By Terrance O’Reilly

Behavioral law and economics has achieved notable policy influence promoting soft paternalism—using nudges to encourage better choices without limiting options. Recently, some behavioral scholars have suggested that positive behavioral models actually support hard paternalism—imposing mandates. This article challenges the insinuation that behavioral law and economics supports mandates.

Despite regular suggestions to the contrary, positive economic models do not entail distinct normative consequences. The article illustrates its thesis in the case of retirement savings, a key concern of behavioral policy. The article examines the diverse behavioral explanations for savings behavior and develops their conflicting policy implications—demonstrating that behavioral analysis fails to supply a definitive policy agenda. The article provides an original demonstration that the standard behavioral model of present bias cannot justify mandatory savings.

The article also questions the ripeness of celebrating the impact of behavioral law and economics. Proponents of behavioral law and economics often maintain that it represents an improvement over law and economics because the behavioral approach is more realistic. This position is flawed for two reasons. First, there is no presumption favoring greater realism in assessing scientific theories. Second, the enhanced realism of the behavioral approach remains unconfirmed—a mere (misguided) aspiration. Recent examinations of research practices in psychology calls into question the reliability of its published research. Further, the purported empirical success of a behavioral approach is consistent with simply having more potential explanatory variables—a bounty of potential psychological biases available to explain economic behavior.

Source @SSRN