Paternalism and Psychic Taxes: The Government\u27s Use of Negative Emotions to Save Us from Ourselves

Paternalism has become increasingly popular among policymakers. Governments at all levels are seriously considering or have recently adopted many paternalistic proposals. For example, the Obama Administration has increased cigarette taxes and adopted a tax on indoor tanning. Similarly, New York City Mayor Michael Bloomberg has proposed a ban on the sale of soda and other sugary drinks in containers larger than sixteen ounces. All of these policies are motivated to some degree by a desire to save people from themselves. This Article analyzes whether the government should use psychic taxes as a tool for achieving paternalistic goals. A psychic tax is a government policy that imposes a psychic cost by provoking negative emotions such as fear, anxiety, or shame. As with traditional sin taxes, the government may adopt psychic taxes to modify behavior. This Article argues that, while psychic taxes hold out the promise of making us healthier, they are not without potentially serious drawbacks, many of which have received little or no attention in legal literature. As a result, this Article expresses skepticism that psychic taxes will serve as a useful form of paternalistic intervention. Although many government policies may impose psychic costs (including policies that simply require disclosure of information), this Article focuses only on graphic warnings on cigarette and food packages. Two features of graphic warnings make them particularly interesting. First, proponents of graphic warnings support them at least in part precisely because they impose psychic costs. Second, while the empirical evidence is not conclusive, some research suggests that these warnings may reduce consumption of unhealthy goods, thereby improving public health and perhaps even saving lives. In 2011, the Food and Drug Administration ( FDA ) adopted regulations that would have required graphic warnings on cigarette packages beginning in September of 2012. Subsequently, the United States Court of Appeals for the District of Columbia Circuit ruled that these regulations violate the First Amendment. The government is reviewing the appellate court\u27s decision to determine whether to seek review by the United States Supreme Court. If the Supreme Court finds that the FDA\u27s regulations are constitutional, the regulations will require that each cigarette package include one of nine images on a rotating basis. The images must cover half of the package, and they are quite explicit. They include a corpse with staples in its chest, a man expelling smoke out of a tracheotomy hole in his throat, and a pair of diseased lungs juxtaposed with a pair of healthy lungs. The regulations would also require that the new labels contain a textual component, which would include statements such as Smoking can kill you and Cigarettes cause cancer. Finally, the warnings would include a telephone number that smokers can call if they want help with quitting: 1-800-QUIT-NOW. Policymakers are also considering graphic warnings on food packages. One possibility is a system that uses traffic-light color-coding. The front of each food package would contain a green, yellow, or red label. Green would signify the healthiest foods, yellow would signify less healthy foods, and red would signify the least healthy foods. A second possibility is graphic warnings indicating the expected body type of a person who consumes a particular food on a regular basis.\u27 Healthy foods would contain an image (for example, a drawing) of a thin person, and unhealthy foods would contain an image of an obese person. Foods that fall in the middle of the health spectrum would contain an image of a person who is somewhere between thin and obese. Graphic warnings and other psychic taxes are a form of paternalism. Despite its increasing popularity, paternalism remains highly controversial. Parts II through IV of this Article discuss the debate over whether paternalism is ever justifiable. An understanding of this debate will assist in following the arguments made in Parts V and VI, which address specifically whether psychic taxes are a useful policy instrument. Parts V and VI constitute the core of the Article and contain its main contribution. Parts II through IV provide background information that should be useful for those readers not versed in the literature on paternalism. Part II explains the objections to paternalism offered by traditional economists and economically oriented legal scholars. These scholars view people as rational actors who carefully weigh costs and benefits and make choices that maximize their own utility (or well-being). If this view is correct, paternalism in general, and psychic taxes in particular, should play no role in government policy. If we make the best possible choices for ourselves, then the government harms us when it interferes with those choices. Nonetheless, the rational actor model has its detractors. Part III discusses several empirical observations that raise questions about the model\u27s application to smoking and eating. These observations provide evidence that people are not perfectly rational. Instead, they suffer from self-control problems and engage in behavior that seems inconsistent with rational utility maximization. Paternalists use the evidence presented in Part III to argue that the rational actor model does not accurately explain how people decide whether to smoke and how much to eat. Paternalists invoke a number of alternative theories in support of psychic taxes and other types of government intervention. Part IV describes these theories. Parts V and VI focus specifically on psychic taxes. Part V discusses the potential benefits of psychic taxes. It explains that if people are not perfectly rational, then the government could use psychic taxes to correct welfare-reducing mistakes. Part V also reviews the empirical evidence regarding whether graphic warnings actually reduce unhealthy consumption. Despite the potential benefits of psychic taxes, Part VI argues that in practice, they may do more harm than good and that they will often be unnecessary. People who are not perfectly rational may be able to cope with self-control problems and other failures of rationality without government intervention. For example, many people have developed strategies for overcoming their self-control problems and other limitations. Also, market-based solutions to the problems posed by irrationality often reduce the need for government involvement. In addition, psychic taxes carry with them potential costs, and these costs, which are often hidden, may outweigh any benefits. Heterogeneity is a major obstacle. For example, some people may eat to excess, while others do not. But psychic taxes on food are a one-size-fits-all solution, and they impose a psychic cost on everyone, even those who are not at risk of becoming obese. Psychic taxes on food may also further stigmatize obesity, which could have regrettable consequences. And special interest groups, such as the food industry, may exert excessive influence over any governmentmandated labeling scheme so that the resulting labels deceive consumers rather than informing them. Moreover, widespread acceptance of psychic taxes as a legitimate policy tool may create a slippery slope, leading to the adoption of laws that many people will find objectionable or even abusive. For instance, some state governments currently use psychic taxes to dissuade women from having abortions. Abortion-rights advocates will likely find it easier to oppose this practice if the public generally views psychic taxes with suspicion than if psychic taxes are an established instrument for manipulating behavior