A state court judge has voided New York City’s much discussed (and much derided) ban on the sale of large sugary drinks, the New York Post reports.   The ban was slated to take effect tomorrow.  Due to the judge’s ruling, however, NY health inspectors won’t have to run around testing drink sizes and coffee sellers will still be able to add sugar to large drinks.  (Lattes and the like were exempted, however, due to their milk content — further evidence of the law’s udder irrationality.)  Here is the opinion, and more coverage from the WSJ, Reason, and Reuters.

UPDATE: NYU’s Rick Hills comments:

Justice Milton Tingling of the New York supreme court (that’s a trial judge for you non-New Yorkers) struck down Mayor Bloomberg’s soda portion cap this afternoon, citing the state non-delegation doctrine and the state’s administrative law constraint on arbitrary and capricious rule-making. The essence of the opinion is that defining soda portion size is above the Department’s pay grade, because it is “legislative” in character, a major policy requiring the imprimatur of City Council. . . .

In favor of Justice Tingling’s anti-paternalism canon is that the doctrine simply forces Mayor Bloomberg to apply to the City Council to make controversial policy decisions. As I have elsewhere noted with respect to taxis, the Mayor has been excessively prone to bypass Council, either applying to Albany for direct state legislative authority or simply ruling by executive decree (or by the decree of mayoral sock puppets like the Department of Health).

But one might complain that judicial glosses on statutes, derived from nothing more than the judge’s libertarian suspicion that an agency’s intervention into the market is too novel or meddling, over-extend judicial power even as they constrain agencies’ power. The Department of Health is, after all, an executive agency that is supposed to pursue policy goals. The supreme court is, by contrast, supposed to construe law. It is hard for me to see, as a matter of law, why City Charter section 556′s capacious grant of power to the Department of Health, as a matter of law, does not include a mandate to limit portion size as an imperfect means for reducing obesity. There can be no serious doubt that Bloomberg’s cup size rule is a good-faith effort to address obesity. Yes, lots of stores were exempted — but can anyone reasonably expect City health inspectors to start visiting every retail outfit with a soda fountain? Yes, the measure is probably too timid to do much good (as its critics who favor more regulation complain) — but are agencies really bound to do everything about a problem or nothing at all? No, the rule does not cover milk-based drinks — but, undoubtedly if it had done so, then you can bet that the National Dairy Council would be suing on the ground that milk-based drinks are too nutritious to be lumped with soft drinks made essentially of sugar and water. . . .

Justice Tingling’s opinion looks like a libertarian canon masquerading in non-delegation trappings. Maybe that sort of canon is good judicial policy. But I’d rather take my policy from Bloomberg, as meddlesome as he can be, than a judge.

Ernst Freund was one of the Founding Fathers of progressive constitutionalism. His 1904 book The Police Power: Public Policy and Constitutional Rights argued for a vastly expanded understanding of the police power. (The police power, broadly defined, is a government’s power to regulate health, safety, welfare and morals. It is distinct from other government powers, such as the tax power, or the military power. In the U.S. system, the federal government does not have a police power, except as to federal territories, but the States do have a police power.)

Freund’s expansive view of the police power aimed to overthrow the then-prevailing (at least in theory) view, articulated by Christopher Tiedeman in his 1886  A Treatise on the Limitations of the Police Power in the United States, that the police power could only be used to prevent people from harming others or violating their rights. In the long run, Freund’s view became the mainstream.

So what would Freund, that great advocate for loosening the restraints on big government, have to say about laws which prohibit the medical use of marijuana? Here’s what he wrote about liquor prohibition:

All prohibitory laws make an exception in favor of sales for medical purposes. This is not a legislative indulgence but a constitutional necessity, since the state could not validly prohibit the use of valuable curative agencies on account of remote possibility of abuse. “[T]he power of the legislature to prohibit the prescription and sale of liquor to be used as medicine does not exist, and its exercise would be as purely arbitrary as the prohibition of its sale for religious purposes....” The right to an adequate supply of medicines cannot be cut off by the legislature, and when legal provisions would have such effect they must that extent be inoperative.

Freund, at 210-11, quoting Sarrls v. Commonwealth, 83 Ky. 327, 332-33 (1885) (interpreting physician exception in statutory ban on liquor transfers).

In The Evolving Police Power: Some Observations for a New Century (27 Hastings Const’l L.Q. 511 (Spring 2000)), Glenn Reynolds and examined the trend in some courts towards judicial recognition of an issue on which Freund and Tiedman agreed: however one defines the boundaries of the police power, it is not infinite, and there are some personal zones into which it cannot reach.

That was the provocative title of a seminar earlier this month organized by the Istituto Bruno Leoni, Italy’s free market think tank. The event was the IBL’s 9th annual Mises Seminar. As is common at multinational seminars in Europe, the event and the papers were in English, which is today’s lingua franca among well-educated Europeans.

