In defense of defaults

In his "Department of Human Behavior" column in today's Washington Post, Shankar Vedantam considers Nudge, a new book by University of Chicago professors Cass Sunstein and Richard Thaler. In it, they argue for "libertarian paternalism." Says Sunstein:

We agree with people who want to allow the market to flourish, so we are libertarians in that sense. On the other hand, we don't believe you can just have markets and then declare victory. It is legitimate to be paternalistic in terms of steering people in directions that will increase the likelihood they will do well.

The authors are particularly enamored with "default" policies, such as having companies enroll new employees in retirement savings programs unless they opt out. Vedantam explains:

When new employees are told that retirement accounts will be started for them unless they object, for example, most sign up cheerfully. When told that the accounts will not be started unless they opt in, most employees do not sign up because not having the account is then the default choice.

Defaults work in education, too. One of the primary goals of the American Diploma Project, for instance, is getting states to adopt a common, rigorous curriculum as the default for high school students. If they'd rather take a "general" or "vocation" track, rather than this college-prep route, students have to proactively opt out. It appears to be an effective way to encourage more kids to take tougher courses.

And you might also argue that the role of effective charter school policies (and sponsors) is to ensure that, in a system of school choice, parents will be limited to only good choices???those that are good for their children. Of course, to extend the analogy, the "default" for most parents is the local public school, so there's no getting around the need for making those as successful as possible, too.

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