An Autonomy Theory of Consumer Protection Law

Introduction

This article breaks new theoretical ground by introducing a new autonomy theory of consumer protection law (CPL). This fresh account draws on Joseph Raz’s framework on personal autonomy and explicates the relationship between CPL interventions and the opportunity, rationality, and independence aspects of autonomy. The promotion of consumer autonomy as an overarching explanation of CPL remains largely unexplored in the literature. Scholars of general contract law have offered autonomy-based theories that explore the degree to which the law is justified in furthering or limiting freedom of contract, and by extension, freedom of choice over contract types. The autonomy theory advanced in this article has a different focus: it considers and justifies the role of CPL interventions in promoting consumer freedom of choice—not simply in terms of contract types but product options in general—from the standpoint of personal autonomy. Hence, unlike the recent work of Hanoch Dagan and Michael Heller, for example, the focus here is not on whether consumers have a choice between different levels or types of consumer protection, but more specifically, whether consumers can exercise freedom of choice in a way that promotes autonomy, and the significant role played by CPL in this regard by way of choice facilitation, choice enhancement, or choice limitation. This represents a novel way of conceptualizing and classifying CPL by focusing on the function performed by the relevant rules with respect to consumer choice. It breaks away from the traditional approach of dividing up different aspects of CPL based on their content or nature.

The present work builds on earlier efforts of Neil Averitt and Robert Lande to offer a “consumer sovereignty” account of CPL. While their writings on the subject have contributed to the understanding of how CPL relates to positive and negative aspects of consumer freedom of choice, the authors fail to explain why freedom of choice is valuable and ought to be pursued. This is problematic, given that freedom of choice may not always be exercised in pursuit of the good. In any event, it is important to clarify what makes freedom of choice “good” or valuable in the first place before any freedom-based account of CPL should be accepted as normatively convincing.

This article seeks to contrast the autonomy perspective on freedom of choice and the corresponding role of CPL with the prevailing welfarist perspective in the literature. According to the welfarist perspective, freedom of choice is instrumentally valuable for its positive effects on consumer welfare (CW). The autonomy perspective asserts, on the other hand, that freedom of choice is intrinsically valuable for being part and parcel of an autonomous, good life. In other words, the value of freedom of choice is derived non-instrumentally from personal autonomy, which is valuable for its own sake.

It is argued that the autonomy perspective should be preferred for two reasons. First, unlike the personal autonomy of consumers, CW—or economic welfare more generally—is not widely accepted as a moral or ethical value. Indeed, legal philosophers such as Ronald Dworkin have questioned the very idea that economic welfare is a worthy pursuit as well as the whole enterprise of economic analysis of law derived from it. From the standpoint of individual well-being, there is no apparent reason to support social policies that promote general economic welfare if one ends up as a loser rather than a winner. A welfarist or “efficiency” approach to CPL entails that inter-consumer tradeoffs should be tolerated for the sake of enlarging the social pie, but it is unclear why the worse-off consumers would support such legal intervention. The welfarist explanation becomes even less attractive when economic welfare, understood as the satisfaction of preferences measured by willingness to pay (WTP), is biased in favor of those who are wealthy and can afford to pay more than the poor. Meanwhile, very few would deny that personal autonomy is intrinsically valuable for being an indispensable component of individual well-being. Accordingly, the promotion of consumer freedom of choice as a “constitutive part” of personal autonomy is far more normatively appealing than the promotion of CW as an objective of CPL.

The first reason—the lack of a normative basis for the pursuit of consumer or economic welfare—is one that is familiar to many. This article focuses instead on the second reason for preferring the autonomy perspective to the welfarist perspective—namely, that many aspects of CPL, specifically the regulatory approaches to enhancing choice and overcoming choice overload, can be more convincingly explained by the broader conception of rational and valuable choice under the autonomy perspective. The welfarist conception of choice is one that reduces the value of choice to its contribution to CW, measured in terms of value for money. According to this narrow, reductionist perspective, a rational choice entails choosing an option with the highest (or a sufficiently high) WTP/price ratio. It follows that choice enhancement is worthwhile only if the added options are valuable in the sense of offering a higher WTP/price ratio than existing options on the menu, and that the limitation of choice to cope with choice overload is acceptable as long as the eliminated options are not economically superior options according to this ratio. Such a narrow perspective fails to explain the holistic approach to choice enhancement currently adopted by CPL authorities, in particular their interest in promoting product differentiation and variety, even where it remains unclear whether the diversified options add value to CW. It also fails to explain the regulatory trend to shift away from choice-limiting approaches toward choice-facilitating strategies such as nudges in tackling scenarios of choice overload.

In contrast, the broad, holistic conception of choice advocated by autonomists can persuasively account for both regulatory phenomena. Pursuant to the autonomy perspective, a choice is rational if it is supported by sufficiently strong reasons that count in its favor, whereas an option is valuable if it is capable of being rationally chosen. An environmentalist, for example, may rationally choose an ecofriendly option for sustainability purposes without having to satisfy themselves that the option is economically superior or satisfying in terms of value for money. A CPL regulator may, accordingly, recommend choice-enhancing measures that expand opportunities for sustainable consumption and defend regulatory approaches that seek to preserve such opportunities. The underlying rationale is that the sustainable options should be recognized as valuable options because they offer different, sufficiently strong reasons to justify them being chosen among other available options, even if they do not stand out as economically superior. This broader view of valuable options, in turn, supports a holistic approach to choice enhancement and the regulatory shift toward choice facilitation as the preferred regulatory strategy to address choice-overload issues.

In essence, this article defends an autonomy theory of CPL on the basis that it fits better with the contours of CPL than welfarist explanations favored by law-and-economics scholars, rather than simply resting the argument on the firmer moral foundations of personal autonomy as opposed to economic welfare.

This theory is advanced in the following steps. First, it will be argued that CPL authorities on both sides of the Atlantic have internalized the objective of promoting consumer freedom of choice as a matter of law and practice (Part I). Then, two contrasting perspectives on freedom of choice will be offered—the welfarist (or CW) perspective (Part II) and the autonomy perspective (Part III)—the latter being based on the Razian framework of autonomy. This article will proceed to examine how economists and autonomists understand the concept of practical rationality and how rational choice is conceptualized differently under the two perspectives, supplemented by observations on how the rationality of choice is promoted by choice-facilitating measures under CPL (Part IV). This article then analyzes, in light of the broader view of rational choice advocated by autonomists, how valuable choice is likewise conceptualized differently by economists and autonomists, and why the autonomist’s understanding should be preferred, given the holistic approach to choice enhancement favored by CPL authorities (Part V). This article proceeds to explore the relevant policy implications for the regulatory choice between choice limitation and choice facilitation as alternative strategies to cope with problems of choice overload, arguing, again, that the autonomy perspective provides a better account of the regulatory trend in favor of choice facilitation (Part VI). The arguments will be illustrated in Part V (the holistic approach to choice enhancement) and Part VI (the preference for choice facilitation) through three case studies on caskets, energy tariffs, and bank overdrafts, respectively (Part VII), before the article concludes. These case studies, as with other regulatory policies and practical examples discussed in the article, are drawn from both the United States and the United Kingdom. Similar to the United States, the United Kingdom is at the forefront of CPL developments and debates, and it is also broadly representative of the European Union and Commonwealth practice of CPL around the world, Brexit notwithstanding.

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