My favorite paper was presented by Kaetana Leontjeva, who is a Senior Policy Analyst at the Lithuanian Free Market Institute. Her paper, Old-age state social insurance: may its failure be averted?, examines the history of old-age pension systems throughout Europe, with a special focus on the USSR, Lithuania and Georgia. She shows how these programs, initially of modest size, grew to an unustainable  level that is financed by borrowing. She argues that there are only two realistic alternatives:

1. Continuing the present systems, with only “technical” reforms. This will eventually lead to complete failure of the old-age pension system, as occurred in the USSR. “ This would lead to a sudden and dramatic change in conditions of the elderly, bringing about poverty and chronic insecurity.” OR

2. “managed failure.” This means starting to shrinking the existing pension systems, by requiring that they operate on a balanced budget. Young people should not be told to depend on the current system, but should be encouraged to start making plans for their own retirement, by setting aside some of their current income to provide for their retirement. “For the ‘managed failure’ approach to work, one generation has to concede and make a sacrifice by paying for the pensions of the current retirees and for their own. In the absence of such a consent and solidarity, the generation to make the sacrifice would emerge spontaneously, and the process of an unexpected old-age social insurance failure would be much more painful.”

Another interesting paper came from Peter J. Boettke (Mercatus Center, George Mason University) and Daniel J. Smith (Manual H. Johnson Center for Political Economy, Troy University). “Monetary Policy and the Quest for Robust Political Economy” examines the failures of economists in thinking about the Federal Reserve. It is possible to imagine a Federal Reserve which conducts its affairs in an economically sound and apolitical fashion. But in practice, the Fed has often been a pump-priming engine of inflation, for political reasons. In other words, “Technical optima are nonoperational in a contemporary democratic setting.” In the wake of the Great Recession, the economics profession has been busy dissecting recent technical mistakes by Fed. Boettke and Smith argue that economists instead ought to be analyzing the only solutions which can put an end to a century of Federal Reserve failures: the adoption of a monetary policy (e.g., based on an external standard, such as a commodities bundle) which removes Fed discretion to promote inflation. While such a policy might not be politically feasible in the short run, it is the only constructive alternative, and would become more politically feasible if economists did not self-censor their recommendations based on short-term political viability.

In “Bankruptcy: Why are Banks Treated Differently Anyway?,” Mathieu Bédard (Ph.D. candidate in economics, Aix-Marseille Université, and a Fellow at the Institute for Humane Studies) classifies and analyzes the 29 different forms of government intervention into bank failures. He argues that ordinary bankruptcy is often superior to liquidations managed by the Federal Deposit Insurance Corporation.

Even if you don’t agree with the policy recommendations in these papers, they are worth reading for their thoughtful analysis.

GMU law professor (and FTC commissioner nominee) Joshua Wright and Judge Douglas H. Ginsburg have a new paper in the Northwestern Law Review, “Behavioral Law and Economics: Its Origins, Fatal Flaws, and Implications for Liberty.” Here’s the abstract from SSRN:

Behavioral economics combines economics and psychology to produce a body of evidence that individual choice behavior departs from that predicted by neoclassical economics in a number of decision-making situations. Emerging close on the heels of behavioral economics over the past thirty years has been the “behavioral law and economics” movement and its philosophical foundation — so-called “libertarian paternalism.” Even the least paternalistic version of behavioral law and economics makes two central claims about government regulation of seemingly irrational behavior: (1) the behavioral regulatory approach, by manipulating the way in which choices are framed for consumers, will increase welfare as measured by each individual’s own preferences and (2) a central planner can and will implement the behavioral law and economics policy program in a manner that respects liberty and does not limit the choices available to individuals. This Article draws attention to the second and less scrutinized of the behaviorists’ claims, viz., that behavioral law and economics poses no significant threat to liberty and individual autonomy. The behaviorists’ libertarian claims fail on their own terms. So long as behavioral law and economics continues to ignore the value to economic welfare and individual liberty of leaving individuals the freedom to choose and hence to err in making important decisions, “libertarian paternalism” will not only fail to fulfill its promise of increasing welfare while doing no harm to liberty, it will pose a significant risk of reducing both.

Definitely worth a read.

In trying to justify his proposed regulation banning large-size sodas, New York Mayor Michael Bloomberg cited the work of economists Brian Wansink and David Just. In this recent Atlantic article, Wansink and Just explain that he got their work wrong:

New York City’s mayor proposed a restaurant ban for any soft drink over 16-ounces. The hope is that by banning big drinks people will drink less and weigh less. He and others cited our research as the science behind the policy. Indeed, a dozen of our studies show when you randomly give people large sizes of food like popcorn and French fries, they overeat....

There’s a critical difference between the lab and Lexington Avenue that the mayor’s office didn’t account for: when Joe the Plumber and Bob the Banker buy soft drinks, they buy the size they want. They aren’t randomly forced to take a 44-ouncer when they really wanted a 12-ouncer. Moreover, their Coke or Pepsi doesn’t magically refill itself. If that happened, they’d overdrink. Instead, most restaurants give us a choice of a small or large drink — just as nearly every fast food outlet gives us a choice of small, medium, or large fries, and every movie theatre gives us a choice of small, medium, or large popcorn. People who want a little buy a little, and people who want a lot figure a way to get it.

