Value Competition: Alvin Roth and Michael Sandel

I'm very positive about the economics Nobel for Alvin Roth, the pioneer of the medical match system and analyst of repugnance as a constraint on markets.??

The background of this post: I'm hoping to get to tomorrow afternoon's Paduano seminar?at NYU by Michael Sandel, who will be talking about how markets crowd out morality.??(We have what looks like a very interesting SCMMS seminar by Prof. Terry Esper tomorrow morning, so it looks like an action- packed day, just like last Friday.)?? Given the interests of some of the Paduano participants, I'm imagining that one line of questions tomorrow for Prof. Sandel will involve empirical research by Herb Gintis, Joe Henrich and others suggesting that more market-oriented societies tend to have higher levels of pro-social behavior in economic games.?

Two thoughts occurred to me this morning while thinking about Sandel and then about Roth.? First, it's perhaps useful to unpack what we mean by market as opposed to non-market relations.? Second, there's an issue as to what if any kind of market failure or repugnance issue lies behind the stigmatizing of sex for money, romance for money, marriage for money, and family household work for money.

I think the second issue can usefully be looked at through a Haidt moral foundations lens.? Is aversion to monetary exchange for intimate relations a purity/sacredness??phenomenon,?analogous to the feelings of repugnance that Roth analyzes and that led California voters to support a ban on the sale of horsemeat in a recent referendum????In one common-sense positive sense, the answer is clearly yes, as I suspect Haidt, Sandel, and Roth would all agree.? In another less obvious positive sense, which I'm pretty sure would be endorsed by Roth and?Haidt but maybe not by Sandel, the answer is that the purity/sacredness repugnance feeling ultimately goes back in evolutionary terms to the fairness foundation, and specifically to preventing cheating in the form of strategic behavior in which one partner tries to usurp the role of producer by demanding payment for his/her services.??

The economic intuition behind the claim that repugnance to selling intimate services is "really" about fairness: Some?optimal production processes, of which many or most intimate relations are paradigmatic,?involve both parties being producers and consumers simultaneously rather than one party being a buyer and the other a seller.? In such production processes, efficiency calls for stigmatizing a party trying to assume the role of producer by receiving monetary compensation.

A?normative claim that I'm quite sure would be strongly endorsed by Roth and strongly opposed by Sandel--I'm not sure about Haidt---is that contemporary intellectual leaders and policy-makers should get beyond repugnance emotions and analyze the effects of monetary markets in intimate relations (and other spheres) in a dispassionate, consequentialist fashion.

My early-morning notes on different aspects of markets in relation to certain key sectors follow...???

Three different aspects of mkts and non-mkts?relevant for sectors involving mkt failures (public goods, externalities, and/or value-reducing strategic behavior when there is no clear producer and consumer)?examples of such sectors--defense, licensing, law enforcement, arts and culture, education, health care, family life and other intimate relations

?1.?? Money going directly from buyer of service to provider??higher education, govt and non-profit employment, arts and culture--YES (or mostly YES); defense, law enforcement, public?K-12 education, grading, academic publication, housework, romance, marriage--NO (or mostly no); licensing--mostly YES; law enforcement--NO; health care--mostly NO;

2.?? Service provided by for-profit providers paid directly by buyers? ?Education--NO (tutoring YES; current?political issue as to for-profits paid entirely or mostly from public funds); arts and culture YES and NO; health care mostly NO (for-profits paid mostly by third-party insurance and public funds are a major part of health-care system);

3.?? Availability of exit for both parties or not?govt employment and tenured faculty employment NO for employer; parenting NO for both parent and minor.

?????????????

Source: http://valuecompetition.typepad.com/value_competition/2012/10/alvin-roth-and-michael-sandel.html

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