Thursday, June 22, 2023

Social production of moral indifference - 9b

A typical economist will tell you that if the price is sorted out, the rest will follow. But while prices matter, economists tend to overestimate the effectiveness of price as a lever, and to underestimate the role of values, sense of reciprocity, networks, and heuristics. We have to decide how to value the goods in question — health, education, family life, nature, art, civic duties, and so on. These are moral and political questions, not merely economic ones. 

We often associate corruption with illicit payoffs to public officials. But corruption also has a broader meaning: we corrupt a good, an activity, or a social practice whenever we treat it according to a lower norm than is appropriate to it. The last few decades have witnessed the remaking of social relations in the image of market relations. One measure of this transformation is the growing use of monetary incentives to solve social problems.

That is especially true when it comes to relationships that we have traditionally managed with our morals by encouraging qualities like trustworthiness, honour, and concern for others’ welfare. Emphasizing material incentives, it turns out, does more than just change incentives. At a very deep level, it changes people. Relying too much on selfishness can become a self-fulfilling prophecy. By treating people as if they should care only about their own material rewards, we ensure that they do.

Evidence from a wide range of policy initiatives raises a warning signal around introducing cash incentives in social spaces. When it comes to creating deep and lasting social and ecological behaviour change, the most effective approach is  to connect with people’s values and identity, not with their pocket and budget. Richard Titmuss first raised this concern in his 1970 book, The Gift Relationship, which contrasted the blood donor service in the US, where people  were paid for their contributions, with the far more successful service in the UK, where volunteers gave more and healthier blood for free. 

Merely mentioning market roles can crowd out our intrinsic motivation. One online survey asked participants to imagine themselves as one among four households facing a water shortage due to a drought affecting their shared well. The survey described the whole scenario in terms of ‘consumers’ to one half of the participants, and in terms of ‘individuals’ to the other half. Those labelled ‘consumers’ reported feeling less personal responsibility to take action and less trust in others to do the same than did those referred to as ‘individuals’. Simply thinking like a consumer, it seems, triggers self-regarding behaviour, and divides rather than unites groups who are facing a common scarcity. 

Another experimental survey found that university students who were invited to take part in a ‘Consumer Reaction Study’ identified more strongly with notions of wealth, status and success than did their fellow students who were merely told instead that they were participating in a ‘Citizen Reaction Study’. Markets don’t only allocate goods; they also express and promote certain attitudes toward the goods being exchanged. When we decide that certain goods may be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities, as instruments of profit and use. But not all goods are properly valued in this way.

Another example comes in the area of managing nuclear waste. For years, Switzerland had been trying to find a place to store radioactive nuclear waste. Few communities wanted nuclear waste to reside in their midst. In one location designated as a potential nuclear waste site, some economists surveyed the residents of the village, asking whether they would vote to accept a nuclear waste repository in their community, if the Swiss parliament decided to build it there. Although the facility was widely viewed as an undesirable addition to the neighbourhood, a slim majority (51 percent) of residents said they would accept it. 

Apparently their sense of civic duty outweighed their concern about the risks. Then the economists added a sweetener:  suppose parliament proposed building the nuclear waste facility in your community and offered to compensate each resident with an annual monetary payment. Then would you favour it? The result: support went down, not up. Adding the financial inducement cut the rate of acceptance in half, from 51 to 25 percent. The offer of money actually reduced people’s willingness to host the nuclear waste site. 

For many villagers, willingness to accept the nuclear waste site reflected public spirit — a recognition that the country as a whole depended on nuclear energy and that the nuclear waste had to be stored somewhere. If their community was found to be the safest storage site, they were willing to bear the burden. But, the offer of cash to residents of the village felt like a bribe, an effort to buy their vote. In fact, 83 percent of those who rejected the monetary proposal explained their opposition by saying they could not be bribed.

When the economists increased the monetary offer, even in excess of the median monthly income the result was unchanged. You might think that adding a financial incentive would simply reinforce whatever public-spirited sentiment already exists, thus increasing support for the nuclear waste site. After all, aren’t two incentives — one financial, the other civic— more powerful than one? Not necessarily. It is a mistake to assume that incentives are additive. The price effect is sometimes changed by moral considerations, including a commitment to the common good. 

We should ask if it is always necessary to maximize social  utility  regardless of the moral worth of the preferences. Economists say that they don't 'traffic in morality' but their belief in maximising utility is itself a value judgement.  You can say that it is just a question of semantics but this reflects a mindset that is increasingly prevalent. Excess of market thinking leads people to view employees as nothing more than statistics to be manipulated in order to beautify the balance sheet. 