Yes, we have found that when people are given larger portions, they do drink or eat substantially more. But to claim that these results imply that the ban will be effective is to ignore our larger body of work. In our experiments, subjects were given larger or smaller portions of food in a dining or party setting, where they were unlikely to notice portion size. It is exactly because participants weren’t paying attention that we got the results we did.

The mayor’s approach, however, overtly denies people portions they are used to be able to get whenever they want them. In similar lab settings, this kind of approach has inspired various forms of rebellion among study participants. For example, openly serving someone lowfat or reduced-calorie meals tends to lead to increased fat or calorie consumption over the whole day. People reason that because they were forced to be good for one meal, they can splurge on snacks and desserts at later meals.

As I explained in my previous post on this subject, paternalistic policies are not going be able to prevent obesity merely by restricting sodas or some other specific food or drink. People who like sugary or fatty foods will simply gorge on something else. The only potentially effective paternalistic solution is comprehensive regulation of people’s diets and possibly exercise as well.

I would oppose the soda regulation and others like it even if they did improve health. Individuals should be able to decide for themselves to what extent they are willing to accept health risks in order to satisfy other preferences. I get less than the optimal amount of exercise in part because I spend a lot of time reading and writing. As a result, I am less healthy than I might be otherwise. But that is a tradeoff I should be able to make in a free society. The same goes for people who are willing to accept health risks for other reasons – including because they want to continue eating the types of food they enjoy.

That said, I can at least understand the case for paternalistic regulations that have genuine health benefits. Paternalistic regulations that don’t even work are just gratuitous infringements on freedom without any justification at all.

UPDATE: In my previous post, I explained why these kinds of paternalistic regulations can’t be justified by the existence of externalities caused by government subsidization of health care.

UPDATE #2: For a more extensive look at the relevant evidence showing that soda restrictions are unlikely to improve health outcomes, see this article by well-known law and economics scholars Jonathan Klick and Eric Helland.

UPDATE #3: In the initial version of this post, I accidentally got David Just’s first name wrong. Thanks to readers for pointing this out. The mistake has now been corrected.

NYU law professor Rick Hills argues that New York Mayor Michael Bloomberg’s ban on large soda pop servings is justified by the existence of government subsidies for health care:

I am inclined to think that denouncing Bloomberg’s proposal as Orwellian is like ridiculing the Food, Drug, & Cosmetic Act as a Stalinist plot or attacking “no smoking” signs in public buildings as a Maoist re-education campaign. Such hyper-ventilated rhetoric against ordinary regulation is making us Republicans look absurd. So long as government subsidizes healthcare costs, regulations to discourage obesity are society’s self-protection, not nosy paternalism. Principled conservative will argue that these subsidies should be reduced so that insurance premiums will reflect the risk of the insured’s behavior. Fair enough...

But no one believes that such subsidies will be eliminated entirely....

Discouraging obesity either through insurance premiums or taxes on sodas (and forcing the purchase of two 16 oz. cups is essentially just a soft-drink tax) is not creating a nanny state: It is avoiding moral hazard by forcing those who undertake risky behavior to pay part of the price of their risk-taking. Despite empty libertarian rhetoric about letting people pay for all of the consequences of their actions, we know that..., the healthcare-subsidized we will always have with us. We will inevitably end up paying for at least some substantial part of at least some folks’ healthcare. So long as such subsidies exist, doing nothing about the effects of soda consumption on obesity is just letting soda drinkers slurp dollars out of their fellow citizens’ wallets.

The problem of externalities created by government subsidies for risky behavior is a real one. But I think that Rick too easily dismisses the far preferable option of dealing with the problem by ending the subsidy. Even if people who are obese because of bad diets can’t be removed from government health insurance subsidies entirely, the state can at least reduce their subsidies relative to those offered to more responsible people. I see no reason to believe that such a policy is inherently politically infeasible. It’s certainly likely to be at least as popular as intrusive paternalistic regulations.

In addition, it’s worth noting that Rick’s logic would justify a lot more than Bloomberg’s soda pop “tax.” It just as easily proves the need for a ban on any behavior that increases one’s chance of getting sick and needing health care. So long as there are government subsidies for health care, anyone who has a suboptimal diet, doesn’t exercise enough, or takes any other risks with their health is potentially “slurp[ing] dollars out of their fellow citizens’ wallets.” A soda restriction is unlikely to solve that problem by itself, or even come close to it. The soda-drinkers could just gorge on pizza and cheeseburgers instead. The only way to deal with the problem of obesity externalities through paternalistic regulation is to have a comprehensive diet and exercise code that all citizens must follow or else pay a fine. Much better to cut back on health care subsidies than to go down that route.

Even if we can’t eliminate the subsidies entirely, there is a strong case that modestly higher taxes to pay for inefficient health care subsidies are a much lesser intrusion on liberty than large-scale government micromanagement of our diet and exercise regimes.

UPDATE: I should perhaps emphasize again that I’m not suggesting we can completely eliminate the government spending externalities that Rick Hills complains about by cutting subsidies. But I do think we can make substantial progress in that direction, and that it is a more promising and less oppressive approach than trying to deal with the problem by regulating dietary and exercise choices.

