Nudges or Shoves?

by Sherzod Abdukadirov on August 14, 2013

in Regulation

David Brooks writes in the New York Times:

I’d say the anti-paternalists win the debate in theory but the libertarian paternalists win it empirically. In theory, it is possible that gentle nudges will turn into intrusive diktats and the nanny state will drain individual responsibility.

But, in practice, it is hard to feel that my decision-making powers have been weakened because when I got my driver’s license enrolling in organ donation was the default option. It’s hard to feel that a cafeteria is insulting my liberty if it puts the healthy fruit in a prominent place and the unhealthy junk food in some faraway corner. It’s hard to feel manipulated if I sign up for a program in which I can make commitments today that automatically increase my charitable giving next year. The concrete benefits of these programs, which are empirically verifiable, should trump abstract theoretical objections.

I agree with Brooks that arguments over nudges should be based on empirical evidence rather than a purely theoretical discussion. So let’s examine the evidence.

As I pointed out in a recent op-ed:

On the federal level, energy efficiency regulations costing billions of dollars are justified by claiming to correct consumers’ irrational choices. Regulators claim that given the lifetime energy savings, rational consumers would demand more efficient vehicles and appliances voluntarily. They take the fact that many consumers are willing to forego efficiency in favor of other attributes, such as style, safety or lower upfront costs, as a clear proof that consumers are irrational. Hence, regulators force consumers to save by reducing their choices.

Below is a list of recent major federal regulations that use behavioral economics arguments to justify government intervention in markets. While far from exhaustive, it should give you some idea as to the magnitude of “intrusive diktats” that are justified using the nudge philosophy. Note that these regulations are not nudges. This is hard paternalism. Federal regulations do not gently push you towards better choices or give you a chance to opt-out. Contrary to Brooks’ assertion, it is not only in theory that “gentle nudges turn into intrusive diktats.”

For comparison, I can think of no major federal policy that actually nudges. When one looks at the evidence, federal regulators give consumers few nudges but plenty of shoves.

Agency Rule Cost (millions)
EPA/DOT Control of Greenhouse Gases from Light-Duty Vehicles


EPA/DOT Greenhouse Gas & Fuel Efficiency for Medium/Heavy Duty Vehicles


DOE Energy Conservation Program: Small Electric Motors


DOE Energy Efficiency Standards for Pool Heaters and Direct Heating Equipment and Water Heaters


DOE Energy Efficiency Standards for Commercial Clothes Washers


DOE Energy Efficiency Standards for Residential Refrigerators and Freezers


DOE Energy Efficiency Standards for Microwave Ovens


DOE Energy Conservation Program: Energy Conservation Standards for Fluorescent Lamp Ballasts


DOE Energy Conservation Program: Energy Conservation Standards for Distribution Transformers


DOE Energy Conservation Program: Energy Conservation Standards for Battery Chargers and External Power Supplies


DOE Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps



Addendum: Some of these costs are annualized; some are total. There is no consistency in the way they are reported. Agencies report one or the other but not both. In addition, in an earlier version of this post, two figures were transposed. I have now corrected this.

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