Gambling and Paternalism

A friend has raised some issues regarding what I call “paternalism" (or "maternalism" if you prefer): “Why shouldn't people be permitted to gamble if they want to?”

More generally, when is it appropriate for the state to regulate an individual’s behavior?

What follows is in no sense represented to be a final draft -- or even a proposal for that matter. Nor is it represented to be the opinions or analysis of someone professionally qualified to speak on the subject. It's just my early ruminating.

The issue comes up in a variety of contexts: motorcycle helmets and automobile seat belts for adults, all kinds of limitations on minors, requiring "smoke free" restaurants and public buildings, limitations on degrees of intoxication, sale or possession of illegal drugs, and so forth.

Caveat: I’m operating on the premise that we’re talking about regulatory judgments based on some kind of scientific fact. I’m not addressing – one way or the other -- the issues associated with the efforts to enact laws that will enforce the moral or religious values of one group upon all others without regard to societal or individual harm.

I've often struggled with this issue and never satisfactorily resolved it, because I start with the default position, or general rule – to which there are of course many exceptions – that people ought to be free to do whatever they want.

And often, when dealing with one of those exceptions, once you brush away all the reasons for the regulation/limitation (e.g., the cost imposed on society by an individual’s foolishness has been covered by a bond obtained by that individual prior to their action) you are left with: ““Look, I really do know better than you what is good for you. What you are doing to yourself isn’t good for you, and since you won’t stop it on your own, we’re going to pass a law to make you stop it.”

And I’m not very comfortable saying that.

So what are these exceptions where some regulation may be philosophically (and politically) acceptable?

1. Children. There tends to be less controversy regarding limitations on "children’s" behavior -- their purchase of alcohol and tobacco, guns, pornography, their obligation to attend schools and when they can drive a car or get married. That’s not to say those issues (restricting a child’s free will) are not also worthy of being addressed – or that they would necessarily be decided differently even if the kids were making the rules. But they don’t; adults do. And adults don’t seem to express much concern, politically or otherwise, about these restrictions on children’s “freedom” – notwithstanding the somewhat arbitrary setting of ages (e.g., drinking age).

2. Harms to others. There’s the old line that "your freedom to swing your arm stops where my nose begins." One basis for restricting individual freedom is that while one should be free to do harm to oneself, one can fairly be restricted from doing harm to others.

Whatever may be one’s position with regard to the purchase, sale, ownership and possession of rifles and handguns, most would agree that limitations on target practice on the streets of heavily populated downtown urban areas is reasonable.

There will be arguments about the degree to which fraud and unfair business practices should be regulated, suggestions that we can’t protect everyone from their naiveté and inexperience and that caveat emptor (“let the buyer beware”) should take care of those problems.

Second hand smoke has been a controversial issue in this category. While one can argue that customers have a choice of bars and restaurants, the workers there have somewhat less choice.

3. Financial burden on taxpayers. Should motorcyclists be compelled to wear helmets?

They are not children, so that rationale is inapplicable. For the most part it is they, rather than others, who will be physically injured or killed in accidents. So why shouldn’t they be permitted to assume that risk?

One reason might be that some dead or injured motorcyclists, not to mention those with severe brain damage, could impose significant economic costs on taxpayers.

OK, goes the rejoinder, what if the motorcyclist is required to post a bond, or otherwise hold taxpayers harmless, against such costs? Then what's the reason to require helmets? Well, there are other losses, as in a wrongful death case, such as the family's loss of the income the motorcyclist would have provided during his or her lifetime. OK, suppose those are covered as well?

At some point you reach the stage where there is no real basis for arguing there is a legitimate public interest in legally requiring the use of safety features by adults (unless they are designed to protect others as well).

And thus, as quoted above, about all you’re left with is the unsatisfactory “Look, I really do know better than you what is good for you” argument.

4. Addictive behavior. If ever “I know what is good for you” might be considered as a possible basis for regulation, it could be with regard to the category of behavior that an individual starts by choosing, but soon becomes behavior over which they have little or no control – such as cigarettes or heroin. I’m not saying that makes it OK to interpose the state to prevent an individual’s free choice; I haven’t resolved that one to my satisfaction; but it does seem to me that harmful behavior to an individual (and no one else) that become addictive is more harmful to that individual (and less of a "free choice") than harmful behavior that can be stopped at any time.

5. Gambling. If it is true that there are significant societal negative externalities from gambling – including increased crime, bankruptcies, domestic abuse, and suicides – then (for some individuals) the free choice to gamble may be addictive, impose costs on taxpayers and cause harm to others.

The challenge is that – unlike, say, heroin use – this will not be the consequence for every gambler. So how to find those for whom gambling creates a problem for taxpayers or others?

One approach would be to think in terms of one of the reasons given for the increase in the tobacco tax: that tobacco contributes to increased health care costs paid for by all taxpayers, and that therefore it is fair to assess those who use the tobacco for at least a proportion of that cost -- in the form of taxes levied on the sale of tobacco.

Another analogy would be the gasoline tax (or any "use tax"), which is a way of assessing those who use the roads for the cost of building and maintaining roads -- since there is at least a rough relationship between the amount of gasoline purchased, the number of miles driven, and the wear and tear on the roads.

Thus, the social costs of gambling could be shifted to either (a) the gamblers themselves, with some form of a gambling tax, or (b) what would have the same effect but be much easier to administer, the tax could be assessed against, and paid by, the casinos (which would, of course, pass it along to the gamblers in the form of, presumably, say, lower payouts on slot machines).

The shortcoming of this approach would be that, while it would cover some incremental costs to taxpayers, it wouldn't do much for the family left in bankruptcy -- or with the primary earner in prison.

So another analogy for gambling would be the way in which drinking and driving are regulated (behavior that may cause harm to others as well as oneself). It may be good practice to never drink any amount before driving. But that is not the regulatory standard we use. The standard is the percentage of alcohol in the blood -- which varies according to what was consumed, how much was consumed, over what period of time, how long ago, as adjusted for various body types.

How might that kind of approach be applied to gambling -- theoretically, of course. .

Bear in mind that what follows is not intended as a serious proposal for public policy. It is simply a way to start thinking about the issue, to approach it theoretically, conceptually.

If a way could be found to track how much an individual gambler loses, as a proportion of what he can afford to lose (harming himself, perhaps, but at least not harming others, or passing costs off to taxpayers) -- a variable amount, like blood alcohol levels in determining drunk driving -- that would enable a policy that provides optimum freedom of choice for the population of gamblers while protecting individuals

Many casinos use "player cards" that provide some kinds of benefits for the gambler. If these used a universal card, they could track total gambling losses, not just those at a single casino. An arbitrary amount (based on some data and rational analysis) could be selected as an acceptable level of gambling losses for anyone -- like the permitted blood alcohol levels, say $100 or $200 per month. It would be presumed that anyone could lose that much without endangering their ability to keep their home and feed their family.

Like I say, I am not for a moment suggesting that this should really be done. But it may be a way to think conceptually about coming up with some scheme that actually would work that could maximize individual freedom to gamble while minimizing the adverse social impact.