Tuesday, May 28, 2013

Is Ronald Coase a Euvoluntary Exchanger? (Deadmaus Edition)

We get abstracts! From Mungo:
Morals and Markets
Armin Falk & Nora Szech Science, 10 May 2013, Pages 707-711

Abstract: The possibility that market interaction may erode moral values is a long-standing, but controversial, hypothesis in the social sciences, ethics, and philosophy. To date, empirical evidence on decay of moral values through market interaction has been scarce. We present controlled experimental evidence on how market interaction changes how human subjects value harm and damage done to third parties. In the experiment, subjects decide between either saving the life of a mouse or receiving money. We compare individual decisions to those made in a bilateral and a multilateral market. In both markets, the willingness to kill the mouse is substantially higher than in individual decisions. Furthermore, in the multilateral market, prices for life deteriorate tremendously. In contrast, for morally neutral consumption choices, differences between institutions are small.
The experimental design is straightforward: 3 treatments, one unilateral, one bilateral, one multi-lateral. Participants have a choice between cash (expected value 10 pounds sterling) and saving the life of a surplus testing mouse that would have otherwise been destroyed since it's unfit for use in the lab. Long story short, folks in the unilateral (i.e. you can have £10 and we kill this mouse, or you take no money and the mouse lives out its remaining natural life in comfort) treatment decided to save at a much higher rate than in the bilateral (i.e. two folks negotiate a trade if they wish. If a deal is struck, the parties receive the terms of trade [they have £20 to split] and the mouse dies, otherwise no deal and the mouse lives). There was no statistically significant difference between the bilateral and the multilateral markets, except in the equilibrium price (see Vernon Smith's work for a critique of this part of the experiment).

Now, this piece was in Science, which for those of you who aren't familiar with the publication is a multi-disciplinary journal, somewhere between a popular magazine and a general interest academic journal. Articles have strict length requirements, and the pieces have to be written sans disciplinary jargon. So I can forgive quite a bit of elision when it comes to the details of the experiment. What I find troubling is the interpretation the authors present. They pirouette out of the bounds of their sample to conclude that markets are immoralizing. The act of exchange in the bilateral and the multilateral results in more rodent deaths, therefore there's something about market trade that strangles other-regard and generates negative externalities (and I'll generously refrain from critiquing the erroneous depiction of what constitutes an externality in their opening remarks). That's one way to look at it. Another way to look at it is that wealth exposes compassion.

Consider what an alternative control group might look like. For most of human history (and all of human prehistory), the probability that anyone would have forgone the equivalent of £10 of wealth to save the life of vermin would have been close to zero. It is only because of the spectacular opulence offered by the modern economy that we gentle souls can even begin to consider the lives of mere brute animals with anything approaching tenderness.

Which brings me to the Coase (Demsetz too) point that what the researchers have exposed isn't so much some moral failure of markets, but a property rights gap. The mice have no agency. To me, this is the intriguing result. You see, we here from our lofty vantage point in history look back on our dreadful ancestry and pity them their benighted morals. They did indeed indulge in some godawful behavior: human chattelry, forced marriage, savage public execution, racking, breaking on the wheel, crucifixion, on and on and on. With the nightmarish examples of Stalin's purges, Mao's Great Leap Forward, and Hitler's Holocaust excepted, these modern times bear the hallmark of a sharp decline in violence, most notably venal, but there's a case to be made for institutional as well. I can imagine a future where our descendants would look on us with sad disdain at our lust for bacon. If you're willing to grant some agency to livestock, a particular progression of morality would be to grant beasts property rights over their own life. Yes, this may seem a bit silly to many folks, but who would have predicted in 1600 that people 400 years hence would be so tender as to grant reprieve to mice of all things? How much more gentle will doux commerce make our descendants?

Tough to say of course, but it is encouraging that so vastly much more exchange can be counted as euvoluntary these days. It really is quite remarkable.

1 comment:

  1. "(see Vernon Smith's work for a critique of this part of the experiment)."

    Hi! Could you provide some pointers? What is a good place to start (w r t the F&S paper) for someone who's not well-read on his work?


Do you have suggestions on where we could find more examples of this phenomenon?