“‘Libertarian paternalism’, ‘optimal paternalism’ and ‘cautious paternalism’ have been promulgated by prominent economists.” A recent Health Economics editorial by Jody L. Sindelar contradicts the economist conventional wisdom that correcting externalities, providing information and protecting youths are the only role for the government in the health policy arena.
I agree with Sindelar that making general economic theory more flexible to the practicalities of the real world is important. For instance, she cites the effectiveness of the PROGRESA program in Mexico. The program has been so sucessful that it has been adopted in New York City. The authors also cite the fact that small conditional cash payments conditional on drug abstinence have also been effective in help those addicted to drugs quit their habit.
Nevertheless, we must be careful how much believe the government should manipulate our lives. Sindelar claims that smoking, alcohol and drug abuse, and overeating all are examples of irrational behavior. While these activities are harmful, many people do enjoy having a cigarette, getting intoxicated, or eating copious amounts of desserts and the decision to smoke, drink, overeat or use drugs is likely not irrational. I do not believe that these activities should be taxed or prohibited just because they are harmful to the individual. Only if they lead to harm in other individuals (i.e.: externalties, such as second hand smoke, drunk driving, etc.) would specific tax be merited.
In my view, I do not believe that all government action is bad. Yet, I believe that the burden of proof should be that government action is truly beneficial. In the criminal court, people are “innocent until proven guilty.” In the public policy arena, there should be no government action, unless the government action has been proven beyond a reasonable doubt to be effective.
- JL Sindelar (2008) “Paying for performance: the power of incentives over habits.” Health Economics, 17(4): 449-451.