Many people but few caged mice

In my previous post I discussed the study Morals and markets, by Armin Falk and Nora Szech, about the choice between ten euros or the life of a mouse. I will now ask what Partha S. Dasgupta and Paul R. Ehrlich would choose, based on their paper Pervasive externalities at the population, consumption, and environment nexus, published three weeks before Falk and Szech's also in Science.

Both papers are framed around the problem of externalities. Wikipedia defines externality as "a cost or benefit which results from an activity or transaction and which affects an otherwise uninvolved party who did not choose to incur that cost or benefit." I thought everyone else defined externality the same way. Not so. Falk and Szech include "detrimental working conditions for workers" and "child labor" as examples of negative externalities. They are not, according to the common definition, because "workers" and "children" accept the costs of working in exchange for wages. And Dasgupta and Ehrlich include fosterage, which is the practice, common in west Africa, of rearing the children of relatives and friends. Fosterage is not a negative externality of human reproduction, according to the common definition, because foster parents voluntarily accept rearing the children - they ask for it, actually.

The level of an activity that generates negative externalities is higher than is socially optimal. Thus, following their incorrect depiction of fosterage, Dasgupta and Ehrlich claim that there is excessive human reproduction in west Africa. Tellingly, they fail to mention the government subsidies to schooling and children health care in the USA and elsewhere that do contribute to excessive reproduction. And they amply discuss that each person, by degrading productive resources and polluting the environment, inflicts negative externalities on everybody else, but not the fact that people also generate positive externalities, for example by creating new resources for everyone to use productively. After adding up negative externalities and ignoring positive ones, they conclude that there are too many people around. They suggest that Africans spend less on "expensive wedding ceremonies and birth celebrations" and more on condoms ("the unmet need for family planning is substantial").

In Falk and Szech's experimental study, participants chose between money and saving the life of a mouse. A succesful trade between the experimenters and a study subject involved a true negative externality whose victim was the unwilling mouse. Not trading money for the mouse resulted in the mouse being saved. "As a consequence of our experiment, many mice that would otherwise have been killed [gassed] right away were allowed to live for roughly 2 years [in an appropriate, enriched environment, and at a cost]." And Falk and Szech reach a verdict: "There exists a basic consensus that harming others in an unjustified and intentional way is considered as immoral." They consider that allowing mice to live for two years in an enriched environment is better than killing them.

But they fail to mention that keeping mice in an appropriate, enriched environment for two years generates negative externalities. Other organisms will be killed to feed the mice. Subjects who decide to save the taxpayers who fund Falk and Szech's research ten euros are making them pay the expenses of keeping the mouse alive for two years, and are harming the unwilling organisms used to feed it. Furthermore, they are generating environmental externalities associated with rearing those other organisms. Whether this is morally preferable to killing the mouse right away is not clear to me. Is it morally worse to kill the mouse than it is to kill the other organisms? Is having more mice and less tropical forest morally better than the opposite is? Would Dasgupta and Ehrlich, who think that there are too many humans, choose to let the mouse enjoy the gift of life for two more years, at the expense of the lives of other organisms, or would they choose the ten euros?

Morals and markets

In a new experimental paper published in Science, Armin Falk and Nora Szech claim that "markets erode moral values" and that, as a result, "we as a society have to think about where markets are appropriate—and where they are not." In this regard, they say that "discussion has arisen about the appropriateness" of trading slaves, religious indulgences, company stock, risky financial derivatives or goods that involve detrimental conditions for workers, child labor, suffering of animals or environmental damage. Although their experiments do not show that markets erode moral values, other observations do. And I think that such moral "erosion" is a good thing.