News item:

Bloomberg Backs Plan to Limit Arrests for Marijuana

ALBANY — Mayor Michael R. Bloomberg said on Monday that he would support a proposal by Gov. Andrew M. Cuomo to significantly curb the number of people who could be arrested for marijuana possession as a result of police stops.

Best reader comment:

Just don’t get caught with the weed AND A 24 OUNCE COKE!

(Hat tip: Eric White)

Is too much salt bad for you?  That used to be the conventional wisdom, but more recent scientific research has suggested the emphasis on salt is misplaced.  No matter.  As Walter Olson notes, the Food and Drug Administration appears to be moving ahead with plans to force gradual reductions in the salt content of processed foods.  Among other things, the FDA is concerning the adoption of federal targets for gradual salt content reductions to wean consumers from their taste for salt.  But reducing salt content will do more than alter food’s flavor.  It can affect texture and perishability as well.  Surely the FDA has better things to do than obsess over the salt content of processed foods.  But if the FDA persists, I suppose it just means these (no relation) will get more use.

Famous economist Steven Levitt, coauthor of Freakonomics, recently described his “daughter test” for assessing paternalistic policies:

Most of the time there is broad agreement as to which activities should be made criminal. Almost no one thinks that theft or violence against innocents is socially acceptable. There are, however, a few activities that fall into a gray area, like illicit drugs, prostitution, abortion, or gambling. Reasonable people can disagree as to whether it is appropriate to prohibit such activities... A common feature of these gray-area activities are that they are typically “victimless” in the sense that, unlike a theft or murder, there is no easily discernible victim of the activity.....

I’ve never really understood why I personally come down on one side or the other with respect to a particular gray-area activity....

It wasn’t until the U.S. government’s crackdown on internet poker last week that I came to realize that the primary determinant of where I stand with respect to government interference in activities comes down to the answer to a simple question: How would I feel if my daughter were engaged in that activity?

If the answer is that I wouldn’t want my daughter to do it, then I don’t mind the government passing a law against it. I wouldn’t want my daughter to be a cocaine addict or a prostitute, so in spite of the fact that it would probably be more economically efficient to legalize drugs and prostitution subject to heavy regulation/taxation, I don’t mind those activities being illegal.

It’s easy to poke holes in Levitt’s “daughter test.” If I had a daughter, I wouldn’t want her to not go to college. Does that mean college attendance should be mandatory for anyone with the requisite academic skills? I wouldn’t want my daughter to advocate racism or communism. If forced to choose, I’d much rather have a daughter who uses marijuana or cocaine than one who is a racist or communist. Does that mean that the government should ban racist and communist speech?

Levitt’s “daughter test” is useful, however, in highlighting an important aspect of paternalism. Many of its advocates, including some sophisticated scholars such as Levitt, too readily generalize from their own personal values and use those preferences as justification for prohibitionist policies.

As economist David Henderson points out, this displays intolerance towards others with different values. What is best for me – or my daughter – may not be best for everyone. Whether the costs of a risky activity outweigh the benefits varies greatly from person to person. That’s true even of dangerous or potentially addictive activities such as drinking, gambling, skydiving, smoking, or using currently illegal drugs. People differ widely in the degree of enjoyment they get from these kinds of activities, and also in the amount of risk they are willing to bear. For example, economist Kip Viscusi’s research found that smokers are just as aware of the risks of smoking as nonsmokers (both groups actually tend to overestimate the danger to health). Where the two groups differed was in their degree of risk-acceptance. Smokers, predictably, are much less risk-averse than nonsmokers.

Even worse, Levitt’s approach ignores the harmful indirect effects of prohibition. Even if the health risks of illegal drugs are very great, it doesn’t follow that the War on Drugs is justified. That policy kills thousands of people every year, imprisons hundreds of thousands more, and undermines family values in poor inner city communities. These costs far outweigh the health risks posed by illegal drugs themselves, especially if many of those risks are born by users who knowingly accept them.

Finally, as Will Wilkinson recognizes, Levitt’s approach indicates a flaw in the currently popular idea of giving experts the power to enact paternalistic policies based on their “objective” scientific judgment. This idea ignores the possibility that even the best experts – including top scholars like Levitt – will base paternalistic policies in large part on their personal values rather than science. Levitt should be commended for openly acknowledging this influence. He explicitly recognizes that his values override his professional judgment as an economist when he acknowledges that the “daughter test” leads him to support drug prohibition “in spite of the fact that it would probably be more economically efficient to legalize drugs and prostitution subject to heavy regulation/taxation.” Many other experts may not be as self-aware as Levitt is, and some might not be as honest.

The “rule of experts” approach to paternalism has various other flaws as well, some of which I described here and here.

Opponents of the constitutionality of the individual mandate have emphasized that upholding the mandate would give Congress the power to mandate virtually anything, including forcing people to eat broccoli. Northwestern law professor Andrew Koppelman appears to agree, but argues that this slippery slope is nothing to worry about:

One of the most rhetorically effective arguments that has been made against President Obama’s health insurance mandate is that it places us on a slippery slope to totalitarian government. If the federal government can make us buy insurance, what can’t it do?...

