Free to choose or free to lose? Understanding individual attitudes toward paternalism

Abstract

In the past decades, behavioral economics has credibly identified numerous decision-making biases leading people to make choices they would not have made if better informed about the long-term consequences of their actions. This has given rise to a new reason for government interventions: internalities. In contrast to traditional reasons for government intervention, such as redistribution and externalities, overcoming internalities often involves the use of paternalistic policies. We investigate theoretically and empirically the formation of attitudes toward paternalistic policies. Theoretically, we focus on the role of self-interest and distinguish between self-interest as construed for the rational decision-maker, self-interest when self-control problems are present, and self-interest when procedural or expressive elements, such as autonomy, matter. Empirically, we employ two novel data sets: a Danish survey on political opinion combined with administrative data on actual behavior and a large-scale cross-country survey to analyze attitudes toward paternalistic policies in the health and financial domains. We show that targets of paternalism are more opposed to paternalism than non-targets both in Denmark and across nine Western democracies and rely on our theoretical priors to explore mechanisms that can explain these attitudes.