Today is pensions freedom day, which has led to fears that people will misuse their freedom and so pay too much tax, stoke up a buy-to-let bubble or just spend too much too soon and so end up in poverty.
This reminds us that freedom is a scary thing. Bryan Caplan highlights some words of Martin Luther:
I frankly confess that even if it were possible, I should not wish to have free choice given to me, or to have anything left in my own hands by which I might strive toward salvation. For, on the one hand, I should be unable to stand firm and keep hold of it amid so many adversities and perils and so many assaults of demons, seeing that even one demon is mightier, than all men, and no man at all could be saved; and on the other hand, even if there were no perils or adversities or demons, I should nevertheless have to labor under perpetual uncertainty and to fight as one beating the air, since even if I lived and worked to eternity, my conscience would never be assured and certain how much it ought to do to satisfy God.
This is a very modern passage. Just as Luther feared that free will would lead us to fall short of the standards demanded by God, so we moderns fear that it will cause us to fall short of the standards demanded by rationality. And Luther, like us, fears the uncertainty that freedom brings.
I suspect that these fears are exacerbated by a couple of errors.
One is that we fail to appreciate that freedom often leads not to anarchy and chaos but to spontaneous order. As I've said, it's no accident that people who most want immigration controls also tend also to want state intervention in other areas of the economy - because they under-rate the power of the invisible hand.
A second mistake, which is more relevant to pensions freedom, is the failure to empathize sufficiently. This can lead us to be too quick to see irrationality in others.
For example, it might be quite rational to spend a lot of money early in our retirement. Doing so can build up a stock of happy memories which we can look back upon in our dotage. Some types of spending are in fact like saving; the give us a source of happiness in future years. And it makes sense to spend whilst we still can. The marginal utility of consumption declines (pdf) as our health deteriorates; holidays are less fun if we can't walk far, and nice cars are useless if our eyesight has gone. It's possible to be too prudent, and to save too much.
Sure, some neoclassical economists are prone to see rationality everywhere, even in destructive behaviour such as addiction. But behavioural economists can be prone to the opposite error; they are too quick to see irrationality.
However, it is not just others' freedom that we are scared of. Perhaps, like Luther, we are also scared of our own. I've recently been thinking of retiring. One reason why I haven't done so is that I'm scared that I might be misjudging my future finances; the uncertainty here isn't just the risk surrounding financial returns but the unquantifiable uncertainty about my future tastes. So far, this fear has been stronger than the countervailing fear, that I'll lie on my deathbed regretting that I have wasted my life by working.
The limits upon our freedom are not just those imposed by laws. There are also what William Blake called "mind-forg'd manacles." Fear - be it the fear of uncertainty or of others' opinions - is also a constraint.