Claire Hill on The Promise of Behavioral Law and Economics
I want to challenge what seems to be a premise of this symposium: that much of the behavioral “contribution” to economics is about people’s “mistakes” (either cognitive mistakes or “weakness of the will”) and the consequent need for paternalistic intervention. I think the behavioral perspective has much more to offer; I also think that the focus on mistakes is overblown and pernicious. Behavioral law and economics was supposed to bring more realism to law and economics. The worldview in which people are either making mistakes or “getting it right” isn’t much more realistic than the one in which people are always “getting it right.” Moreover, advancing such a worldview as realistic is a step backwards: the admittedly “unrealistic” but ostensibly “useful” law and economics is being supplanted by the supposedly more realistic binary world in which people either make mistakes or get it right. To be sure, of course people sometimes do make “mistakes.” A focus on mistakes that is more methodology (how we proceed) than ontology (how the world is) is quite useful: of all the ways people act other than as the traditional paradigm predicts, the subset we can label as “mistakes” (and, to be more precise, cognitive mistakes rather than “weakness of the will”) may present a particularly good case for regulatory interventions. Indeed, the label “mistake” is often used for what is actually “weakness of the will” – not a mistake at all, since a person really does want both cake and good health (and, according to some evidence, she may regret more regularly choosing health over the cake than the cake over health). In those cases, any regulatory intervention is more appropriately justified by externalities.