The Broccoli Objection, as I will call it, rests on a simple mistake: treating a slippery slope argument as a logical one, when in fact it is an empirical one.

This basic point was made long ago in Frederick Schauer’s classic article, Slippery Slopes, 99 Harv. L. Rev. 361 (1985). Schauer showed that any slippery slope argument depends on a prediction that the instant case will in fact increase the likelihood of the danger case. If there is in fact no danger, then the fact that there logically could be has no weight. For instance, the federal taxing power theoretically empowers the government to tax incomes at 100%, thereby wrecking the economy. But there’s no slippery slope, because there is no incentive to do this, so it won’t happen.

Similarly with the Broccoli Objection. The fear rests on one real problem: there are lots of private producers, including many in agriculture, who want to use the coercive power of the federal government to transfer funds from your pockets into theirs. But the last thing they want to do is impose duties on individuals, because then the individuals will know that they’ve been burdened. There are too many other ways to get special favors in a less visible way.

Koppelman makes an interesting point. But I think it ultimately fails for two reasons. First, even if Congress would never actually enact the broccoli mandate, the fact that it could so under the same logic as the health insurance mandate highlights a logical flaw in the argument made by defenders of the latter. It strains credulity that a constitutional text that gives Congress the power to regulate interstate commerce gives it unlimited authority to force people to buy products they don’t want, even within the borders of a single state.

Second, I think that Koppelman is right to point out that slippery slope scenarios must be evaluated based on their actual likelihood of occurring, as opposed to merely the logical possibility. But I think the likelihood of this is much greater than he admits. It’s true that subsidies are easier to hide from the voters than purchase mandates. But the latter have their own advantages for politicians and interest groups. For example, in a time of tight budgets, a purchase mandate can transfer money to a favored industry without requiring additional government spending or tax increases. It’s very hard for the federal government to directly transfer as much money to an industry as it would get from forcing millions of new customers to buy their products.

Moreover, there is a wide variety of ways that purchase mandates could be sold to the public. Congress need not admit that they’re intended to help powerful interest groups. They could instead be defended as efforts to stimulate the economy by helping a vital industry (the same justification as was used to justify government bailouts of the banks and auto industry). Forcing people to purchase broccoli or other food could be defended as a public health measure. Indeed, paternalists of both the “libertarian” and traditional varieties have successfully advocated numerous coercive regulations on precisely those kinds of grounds. There is no reason why they couldn’t use similar strategies to justify purchase mandates. An alliance between well-intentioned paternalists and industry interest groups is precisely the kind of “baptist-bootlegger” coalition that has often been successful in the past. Given widespread political ignorance, voters will often be hard-pressed to tell whether such proposals will really increase public health or not.

Finally, it’s important to emphasize the sheer range of interests that come into play here. The logic of the pro-health care mandate argument can justify virtually any mandate to purchase or do anything. This opens the door to the machinations of a extraordinarily large number of interest groups. It seem very likely that at least a few of them will figure out a way to take advantage of the opportunity. Even if I can’t figure out exactly how to do it, interest group leaders and other professional political strategists probably can.

Indeed, at least one industry interest group already has managed to do it. After all, the health insurance mandate was included in the health care bill in large part because insurance companies support it, and in spite of the fact that President Obama had strongly opposed the idea when Hillary Clinton proposed it during the 2008 presidential campaign. Where the insurance industry leads, others might well follow.

UPDATE: In the original version of this post, I forgot to link Andrew Koppelman’s post on Balkinization that I was responding to. I apologize for the error, which has now been corrected. Unfortunately, I was unable to fix it for several hours, because I had to catch a plane, and then could not access the internet while I was in flight.

UPDATE #2: I suppose I should note that my reference to Barack Obama’s reversal of position on the individual mandate in no way denies that Republican politicians are also often inconsistent, including, in some cases, on the very same issue. My point, rather, was that interest group influence played a role in pushing through the individual mandate (even in spite of widespread hostility to the idea), and could easily have a similar impact in enacting other purchase mandates in the future.

The WSJ reports:

Mayor Michael Bloomberg and Gov. David Paterson have asked the federal government to bar New York City food-stamp recipients from using the benefit to buy sugary drinks, an effort to determine if the move would decrease obesity and diabetes problems.

The request, sent late Wednesday to the U.S. Department of Agriculture, could affect an estimated 1.7 million city residents who receive food stamps. As much as $135 million in federal nutrition benefits is used to buy sugar-sweetened drinks, the mayor’s office said. . .

Food-stamp users cannot use benefits to buy alcohol and cigarettes. The request asks that the USDA allow city officials to have two years to assess if sugary-drink purchases drop, as well as problems associated with diabetes and obesity, a mayoral spokeswoman said. The proposal would not affect the total benefits received, she said.

So is this an example of over-weening paternalism? Or is it a responsible limitation on government assistance?

From today’s Washington Post:

The Food and Drug Administration is planning an unprecedented effort to gradually reduce the salt consumed each day by Americans, saying that less sodium in everything from soup to nuts would prevent thousands of deaths from hypertension and heart disease. The initiative, to be launched this year, would eventually lead to the first legal limits on the amount of salt allowed in food products.

