Should Government Nudge People Into Making Better Decisions?

(Michael Thomas interview on Fox Business by John Stossel)

Utah State University assistant professor Michael Thomas, interviewed on Fox Business by John Stossel, says "libertarian paternalism" is a contradiction in terms.


LearnLibery.Org Videos Featuring Professor Diana Thomas

How to Rig a Majority Vote

Do you think that a majority vote is always the fairest way to reach a consensus? Think again! In this Learn Liberty video, Professor Diana Thomas illustrates a paradoxical outcome that arises when people vote on three or more items – known as Condorcet’s Paradox – and proves that it is quite easy to manipulate the voting process in this scenario.

Condorcet’s paradox occurs when a vote is taken on a set of three options that nobody ranks in the same order. Even though a vote of two of the options may yield a consistent winner, it’s impossible to achieve a consistent outcome between all three choices. Usually, a majority vote is taken on only two options, so whoever gets to choose which two options are on the table (known as the agenda setter) has the power to dictate the winner of the vote. 

Why Do Politicians All Sound the Same?

Have you ever wondered why politicians seem to all say the same thing, especially during presidential elections? According to Professor Diana Thomas, this is due to the median voter theorem. To guarantee victory, a candidate has to earn just over 50 percent of the vote. Even if a candidate starts out on an extreme end of the political spectrum, he ultimately will aim for the middle to convince the “median voter” to vote for him.

For example, a Democrat running for office may start out expressing ideas that fit well on the far Left side of the political spectrum. To earn the votes of more mainstream Democrats, he will then begin to stand for more mainstream policies. To then earn the votes of the most conservative Democrats or Independents, he will move his platform even more toward the center, in an attempt to win over just more than 50 percent of voters. A Republican candidate goes through the same process in reverse, until both have essentially met in the middle.

In a two-party, majority rule system, moving toward the center is not likely to alienate the voters on the ends because they feel there is not another viable candidate to vote for instead. This means, there really isn’t any penalty for a candidate chooses to move toward the middle. And it explains why all politicians end up sounding the same.

Why Are Voters So Uniformed?

Surveys routinely show that the general public is poorly informed about government and politics. In a survey conducted in 2010, for example, fewer than half of respondents even knew which political party held the majority of the seats in the House of Representatives. Professor Diana Thomas asks why the public knows and cares so little.

To answer, she draws upon an argument from Professor Anthony Downs. He claimed that it is actually rational for people to be ignorant about politics because the act of voting itself is irrational. One voter is unlikely to influence an election or lead to improvements in government performance.

Informed voters may put a lot of time and energy into researching the best candidates and understanding the issues in government. For this work, they receive little reward since the chance their votes will change the outcome of an election are virtually zero. In other words, people don’t take the time to be informed because there is little incentive to do so. For this reason, many economists will say it is completely rational to be ignorant about politics.

Why Is There Corn in Your Coke?

Coca-cola used to be made with real sugar, but in 1984 the makers of the soft drink replaced sugar with corn syrup. Why did this happen? Part of the reason is that because corn syrup became less expensive than sugar. In fact, sugar is nearly double as expensive in America as in the rest of the world. In this video, Professor Diana Thomas explains why.

United States laws actually limits the amount of sugar imported each year. This limit causes the price of sugar to rise. Such a quota is meant to increase profits of domestic sugar producers and to protect them from foreign competition. The cost to American's of this quota is a staggering $3 billion each year, in the form of higher prices for sugar and sugar products. But since the cost is split among all citizens, it isn't worth it to the average American to complain.

In contrast, sugar producers are much in favor of this policy. From 1980 to 1998, each U.S. sugar farmer earned approximately $3 million extra each year because of the quota. The farmers profit generously from this quota, while consumers are made worse off.

How can we prevent some groups of taking advantage of others through laws like sugar quotas? One solution would be to limit what government can do.

Faculty/Alumni Feature Videos

Government Regulations Can Have a Negative Impact on Poor

Diana Thomas, assistant prof., testified before a subcommittee of the House Judiciary Committee explaining how certain government regulations can hurt low-income families. Watch her testimony.


Jason Smith Recognized for Corporate Finance Research

Jason Smith, assistant professor, recently won the 2012 Jensen Prize (Second Prize) for a paper published in the Journal of Financial Economics. Here he explains his research into how cash flow can influence how quickly a firm will move to an optimal level of debt.


Researcher of the Year 2013 - Ben Blau

Ben Blau, Assistant Professor of Finance at the Jon M. Huntsman School of Business was recently named Researcher of the Year for the Huntsman School of Business.


John Joffredo '86, Finance

Huntsman School alumni can be found throughout the world. Huntsman alumni can be found in all 50 states and in 44 countries. John Loffredo is one of them who works in New York City at a hedge fund. See what he has to say about his experience at Utah State and how it's affected him in this video.


Kent Alder '74 Finance

Kenton K. Alder is the chief executive officer, president and director of TTM Technologies. In 2009, TTM, a leading independent supplier of time-critical, technologically advanced printed circuit boards, combined with Meadville Holdings from Hong Kong to create the third largest manufacturer of printed circuit boards in the world. TTM was also ranked among the top 100 recognized most trustworthy American businesses by Forbes magazine.


Rick Hornsby '81, Finance

Rick Hornsby began his 28-year banking career at First Security Bancorporation in 1982. He is a current Group VP for the Federal Reserve Bank of San Francisco. Mr. Hornsby earned a bachelor’s degree in business administration - finance and an MBA from the Jon M. Huntsman School of Business at Utah State University.