Sunstein’s back with more ‘libertarian paternalism’

Cass Sunstein returns to Bloomberg Businessweek with a prescription for helping “governments best promote the use of clean energy.” How? Change the “default rules.”

While the debate simmers, both the private and public sectors can promote environmental protection now—without mandates, bans, or expensive new regulations. The simplest approach involves the use of default rules, which specify what happens when people do nothing at all.

Here’s a small example. Human beings use a lot of paper, and paper requires the destruction of a lot of trees. Suppose a private or public institution wants to save money and protect the environment by reducing its use of paper. The institution might make a little intervention: alter its default printer setting from “print on a single page” to “print on front and back.” Not long ago, Rutgers University adopted a double-sided printing default. After four years, the university had reduced paper consumption by more than 55 million sheets, the equivalent of 4,650 trees. Countless people use far more paper than they need only because of that “single page” default; a change would produce significant savings.

Most people in the U.S. don’t use clean energy in their homes and offices, in part because it’s difficult and time-consuming to find out how to do so. Environmentally friendly default rules could change that. In Germany, two communities, Schönau and Wüstenhagen, show strikingly high levels of clean energy use—more than 90 percent. This is a dramatic contrast to the relatively low level of participation in clean energy programs in other German cities and towns. The reason for the difference? In the two towns people are automatically enrolled in clean energy programs (but can opt out).

It’s the type of prescription one should expect from a proponent of “libertarian paternalism.” Sunstein does not mention in the German example how much more consumers are paying in those two communities for their “clean” energy, nor how much information consumers have about the relative costs and benefits of different energy sources. We’re asked to trust that government officials will make the right decisions about setting the default rules in the public interest. Right.