The Curious Case of Choice Architect: Examining the Philosophical Inconsistencies of Libertarian Paternalism

Classical economics works on the principle that individuals are rational and make decisions to maximize their self interest. However in real situations, individuals face a conflict between rational and irrational selves leading to decision making that does not leave them better off. Libertarian paternalism proposes a solution to this rationality problem in an individual by conceiving a choice architect. Choice architect is a third party capable of arriving at what a perfectly rational choice would be and ‘nudges’ an individual towards making that choice. Libertarian paternalists claim that choice architect does not interfere with the freedom of an individual because the choices he offers are easily reversible, i.e, an individual can reject it at any given point in time. Libertarian Paternalism seems to offer the third way between absolute autonomy of individual choice (libertarianism) and third party intervention (paternalism). This paper argues that the conception of a choice architect comes out of a hasty commitment to reconciling libertarianism and paternalism by placing perfect rationality and autonomy in two separate individuals in the case of a single decision making process. The paper proposes alternatives to confront the rationality problem

Job Polarisation in India: Structural Causes and Policy Implications

Automation impacts employment and wage levels at the micro-level, and the structure of employment-shift at the macro-level. Job polarisation is defined as the automation of ‘middle-skill’ jobs that require routine cognitive and manual applications while high and low-skill occupations are preserved. This paper examines the nature of job polarisation in India during the period 1983-2012 when Indian manufacturing was being gradually automated. The research uses disaggregated data from National Sample Survey Office and examines supply-side factors such as nature of employment growth in manufacture and presence of educated labour force which have not been adequately analysed before. The study has three observations. First, only the increased demand for high-skilled workers in the formal sector is due to skill-bias of technology conforming to theoretical expectation. Second, the transition of agricultural labourers has been to low-skill manufacturing sectors such as construction and textiles signalling distress in traditional manufacturing to provide employment. Third, over-supply of secondary and tertiary educated labour force has squeezed out middle-skilled workers from middle-skill jobs to relatively low-skill manufacturing and service occupations, explaining the persistence of routine occupations. The study concludes that increased demand for high and low-skill jobs has co-existed with the persistence of middle-skill jobs in India