I saw a strange statement by Larry Summers quoted in What Money Can't Buy, ‘We all have only so much altruism in us. Economists like me think of altruism as a valuable and rare good that needs conserving. Far better to conserve it by designing a system in which people's wants will be  satisfied by individuals being selfish, and saving that altruism for our families, our friends, and the many social problems in this world that markets cannot solve.’ Altruism is a 'rare good'? I have been surviving on altruism for over 24 years and have never felt that it was so rare. 

Sunday, June 4, 2023

Social production of moral indifference - 9a

“Altruism, generosity, solidarity and civic spirit are not like commodities that are depleted with use. They are more like muscles that develop and grow stronger with exercise. One of the defects of a market-driven society is that it lets these virtues languish. Michael J. Sandel, What Money Can't Buy: The Moral Limits of Markets

Markets have become detached from morals and market values are moving into areas of life where they don't belong, eg. health, education, family life, nature, civic duties, etc. A market economy is inexorably turning into a market society. Michael Sandel writes in What Money can’t Buy, ‘The difference is this: A market economy is a tool — a valuable and effective tool —for organizing productive activity. A market society is a way of life in which market values seep into every aspect of human endeavour. It’s a place where social relations are made over in the image of the market.’ In The Market as God, Harvey Cox writes:

The latest trend in economic theory is the attempt to apply market calculations to areas that once appeared to be exempt, such as dating, family life, marital relations, and child-rearing. Henri Lepage, an enthusiastic advocate of globalization, now speaks about a "total market." . . . There seems to be nowhere left to flee from its untiring quest. Like the Hound of Heaven, it pursues us home from the mall and into the nursery and the bedroom.

It used to be thought — mistakenly, as it turns out — that at least the innermost, or "spiritual," dimension of life was resistant to The Market. . . But as the markets for material goods become increasingly glutted, such previously unmarketable states of grace as serenity and tranquillity are now appearing in the catalogues. . . Thus The Market makes available the religious benefits that once required prayer and fasting . . . 

All can now handily be bought without an unrealistic demand on one's time, in a weekend workshop at a Caribbean resort with a sensitive psychological consultant replacing the crotchety retreat master.

Markets promote certain vales and attitudes towards what is being priced. In standard economic theory, a transaction is fine if it results in some people being better off and no-one else is worse off. It assumes that putting a price on a good doesn't change the character of the good. Is this true in all situations? A growing body of research confirms that financial incentives and other market mechanisms can backfire by crowding out non-market norms. Sometimes, offering payment for a certain behaviour gets you less of it, not more. And when market norms displace social norms, the effects can be hard to reverse, as demonstrated in an experimental study in Haifa, Israel in the 1990s. 

Some child-care centres faced a familiar problem: parents sometimes came late to pick up their children. To solve this problem, the centres imposed a fine for late pickups. The parental response? Rather than arriving more promptly, twice as many parents started arriving late. Introducing the fine changed the norms. Before, parents who came late felt guilty; they were imposing an inconvenience on the teachers. Now the social norm of a moral obligation was viewed through a market lens as overtime fees. Rather than imposing on the teacher, they were simply paying him or her to work longer.

When the fine was removed, the number of late pickups rose higher still: the price had gone, but the guilt hadn’t come back. The temporary marketplace had, in essence, erased the social contract.  The price effect - when the price goes up, people buy less of a good, and when prices go down, they buy more - is generally reliable when material goods like PCs or mobile phones are being discussed. But  it is less reliable when applied to social practices governed by non-market norms. Sociologists argue that we live in two worlds, one where social norms dominate and the other where market norms dominate. 

The social norms are the actions among friends that are not based on money. For example we might help a friend move his couch without expecting any payment (in fact it would probably be rude to require payment). In contrast to the vague, unclear and implicit dealing of the social world, the market world is the opposite. Here we only deal with people who can benefit us and make us money. When social norms are involved, applying market logic often confounds expectations. Economics is about trade-offs and the trade-off between market and social norms is often ignored.

Depending on which norms we adhere to also affects our behaviour. Studies show that when people are in the social norm world, they are more likely to ask for help and help others. Whereas when people are in the market norm world, they are more self-reliant and self-focused. They are less likely to help strangers or explain things to confused fellow students. They are more likely to work alone and choose individual activities over teamwork. So when we think about money and put ourselves in the market norms world, then we behave as traditional economics expects.