Arizona’s Opt-Out Fee

November 16, 2009

New York isn’t the only state becoming creative with their automobile registration. An Arizona tax panel has recommended to Gov. Jan Brewer an “opt-out” provision to fund state parks. Residents of Arizona would automatically be registered to pay an additional fee for $14 or $15 dollars when registering their vehicle. Residents would then be allowed free entry to all the state parks but remain liable for additional fees.

Standard economic theory would say that there is no real difference between an opt-out or opt-in provision. In reality there is a large volume of literature in behavior economics that shows such programs do have real effects. The popular book Nudge has pushed for such policies referring to them as “libertarian paternalism”. The concept behind “libertarian paternalism” is that public policy should use cognitive biases, such as framing effects and default bias, to influence peoples’ behavior. While, at the same time, ‘libertarian paternalism” would allow individuals to opt out of such behavior.

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