An interesting article appears in Science in May 2013, titled Morals and Markets (A. Falk, and N. Szech.vol., 340, pp. 707-711). The article sets out to explore how market participants change their attitudes towards harm and damage done to third parties.
The act of producing and trading goods in a market produces negative externalities that can lead to exploiting the workforce through poor working conditions, child labor, and environmental damage. It has been observed that people who participate in markets buy goods without much regard to their own moral standards. The researchers devised an experiment to show that if people participate in markets than their moral standards are lowered.
The researchers state
“Our paradigm for studying moral values and detrimental effects on third parties is the trade-off between a mouse life and money. In our main treatments, human subjects faced the decision to either receive no money and to save the life of a mouse, or to earn money and to accept the killing of a mouse.”
The mice used in the study were young healthy mice that would be expected to live over 2 years in an appropriate environment. The subjects were further given an instructional video showing how the mouse would be killed if they decided to kill their mouse. The mice used in the study were surplus mouse that had been bred with genetic changes that had failed for the intended study purpose. The default protocol for mice in these types of experiments would be to kill them but this information was only told to the participants after the study. Mice that were chosen by the participants to survive were purchased and allowed to live.
Three different conditions were explored: 1) individual treatment , 2) a bilateral trading market, and 3) a multilateral trading market. The last 2 conditions represent market conditions.
In the first study (individual treatment) participants were given two options.
“Option A implied that the mouse would survive and that the subject would receive no money. Option B implied the killing of the mouse and receiving 10 euros. “
In the bilateral trading market, one seller and one buyer bargained over killing a mouse for a total of 20 euros that the two parties could split up between themselves.
The researchers state
“If a buyer and a seller agreed on a trade, the buyer received 20 euros minus the price agreed upon. The seller received the price. In addition, the mouse of the seller was killed, reflecting a situation in which trade takes place to the detriment of a third party. If a seller or a buyer did not trade, earnings for both were zero and the mouse survived.”
Hence in the bilateral trading market if a trade occurred the mouse died if a trade did not occur the mouse survived.
In the multilateral trading market it was exactly like the bilateral market as just described, except seven buyers and nine sellers bargained over prices.
The researchers found that for the individual decision treatment, 45.9% of subjects were willing to kill their mouse for 10 euros. In the bilateral market, 72.2% of sellers were willing to kill a mouse for less than or equal to 10 euros. In the multilateral market, 75.9% of sellers were willing to kill a mouse for less than or equal to 10 euros. A statistically significantly higher amount of subjects were willing to kill a mouse in both market conditions when compared to the individual condition. The researchers state this is they key result of their study and suggests that markets erode moral values.
The authors actually present several other studies which I won’t go into and also have a detailed section near the end where they discuss 3 potential concerns that one may raise from their study and their rationale for why their study is valid. The authors conclude by saying
“The point of this study is not to question market economies in general. Indeed, other organizational forms of allocation and price determination such as in totalitarian systems or command societies do not generically place higher value on moral outcomes….We therefore agree with the statement quoted at the beginning that we as a society have to think about where markets are appropriate and where they are not.”
While the authors attempt to be robust in their study, I do question if using something more morally reprehensible than killing a mouse would alter the results.