The government intends to work with the food industry and health experts to reduce sodium gradually over a period of years to adjust the American palate to a less salty diet, according to FDA sources, who spoke on condition of anonymity because the initiative had not been formally announced.

Officials have not determined the salt limits. In a complicated undertaking, the FDA would analyze the salt in spaghetti sauces, breads and thousands of other products that make up the $600 billion food and beverage market, sources said. Working with food manufacturers, the government would set limits for salt in these categories, designed to gradually ratchet down sodium consumption. The changes would be calibrated so that consumers barely notice the modification.

The legal limits would be open to public comment, but administration officials do not think they need additional authority from Congress.

Some of the commenters on my last two posts criticizing libertarian paternalism accuse me of ignoring the possibility that such paternalism is justified by the supposedly superior expertise of government regulators. Actually, I have addressed this point in several previous posts, such as here and here. However, readers can’t be blamed for not taking the time to collect bits and pieces from previous posts scattered over a three year period. Therefore, it may be helpful to collect my thoughts on this point in a single post. To summarize, I think that the regulators’ superior expertise applies at most only to one-half of the relevant equation, that even with respect to that half it has serious drawbacks, and that consumers who need expert advice can usually do better by relying on the private sector.

I. Regulators Lack Expertise on the Subjective Benefits of Risky Activities.

Regulators may have greater knowledge than consumers about the health or safety dangers of risky activities. But they lack comparable knowledge of the benefits that consumers derive from those activities. A public health expert probably knows more than I do about the risks of drinking or smoking. But only I know how much enjoyment I derive from having a beer or puffing on a cigarette. This is especially true when we remember that preferences about such things vary widely. I get zero utility from smoking and (unusually for a Russian) very little from drinking alcohol. Many other people have very different experiences. With respect to the subjective benefits they get from risky activities, consumers actually have vastly greater expertise than regulators do. In a classic 1945 article, F.A. Hayek emphasized the importance of this constraint on expert knowledge:

It may be admitted that, as far as scientific knowledge is concerned, a body of suitably chosen experts may be in the best position to command all the best knowledge available—though this is of course merely shifting the difficulty to the problem of selecting the experts. What I wish to point out is that, even assuming that this problem can be readily solved, it is only a small part of the wider problem.

Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.

This kind of ignorance might not be a problem for traditional paternalists, who sought to make individuals do the “objectively” right thing without reference to their own preferences. Libertarian paternalists such as Richard Thaler, however, emphasize that they seek to “make people better off as judged by themselves.”

II. Limitations of Regulators’ Analysis of Risk.

Even with respect to estimating health and safety risks, government regulators function under severe constraints. Regulators are not philosopher-kings who can implement whatever conclusions they reach through objective analysis. Rather, they are constrained by political pressure. In a democratic political system, regulators’ decisions will be heavily influenced by public opinion. And voters have very strong incentives to be ignorant about public policy and irrational in their analysis of the limited political information they do have. Both of these limitations of voters are likely to impose severe constraints on the quality of paternalistic regulation. Ironically, leading libertarian paternalist Cass Sunstein has done important work documenting the ways in which irrational public opinion reduces the quality of other forms of regulation (see e.g. here). Paternalistic regulation, libertarian or otherwise, suffers from this weakness as well.

Expert regulators are also vulnerable to interest group pressure. The more complex and technical the regulations they administer, the greater will be the opportunities for interest group lobbying and “capture” of the regulatory process, since rationally ignorant voters will have great difficulty in monitoring the experts performance. Ironically, expert regulators will be least likely to function as truly disinterested experts on precisely those issues where expertise is most needed.

Finally, government experts have major cognitive biases of their own, just as consumers do. And the regulators have less incentive than consumers to try to combat their own prejudices.

Given these three dangers, it is no surprise that government experts have a long history of making dubious risk analyses that were then used to justify costly and intrusive paternalistic policies that turned out to cause far more harm than good. As economist Edward Glaeser pointed out in his important 2006 critique of libertarian paternalism:

Paternalism has been used to justify government actions and rhetoric towards alcohol, drugs, homosexuality, religion-related activity, slavery, and even loyalty to the government itself. The nineteenth century crusade against alcohol brought Prohibition, which appears to have had only a modest impact on alcohol abuse while supporting a large, violent, underground alcohol-based economy. The fight against other drugs is more defensible, but the advocates of marijuana legalization argue that the costs of this government policy far exceed the benefits. Governments have attacked homosexuality for centuries and often used paternalistic rhetoric for doing so....

Most disturbing, governments are often persuaded that service to themselves is indeed the highest of callings, and that as a result for paternalistic reasons people should be induced to serve and be loyal to the government. In the United States, this form of paternalism has been pretty benign at least by world standards (pledges of allegiance, jailing critics of World War I). Places with fewer checks and balances, like Nazi Germany or Soviet Russia, turned to paternalistically justified prostate policies with awful results. Some paternalistic policies have had positive benefits, but much of the time, paternalism has been pretty harmful. Social welfare may be well-served by a general bias against paternalistic interventions.

