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NUDGING TO PROHIBITION? A REASSESSMENT OF IRVING FISHER’S ECONOMICS OF PROHIBITION IN LIGHT OF MODERN BEHAVIORAL ECONOMICS

Published online by Cambridge University Press:  01 March 2023

Nicholas A. Curott  and
Nicholas A. Snow
Nicholas A. Curott
Affiliation:
Nicholas A. Curott: Department of Economics, Ball State University. Email: [email protected].
Nicholas A. Snow
Affiliation:
Nicholas A. Snow: Department of Economics, Wabash College. Email: [email protected].
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Abstract

In this paper we argue that Irving Fisher (1867–1947) is an unacknowledged pioneer of modern behavioral economics. Fisher’s behavioralist orientation is evident in his writings on alcohol prohibition. In these works, Fisher argued that behavioral anomalies prevent individuals from making rational choices regarding alcohol consumption. Fisher thought these anomalies arose from three sources: 1) incomplete information; 2) limited cognitive abilities; and 3) lack of willpower. These are essentially the same barriers to rational choice identified by modern-day New Paternalists. Therefore, we argue that Fisher’s work on Prohibition was a pioneering academic achievement that anticipated recent developments in economics, and not an unscientific diatribe, as previous commentators have presumed. Unlike modern-day ‘New Paternalists,’ however, Fisher rejected minor alterations to the choice architecture and advocated outright prohibition instead. This helps to illustrate a potential slippery-slope problem with modern New Paternalist arguments that should be addressed.

Type
Article
Information
Journal of the History of Economic Thought , Volume 45 , Issue 1 , March 2023 , pp. 117 - 136
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the History of Economics Society

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Footnotes

The authors would like to thank Peter Boettke, Alexander Fink, Mario Rizzo, and participants at the Colloquium on Market Institutions and Economic Processes for helpful comments and suggestions. The financial support of the Institute for the Study of Political Economy at Ball State University is also gratefully acknowledged.

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