The thing is, there is by now abundant evidence that people choose badly. This is not just in trivial areas such as the choice of jam, but in really important matters; Richard Thaler and Shlomo Benartzi have shown (pdf) that even very intelligent people can be bamboozled by choices into getting their pension selections wrong.
However, Ms Bennett’s interlocutors overlook this. There seems to be a reluctance to face the fact that the evidence is mounting against the crude “max U” rational maximizer of Econ 101 myth.
But Ms Bennett is also wrong to infer from this that choice in public services is a bad thing. There’s good evidence that choice can, in the right circumstances, drive up standards. But how can this be, if people are bad at choosing? There are (at least) two possible mechanisms:
1. The mere threat that consumers might choose if not efficiently then at least adequately can prevent organizations getting too sloppy. Bosses who display a contempt for their customers - think of Gerald “crap” Ratner - tend not to succeed.
2. People don’t have to make the best possible choice. They only have to satisfice - pick a tolerable option. This could be sufficient to drive people away from really bad schools and hospitals. In this sense, choice and competition can improve standards not because the best get better or bigger, but because the worst disappear. This seems to be the case in the private sector generally. In this superlative paper, Alex Coad writes:
Selection only operates via elimination of the least productive firms or establishments, while the mechanism of selection via differential growth does not appear to be functioning well.This suggests there is a middling position. Yes, Ms Bennett and her like wrongly under-rate the importance of choice in public services. But equally, I fear that some on the right might be over-estimating its efficacy.* Which leaves me puzzled, as to why an extremist like myself is left occupying the centre ground.
* I’m thinking here of choice as an instrumental value. One might reply that choice is a good thing in itself, even if it makes us unhappy, and aside from its effect upon standards. I’m not sure how to ajudge such a claim.