Let me start with two illustrative examples of the problems surrounding opt-out. I immediately think of two programs, one is the organ donor program sponsored through the DMV. The incredible ease with which this program has made it possible to opt-in to organ donation still contrasts with the number of people claiming to want to be organ donors. One way to interpret this information, behaviorally, is that find it uncomfortable to think about organ donation and simply ignore it. This would in-fact explain why so many more people claim to want to donate organs than those who check the box on the driver's licence application. There might be another explanation, however, that people are more likely to say that they want to be organ donors than actually do. Economists call this "cheap talk," meaning that it signals good intentions without causing any consequence for the speaker.
We know that we would get more people to donate organs if we made the system an opt-out one. In the presence of drastic organ shortages, this is an overwhelming argument in favor of switching to opt-out. However, let me discuss one unintended consequence. Do we really think that the opt-out option would be on the DMV form? If the policy is really to recruit more organ donors, what about those people who object religiously or philosophically? How easy will it be to opt-out given that the people who want to opt-out are a non-vocal minority whose default rights have been switched?
This brings me to my second example. In Germany, where my wife is from, her brother-in-law had to opt-out of the taxes he paid to the Catholic church. As he was not religious and found this offensive, he researched the method one can use to opt-out. Fortunately for him, in Germany, the atheists are not in the minority and opting-out has gotten easier over time as the number of people wanting to do so has increased, but the point is that he has to invest real resources in finding the correct form and office to contact to remove himself permanently from the roles of the Catholic church. Many people in Germany simply never get around to doing this.
Now this was a long digression to answer your question about the porn filters article from the BBC article. Setting the default status to opt-out means that those people with the desire to view porn have to be vocal about their desire to do so. This is likely not to be easy. By contrast, opting-in is easy. I am a parent and I know quite a bit about parental filters. There is a large community that shares this information, where I am from in Utah you can even buy DVD players that screen objectionable material from many popular DVDs. This is called "clear play." The dynamics of this are simple, the market provides the service because quite a few people share a principled objection to pornography, they are the majority, and the market does a good job of providing items that accommodate the majority's preferences. I worry that the minority will not be vocal and will have very little ability to create work around solutions. If this is desirable, why not prohibit the porn industry entirely?
This gets me to my general thoughts on nudges. Nudges are less likely to cause unintended consequences than disfavored taxes (we discuss "Sin Taxes" in a Mercatus paper) and these are preferred to prohibitions that cause serious problems with black markets and the attendant crime (drugs, alcohol). Giving the consumer free choice is most preferred. Choice > Nudging > Sin Taxes > Prohibition.
In this case choice means education about the benefits of things like organ donation and the harms of things like ponography. Nudging seems to be a way to have paternalism dressed up as not interfering with choice. I hope I have made the case that libertarian paternalism is a contradiction in terms because libertarians like choice and paternalists think people make systematic errors.
It is hard to argue against the notion that people should pay their tax bills on time. I will say that one of my specialties is Public Choice economics which indicates that making government more efficient is not always a good thing. In fact, improvement in efficiency is only good when the government in question is both omniscient and benevolent, a condition that rarely holds. At the end of the day, many of the reasons that nudging might work is because it silences implicit arguments that people are not prepared to make explicit. I tend to think of this as a type of bullying by the majority. There may be more reasons that people pay taxes late, fail to complete schooling, save less than they "should" for retirement, and other policy goals than are readily accounted for in this literature. I think the attic cleaning service (mentioned in this article) is an example where good marketers can apply their trade and try to educate the public. However, as a matter of policy, if it doesn't make sense as a prohibition or absolute mandate, we need to seriously consider why we think it makes sense as a nudge.
This last bit formed the basis of quotes in several news outlets: here, here, here (Maxim Lott, The actual interviewer).
I am very skeptical of a team promoting nudge policies. Nudging, just like taxing and prohibition, has unintended consequences. I don't believe it is "worth the cost." I am not convinced that increased efficiency in government is always a good thing (especially in the case where government ignores unintended consequences or the intervention is simply in error). Ultimately nudging is still paternalism, which assumes a small group of people know better about choices than the individuals making them. For example, trans-fats were considered better than saturated and unsaturated fats in the past, now we know this is an error. Certainly, nudging has the potential to go too far. I am a much bigger fan of the idea of education and choice than I am of engineering choice. The individual has a capacity to adapt and learn. Taking individual choice seriously is better policy than assuming government knows better.
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