III. The Advantages of Relying on Private Sector Experts.

None of this proves that we don’t need experts. To the contrary, there are many decisions where we can benefit from expert advice. However, the private sector offers a wide range of opportunities to avail ourselves of such advice without incurring the risks posed by government coercion. I addressed this point in more detail in one of my very first posts on libertarian paternalism:

[I]t is essential to recognize that individual consumers don’t have to rely on government for expertise. They can hire their own experts in the market or rely on more knowledgeable friends and acquiantances. When I get seriously ill, I go to a doctor. When I decide how to invest my money, I rely on the advice of friends who work in venture capital and investment banking. The real question is not whether we are going to rely on experts to help us make decision, but who gets to choose the experts and whether or not the experts will have veto power over the final decision on what to do.....

If instead of each individual choosing his or her own experts, there is a single set of specialists chosen in democratic elections, then the quality of the decision is likely to be impaired by political ignorance....

Of course the experts could instead be chosen by nondemocratic means and insulated from political pressure. Yet, in the absence of democratic control, it will be difficult to ensure that the experts are actually serving the interests of the people as opposed to their own. By contrast, experts hired in a competitive market have better incentives; they know that if they pursue their own interests at the expense of the consumer’s, they are likely to be out of a job......

Finally, both democratic and nondemocratic means of choosing government experts have a common weakness: both eliminate the option of dispensing with experts entirely. For some people, that may well be the best choice...

The second major shortcoming of government-appointed experts relative to those hired in the market is the fact that government coercion deprives the consumer of the right to make the final decision. If I hire an expert in the market, I retain the right to reject his advice and pursuing a different course of action. This is a vitally important option.

Economist Richard Thaler, a leading advocate of libertarian paternalism, has briefly responded to some of the points I made in my most recent post on that subject. In that post, I argue that advocates of libertarian paternalism implicitly rely on the assumption that regulators and voters are rational, while consumers and other private sector actors are not:

Ilya Somin gets the discussion off to a unhelpful start by claiming (a) that we consider regulators to be perfectly rational, when again we repeatedly say in the book that regulators are human just like everyone else and (b) that “regulators have no reliable way of estimating the benefits and costs that consumers derive from potentially risky products.” If he means “perfectly reliable” then fine, but that is not a sensible standard. Suppose that a crib is found to strangle babies that sleep in it, as happened to the child of friends of mine. I think it is pretty easy to guess that parents would not want to buy a crib that has strangled a dozen kids. Don’t you?

Thaler’s response, I think, misinterprets my argument. Of course I am well aware that Thaler and other advocates pf libertarian paternalism realize that regulators are “human just like everyone else.” Indeed, in my post I linked some important articles on regulatory irrationality by Thaler’s coauthor Cass Sunstein. The problem is that this recognition of regulators’ “humanity” gets lost in libertarian paternalists’ policy recommendations, where the implicit assumption of regulator rationality plays a crucial role. If the libertarian paternalists built in to their theory the fact that regulators cannot be expected to be more rational than consumers (and, for reasons, I indicated in my post are often likely to be less rational), then it is unlikely that they would continue to advocate government regulation as a good solution for consumers’ cognitive biases.

On his second point, I did not contend that a “perfectly reliable” estimate is required. Rather, I linked an earlier post where I argued that regulators don’t have anything close to an even partially reliable way of estimating the benefits that consumers derive from risky activities such as smoking, drinking, sky diving, and so on. They may know how great a health risk these activities pose, and thus have some way of at least roughly estimating their costs. But they can’t measure the utility that consumers get from doing these things. That is especially true when consumers’ tastes and preferences vary greatly. And it’s hard to have an accurate cost-benefit analysis when at best you can only estimate one side of the ledger.

Thaler’s example of the dangerous cribs somewhat obscures these points because it relates to children, a group we typically do not allow to choose for themselves on a wide range of issues and do not trust them to estimate their own utility. Paternalism with respect to adults is a different matter. Even in the case of the cribs, however, Thaler’s analysis obscures as much as it reveals. Assuming that a dozen children did die, one would still want to know how many that was relative to the total number of users, how good those cribs were relative to their competitors in other ways, and so on. A dozen dead children is, of course, horrible. But many more children than that are injured or die each year from activities such as taking baths and bicycle accidents. Yet that doesn’t mean that the government should forbid parents to allow their children to take baths and ride bikes. Some low-probability risks are sometimes worth tolerating even in the case of children.

The rest of Thaler’s essay is devoted to responding to others who can fend for themselves. However, I want to briefly note the significance of Thaler’s dismissals of the possibilities that paternalistic regulation might lead to “slippery slope” effects and that regulators might use their authority to impose their own personal preferences or those of the majority of voters. Thaler says that that’s not what he and his coauthors want regulators to do; he wants them to “choos[e] the choice architecture that is your best guess of what the participants would choose for themselves if they had the time and expertise to make an informed choice.” But once we recognize that regulators and voters are prone to cognitive biases “just like everyone else,” there is every reason to expect these and other negative impacts of expanded paternalistic regulatory authority to occur. Indeed, the assumption that our own preferences are right for everyone is one of the most common cognitive biases of all. The “best guess” of a cognitively biased regulator as to what others will choose if they were were well-informed is likely to be very similar to the regulator’s estimate of what he himself would do under such conditions. Thaler’s laudable desire that regulators avoid these pitfalls does not prove that they actually can or will do so.

