Posted by Jonathan Adler:
Posner on Consumer Financial Protection Paternalism:
http://volokh.com/archives/archive_2009_07_26-2009_08_01.shtml#1248846622
[1]Judge Richard Posner thinks the proposed Consumer Financial
Protection Agency Act of 2009 goes overboard in trying to protect
consumers from themselves. Better to treat them -- us -- as
"consenting adults."
The plan of the new agency reveals the influence of �behavioral
economics,� which teaches that people, even when fully informed,
often screw up because of various cognitive limitations. A leading
behavioral economist, Richard Thaler of the University of Chicago
Booth School of Business, wrote �Nudge: Improving Decisions About
Health, Wealth, and Happiness� last year with Cass Sunstein, who is
President Barack Obama�s nominee for �regulatory czar.�
Mr. Thaler, whose views are taken seriously by the Obama
administration, calls himself a �libertarian paternalist.� But that
is an oxymoron. He is a paternalist with a velvet glove�as the
agency will be. Through the use of carrot and stick, the agency
will steer consumers to those financial products that it thinks
best for them, whatever they naïvely think. . . .
Behavioral economists are right to point to the limitations of
human cognition. But if they have the same cognitive limitations as
consumers, should they be designing systems of consumer protection?
References
1.
http://online.wsj.com/article/SB10001424052970203946904574302213213148166.html
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