I understand human beings rather well, which is why I try to tell people they must not allow anyone (say, you for example) to use the political system to distort markets just because you would rather not have to deal with the reality that most of your fellow countrymen do not have a problem with closing said factory and putting you out of a job if someone in Korea can do your job better and thereby save *them* some money by providing a cheaper or better product. That’s life, buy a helmet.

In any case, I think my main point was precisely that we suffer from biases that anchor us to familiar places at the expense of our long-term welfare.

Well, the former shrinks the choice set, while the latter expands it. A larger choice set shouldn’t reduce anyone’s utility, unless we are willing to posit some kind of cognitive bias on the part of the poor subsidy recipients that prevents them from seeing the full benefits of going elsewhere (or the full costs of staying).

Bryan Caplan has made this argument with respect to public welfare; basically, the idea is that the traditional conservative “welfare trap” argument works only if we have irrational welfare recipients, since rational people will only accept the hand-outs if doing so will make them (on net, in the long run) better off. Thus, Caplan says the paternalistic arguments coming out of behavioral economics sometimes militate against state intervention.