If we think of a person as consisting of multiple selves—the present self who wishes to indulge in transient pleasures versus the future self who wishes to be healthy—then arguably the present self’s choices can force externalities on the future self. Those within-person externalities have been dubbed “internalities.” And just as we might impose a pollution tax on a factory to control the externality problem, we mightimpose a sin tax on items like cigarettes, alcohol, and fatty foods to control the internality problem.That's just what I've been saying:
The concept of internalities, although not yet a part of mainstream economics, is gaining attention. It is one among many novel economic models recently deployed by a new generation of paternalists. Paternalistic arguments advocate forcing or manipulating individuals to change their behavior for their own good, as distinct from the good of others. At one time paternalists argued that adults, like children, don’t really know what’s best for them. Some preferences, they argued, such as those for unhealthy food or casual sex, are just wrong. But such arguments hold little sway in a free society, where most people believe they should be able to pursue their own values and preferences even if others don’t share them. So the “new” paternalists have wisely chosen not to question people’s preferences directly; instead, they argue that internalities (and other sources of error in decisionmaking) can lead people to make decisions that are unwise even according to their own values and preferences.
In short, the old paternalism said, “We know what’s best for you, and we’ll make you do it.” The new paternalism says, “You know what’s best for you, and we’ll make you do it.”. . .
First, the new paternalism blithely assumes that, when your present self can impose costs on your future self, the outcome is necessarily bad. But preventing harm to the future self might involve even greater harm to the present self. There’s no valid reason to assume, when there is an inconsistency between present and future interests, that the latter must trump the former.
Second, the new paternalism ignores the fact that harms can be avoided in multiple ways. Restricting present behavior is one way to reduce future harms, but that doesn’t make it the best way. The future self might be capable of mitigating the harm at lower cost by other means.
Third, the new paternalism neglects the possibility of internal bargains and private solutions. All of us face self-control problems from time to time. But we also find ways to solve, or at least mitigate, those problems. We make deals with ourselves. We reward ourselves for good behavior and punish ourselves for bad. We make promises and resolutions, and we advertise them to our friends and families. We make commitments to change our own behavior. Internality theorists point to these behaviors as evidence that the internality problem exists. But they are actually evidence of the internality problem being solved, at least to some degree.
People are not perfect, so we should not expect real people’s actions to mimic those of perfectly rational and perfectly consistent beings. Mistakes will occur; self-control problems will persist. But paternalist solutions will solve them no better than personal solutions. What is really at stake is how self-control problems will be addressed—through private, voluntary means or through the force of government.
The new paternalists would have us believe that benevolent government can—through taxes, subsidies, restrictions on the availability of products, and so on—make us happier according to our own preferences. But even if we place little or no value on freedom of choice for its own sake, the paternalists’ recommendations simply don’t follow. Public officials lack the information and incentives necessary to craft paternalist policies that will help the people who most need help, while not harming those who don’t need the help or who need help of a different kind. Individuals, on the other hand, have every reason to understand their own needs and find suitable means of solving their own problems.
The Rationality Fallacy
A Libertarian Paternalist's Dream World
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism