pay subjects enough.
  5. The physician’s role is to advance the patient’s medical interests, and not her interests, writ large. And perhaps much the same could be said for the relationship between IRBs and subjects.
  6. Society may prefer that research not be viewed as an economic transaction and it may symbolize its commitments by not allowing such values to intrude on the assessment of risks and benefits.
  7. It is crucial that the public believe that research subjects are not abused or exploited. … Whereas society accepts with a relative yawn the fact that people incur job related injuries or deaths as coal miners, fishermen, and off-shore oil service workers, society seems to react with great intensity to research related injuries and deaths.

I hope you can imagine my incredulous stare. This goes way beyond sometimes overruling certain judgements because you think people sometimes make particular mistakes. Here regulators basically presume that all wanting of money is illicit and not to be counted. Reason #7 seems to me closest to the truth – the idea appears to be to preserve an ivory-tower image of research as a high pure far ideal thing not to be sullied if possible by money motives. Which if you think about it isn’t that far from the common medical ideal, that cost should not be a factor in medical decisions.

 

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