International Review of Economics

There is an extensive critical literature analyzing the libertarian paternalism (LP) of Richard Thaler and Cass Sunstein. This paper is critical as well, but does so from a different perspective than most of the existing research. Thaler and Sunstein characterize LP by at least two key features: (1) a sharp distinction between Econs (those whose behavior will be unchanged by LP policies) and Humans (who will, at least potentially, change their behavior as a result of LP policies), and (2) defining Econs explicitly as homo economicus: “the textbook picture of human beings offered by economists” (Thaler and Sunstein in Nudge: improving decisions about health, wealth and happiness. Penguin, London, p. 7, 2009). This paper will take their definition of Econs seriously and examine the implications for LP-based policies. The bottom line is that if we take Econs seriously, LP nudges end up being not only extremely weak policy tools, but they also fail to accommodate some of the most important insights of behavioral economics.