Modern Mill: An Examination of Economic Nudges and Mill's Harm Principle

Abstract

John Stuart Mill purported to demarcate the limits of government power in his work On Liberty, which outlined The Harm Principle - the assertion that the government may only step in to limit someone's liberty when they would harm another. Since the time of its writing, Mill's Harm Principle has remained a powerful force in describing how governments may operate. One fundamental premise of this view is that individuals are capable of satisfying their stated preferences without government intervention. However, the work of behavioral economists Drs. Richard Thaler and Cass Sunstein show that individuals often fail to appropriately satisfy their own stated preferences. To correct for this, Thaler and Sunstein theorize a system of 'nudges' that change the context in which individuals make decisions in order to satisfy their stated preferences. The central question of this paper is whether Mill's Harm Principle can accommodate Thaler and Sunstein's nudges and if so, how. This paper will answer in the affirmative and defend a system that filters nudges through the various institutions that individuals are a part of, ending with a list of suggested and permissible nudges as well as a response to objections.