UPDATE: I should note that in my initial post, I wasn’t sufficiently clear about the distinction between what libertarian paternalists understand in their own minds and what is built into their theory. In my view, they clearly do understand that regulators aren’t fully rational in the former sense, but have failed to incorporate it into their analysis in the latter. I am sorry for any misunderstandings this might have caused.

Cato Unbound has an excellent symposium on “libertarian paternalism,” the theory that argues that government should intervene to protect people against cognitive biases that lead them to make decisions that ultimately reduce their ability to achieve their own objectives. Advocates of libertarian paternalism argue that their approach is different from and superior to traditional paternalism, which imposes the paternalists’ own values on those subject to regulation. Overall, I largely agree with the criticisms of libertarian paternalism in the Cato symposium by Glen Whitman (here and here) and Jonathan Klick. However, I wish to focus on a different weakness of libertarian paternalism: the implicit assumption that voters and government regulators are not subject to serious cognitive biases of their own.

It may well be that private citizens acting in markets and civil society often make decisions that they later regret because of cognitive errors. However, regulators and voters are people too. They also might make bad decisions because of cognitive errors. Libertarian paternalist scholars generally ignore this possibility by implicitly comparing perfectly rational regulators with often irrational consumers. But there is no a priori reason to believe that the former are more rational than the latter.

I. The Cognitive Biases of Regulators.

Indeed, there are good reasons to believe that regulators are likely to be more susceptible to cognitive biases than private sector consumers. This is so for at least three important reasons. First, regulators are making decisions for others, not for themselves. As a result, they have less incentive to get them right. If regulators in the proposed Consumer Financial Protection Agency ban financial products that are of great value to consumers, the regulators themselves won’t suffer (unless they happen to want to purchase those products themselves). The less people have at stake in the decisions they make, the less incentive they have to control their cognitive biases.

Second, we are naturally more ignorant of the preferences of others than our own. Regulators have no reliable way of estimating the benefits that consumers derive from potentially risky products. When making decisions for other people, we are therefore prone to the cognitive bias of assuming that what they “really” want is what we ourselves would prefer in their place. It may, for example, be difficult for a health-conscious upper middle class regulator to believe that a consumer might genuinely prefer the pleasures of eating large numbers of cheeseburgers to the health benefits of a more balanced diet. Thus, he will be likely to put down decisions to consume huge numbers of cheesburgers to consumer “irrationality” and favor paternalistic anti-obesity regulations.

Third, regulators will be making decisions for thousands or even millions of consumers. This requires much greater information and analytical skill than the individual consumer’s task of deciding for himself or perhaps also his family. The more complex the task, the greater the temptation of trying to simplify it with cognitive shortcuts that are prone to bias and may well turn out to be misleading.

II. Voters May be Even Worse.

Of course expert regulators aren’t the only people with influence over paternalistic policies. In a democratic society, voters will have a lot influence too. And, as I have pointed out in previous critiques of libertarian paternalism (see here, here, and here), voters have strong incentives to be both ignorant about public policy and highly irrational in the way they analyze the limited political information they do have. Because the chance that any one voter will influence an electoral outcome is infinitesmally small, most voters have little incentive to either acquire much information about the choices before them or make a strong effort to control the irrational biases they may bring to its evaluation. By contrast, when consumers purchase products in the market, they know that their decisions are decisive and therefore have much stronger incentives to make rational choices.

Once we recognize that voters and regulators are also subject to cognitive biases and that they have only weak incentives to combat those biases, the case for libertarian paternalism is significantly weakened. What I find strange, however, is that prominent libertarian paternalist scholars have paid so little attention to this problem. Cass Sunstein, one of the leading academic advocates of libertarian paternalism, has written some brilliant work on regulatory irrationality in other contexts, including his excellent 2002 book Risk and Reason and an important 1999 article coauthored with economist Timur Kuran.

Lastly, it’s important to note that everything I have said above assumes that voters and regulators designing libertarian paternalistic policies have good intentions; that both are genuinely trying to adopt only those regulations that will help people correct their cognitive biases and more effectively achieve their goals. Once we recognize, as Whitman and I have pointed out elsewhere, that regulatory agencies implementing these policies are subject to interest group “capture” and slippery slope effects, the case for such regulation becomes weaker still.

UPDATE: I know some will argue that regulator and voter biases don’t matter much because libertarian paternalists advocate only noncoercive “nudges” that still leave the final decision up to individual choice. However, as Whitman notes in the Cato symposium and here, they in fact advocate many policies that go well beyond that. Moreover, one important consequence of voter ignorance is that voters are unlikely to make fine-grained distinctions between “libertarian” paternalistic policies and more heavy-handed ones. As a result, libertarian paternalist policymakers may find it very difficult to limit the scope of government intervention to the types of “nudge” policies they initially envisioned.