Falk and Szech made several interesting experiments, but I will summarize only the three main treatments. In the "individual treatment" subjects chose between receiving 10 euros from the experimenter or saving the life of a mouse. According to Falk and Szech, this choice involved moral values. Half of the people chose the money. In the "bilateral market" pairs of subjects got money from the experimenter to bargain over prices to save the mouse and in the "multilateral market" each subject bargained with several others and witnessed the outcomes of trades between other subjects. In the latter two treatments more than two thirds of participants decided to kill the mouse for 10 or fewer euros. So, subjects became more callous about the life of a mouse when bargaining in markets with other subjects than they did when selling it to the experimenter. A possible mechanism for the difference is that observing other people trade the lives of mice for low prices makes it more acceptable to kill a mouse for a few euros (if other people kill a mouse for four euros then it must be alright for me to do the same). Other possible mechanisms are that each participant feels less responsible for the lives of mice when part of a larger market where other people are killing mice and that each participant focuses more on the bargaining dynamics and so pays less attention to the moral implications of his actions.

Falk and Szech write as if the "individual treatment" consisted of an individual decision outside of a market, while the other treatments replicated market decisions. So they conclude that markets erode moral values. However, the "individual treatment" is a market transaction between a subject and the experimenter. So, the difference is not between markets and non-markets but between markets with bargaining and multiple sellers and buyers and a market with no bargaining and a single seller (the subject) and a single buyer (the experimenter).

Anyway, I have no problem accepting the idea that when participating in free markets people become more sensitive to prices and less sensitive to their moral intuitions. Or, in other words, that moral choices are more price-sensitive in free markets, and more so in larger markets. 

Does this justify forbidding certain markets or trades? No, it doesn't. There is no reason to presume that prior moral intuitions are morally better than the choices made in markets. It seems to me that relaxed moral standards in global commercial markets are preferable to the stricter moral intuitions people express in non-commercial contexts. Some widespread moral intuitions are that foreigners, people of other races and religious beliefs, homosexuals, big corporations and the wealthy are evil. If free markets erode these moral values, as they seem to do, then I applaud free markets. Some people have moral reservations about trading with women, children or people earning low incomes or working in extremely unhealthy conditions. These moral reservations result in more misery for women, children and poor workers and entrepreneurs. I welcome their erosion.

Cleaning the environment by publishing slogans in Nature

In between the title (China's citizens must act to save their environment) and the closing words ("The air of the people should be protected — by the people, for the people") of his article in Nature, Qiang Wang tells us that "the voice of society is growing," that the hashtag "I don't want to be a human vacuum cleaner" attracted more than 1.7 million comments (in Sina Weibo, because the government blocks Twitter), that "local protests have successfully blocked the construction of individual polluting projects," that "car ownership is burgeoning," and that people in Beijing buy a second car with an even plate number to drive on the days when the first car with an odd number is not allowed to.

The article's subtitle is "The country's air-pollution crisis offers a lesson in the power of civil society." Wang doesn't say exactly what lesson.

Very compelling moral imperatives

"If it's clear that we exterminated a species, I think we have a moral imperative to do something about it," says Michael Archer [talking about creating a passenger pigeon out of DNA from stuffed specimens].

In the same vein, says I: "My uncle burnt his family's book collection, so I think I have a moral imperative to gather some of the ashes and write a blog post."

Interview on the radio

Esteban Fernández Moreira has inverviewed me on his radio program Actuaciencia. We talked about environmental problems and how people react to them. The podcast is here (in Spanish).

Academic environmentalism and movies

The following quote about macroeconomics, attributed by David Henderson to Axel Leijonhufvud reminds me of the planetary environmentalist stuff published in scientific journals:

Macroeconomics seems to have taken a turn very similar to movies: more and more simple-minded plots but ever more mind-boggling special effects.

Peak shale oil in Nature magazine

Nature, the somewhat scientific journal, has just published a comment on shale gas and oil (Energy: A reality check on the shale revolution) by peak-oiler J. David Hughes.

[P]roduction is likely to be below the exuberant forecasts from industry and government.

[The US Energy Information Administration's] predictions are wildly optimistic given the fundamentals of producing these hydrocarbons.

[T]he industry practice of fitting hyperbolic curves to data on declining productivity, and inferring lifetimes of 40 years or more, is too optimistic.

[I]ndustry must recognize that shale gas and oil are not cheap or inexhaustible [...]

Wait. This sounds familiar.