The paralysis of choice

This weekend created another flood of interesting marketing articles. One was in the New York Times titled Choice Is Good. Yes, No or Maybe?. Many of the examples cited are the same ones we've quoted in The Tyranny Of Too Much, but the article suggests an interesting compromise they call "libertarian paternalism."

Mr. Thaler and Cass Sunstein of the University of Chicago Law School suggested that it is proper for the government, or an employer, to set boundaries to choice to achieve desired social objectives, an approach they call "libertarian paternalism."

Sweden's default fund for social security accounts - a mixed low-fee portfolio - is an example of such paternalism. Another would be to place the dessert display at the far end of the company cafeteria. Employees could still have dessert, but the hurdle to make that choice would be a little higher. Obesity might decline.

Eric J. Johnson and Daniel Goldstein, co-director and associate director, respectively, of the Center for Decision Sciences at Columbia University, found that big majorities of Americans approve of organ donations, yet only about a quarter consent to donate their own. Meanwhile, nearly all Austrians, French and Portuguese consent to donate theirs. The difference? In the United States people must opt to become an organ donor. In much of Europe, people must actively choose not to donate. So if organ donation is considered a social good, American defaults could just be flipped around.

This libertarian paternalism is the simply public policy version of Blackfriars mantra:

Less choice creates more value in the tyranny of too much.

But it is nice to see some people thinking about the value and the costs of too much choice in government policy as well as the marketplace.