ABSTRACT

Behavioural policy interventions have become more widely applied in major policy agendas to improve the implementation and delivery of alternatives to government interventions, in particular through strengthening the information and incentives available to people to encourage making better choices. In view of the growing relevance of the behavioural policy interventions, this chapter highlights the relation between nudges and Libertarian Paternalism. To understand the relevance of the meaning of Libertarian Paternalism, the concept deserves attention in historical and philosophical perspectives. In this attempt, Hayek’s rebirth of classical liberalism and the Libertarian Paternalism of Thaler and Sunstein are analysed. According to the Libertarian Paternalists, the role of public policy is to improve individual decision-making, since humans are predictably irrational in various ways. Nudging tries to help people increase their level of subjective welfare, something they cannot do by themselves due to cognitive biases. In this attempt, Libertarian Paternalism maximally preserves the freedom of choice while the government interventions frame choices, leaving the final decisions to individuals.