Do markets change the goods for sale? Do they erode social norms?

what-money-cannot-buy
 

If you’re going to read one review of Sandel’s book, read Deirdre McCloskey’s. If you have energy for one more, read mine.

Consider three true tales:

“Barbara Harris, the found of a North Carolina-based charity called Project Prevention, has a market-based solution [to the problem of babies being born to drug-addicted mothers]: offer drug-addicted women $300 cash if they will undergo sterilization or long-term birth control. More than three thousand women have taken her up on the offer since she launched the program in 1997.”

“It’s not easy to compose an elegant wedding speech, and many best men don’t feel up to the task. So some have resorted to buying wedding toasts online. ThePerfectToast.com is one of the leading websites offering ghostwritten wedding speeches…. You answer a questionnaire online…and within three business days you receive a professionally written custom toast of three to five minutes.”

“As a single mother of an eleven-year-old boy who was struggling in school, Kari Smith needed money for her son’s education. In an online auction in 2005, she offered to install a permanent tattoo advertisement on her forehead for a commercial sponsor willing to pay $10,000. An online casino met her price.”

What should be for sale? Reproductive rights? Tokens of friendship? Skin space? Health care? A love of learning? In this slim tome, Harvard professor and philosopher Michael Sandel explores the expansion of market-oriented thinking into a wide array of new areas, as the examples above demonstrate. Sandel offers about a hundred more: “The reach of markets, and market-oriented thinking, into aspects of life traditionally governed by nonmarket norms is one of the most significant developments of our time.” As he lays it out, markets do two potentially good things: First, markets tend to make the buyer and the seller better off. Otherwise they wouldn’t both be buying and selling. So if people are freely engaging in market behavior (even around things traditionally governed by norms), it is probably making them better off. (Sandel does point out that not all market behavior is “freely” engaged in, as one could argue with the drug addicts in the first example above.) Second, markets pass no judgment on transactions. If people want to buy or to sell their body space, why should a bystander be permitted to block that?

But his largest point against markets is that they may change the nature of the good being bought or sold (i.e., they may “corrupt” the item or the interaction). If selling fast passes at amusement parks and airports changes the nature of interactions in these spaces, then markets are changing the item. If trying to buy students’ motivation by paying them to read books crowds out their intrinsic interest in reading books, then the market behavior is changing the nature of the item for sale. (Sandel partially surveys the evidence on this: The effectiveness is mixed.) That doesn’t mean we shouldn’t ever do it:

“I do not claim that promoting virtuous attitudes toward the environment, or parenting, or education must always trump competing consideration…. If paying underachieving kids to read books brings a dramatic improvement in reading skills, we might decide to try it, hoping we can teach them to love learning later. But it is important to remember that it is bribery we are engaged in, a morally compromised practice that substitutes a lower norm (reading to make money) for a higher one (reading for the love of it).”

Indeed, we have some evidence from teacher incentives in the USA (Jinnai 2016) and from student incentives in India (Visaria et al. 2016) that suggests that after incentive programs are discontinued, some teachers or students perform worse than before the program was introduced. So these are not purely theoretical considerations.

Sandel doesn’t offer clear answers, but he poses important questions. As I listened to the audiobook, I alternated between thinking hard about markets in the fields I work in (education, health, social safety nets) and where we should think carefully about the erosion of norms, and being mildly annoyed at what I see as a pretty reductive view of economics (Freakonomics is quoted repeatedly in an effort to define modern economics).

I’m comfortable with far more markets than Sandel is, but maybe not all of them.

Reviews and reactions:
  • Dierdre McCloskey, personal website (economist): Sandel “does, to his credit, give many interesting examples of the moral dilemma in choosing money over status or queuing to allocate things, from selling kidneys to buying baseball players. Yet surprisingly for someone who has taught over the years 15,000 students in his famous course, Moral Reasoning 22, Sandel’s moral ideas in the book have no discernible connection to human moral thinking since Moses and Confucius and Socrates. The kids deserve better. His moral thoughts in fact are two only, and thin versions even of these: that equality is good; and that the sacred can be corrupted by the profane.”
  • Diane Coyle, Independent (economist): “This entertaining and provocative book is full of examples of vulgar commercialisation…. A lot of us will agree that there is far too much of this in modern life. However, there are examples in this book of the expansion of markets in ways that many people, especially economists, would mostly regard as beneficial, but the author argues are degrading…. What Money Can’t Buy will tap into a widespread unease about having to limit government and accept a larger private domain in this age of austerity; and about crass commercialisation when unemployment and inequality are too high. But it does not offer a clear guide to which markets are repugnant, and why.”
  • Philip Badger, Philosophy Now (philosopher): “His argument, which is difficult to resist in several respects, comes down to the point that the increasing commodification of our existence is a form of corruption which undermines both our relationships with each other and the relationship of the individual with society.”
  • John Lanchester, The Guardian (novelist & journalist): “Let’s hope that What Money Can’t Buy, by being so patient and so accumulative in its argument and its examples, marks a permanent shift in these debates. Markets are not morally neutral…. Anyone who is already in agreement with the ideas Sandel is advancing – a fairly numerous group of his readers, I’d have thought – may well want a more sweeping, angrier book, one that is more heated about the morally debased landscape brought to us by the ubiquity of market thinking.”
HT Mario Macis — who does great work on morally controversial transactions — for sharing the McCloskey review.
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