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How Markets Crowd Out Altruism

Posted by Josh Rothman  May 23, 2012 11:30 AM

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Writing in Boston Review, Harvard's Michael Sandel offers an essay-length summary of his new book, What Money Can't Buy: The Moral Limits of Markets. I've enjoyed this book quite a lot and think it's well worth reading in its entirety -- but, if you don't have the time, this is a great place to start. Key quote (from the book): "Economists often assume that markets are inert, that they do not affect the goods they exchange. But this is untrue. Markets leave their mark. Sometimes, market values crowd out nonmarket values worth caring about... [S]ome of the good things in life are corrupted or degraded if turned into commodities."

The idea that thinking about something in a market-based way might corrupt or degrade it may seem like a lot of moralistic finger-wagging. In fact, Sandel argues, it's a very real, measurable effect, and, cumulatively, it can change the way our society works. Consider this example from Switzerland:

For years, Switzerland had been trying to find a place to store its radioactive waste.... One location designated as a potential site was the small mountain village of Wolfenschiessen (population 2,100). In 1993, shortly before a referendum on the issue, 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 neighborhood, 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 favor it?

The result: support dropped to 25 percent. What’s more, upping the ante didn’t help. When the economists increased the monetary offer, the result was unchanged. The residents stood firm even when offered yearly cash payments as high as $8,700 per person, well in excess of the median monthly income.

It's a classic example, Sandel writes, of the way that putting a price on something -- in this case, civic virtue -- can actually change and even destroy it. Apart from the market, accepting the location of the storage site is virtuous; with the market, it's simple bribery. In fact, "83 percent of those who rejected the monetary proposal explained their opposition by saying they could not be bribed." It's what Sandel calls "crowding out": Introduce the market, and you "crowd out" other ways of thinking about a decision. Incentivize a behavior, and you might actually get less of it.

Economists, Sandel writes, aren't particularly bothered by crowding out; in their view, society is better off instituting market mechanisms wherever possible so as to reduce our reliance on altruism, which is a fickle and limited resource. But "to those not steeped in economics," Sandel argues, "this way of thinking about the generous virtues is strange, even far-fetched. It ignores the possibility that our capacity for love and benevolence is not depleted with use but enlarged with practice."

Read more at Boston Review, and buy Sandel's book here.

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About brainiac Brainiac is the daily blog of the Globe's Sunday Ideas section, covering news and delights from the worlds of art, science, literature, history, design, and more. You can follow us on Twitter @GlobeIdeas.
Brainiac blogger Kevin Hartnett is a writer in Columbia, South Carolina. He can be reached here.

Leon Neyfakh is the staff writer for Ideas. Amanda Katz is the deputy Ideas editor. Stephen Heuser is the Ideas editor.

Guest blogger Simon Waxman is Managing Editor of Boston Review and has written for WBUR, Alternet, McSweeney's, Jacobin, and others.

Guest blogger Elizabeth Manus is a writer living in New York City. She has been a book review editor at the Boston Phoenix, and a columnist for The New York Observer and Metro.

Guest blogger Sarah Laskow is a freelance writer and editor in New York City. She edits Smithsonian's SmartNews blog and has contributed to Salon, Good, The American Prospect, Bloomberg News, and other publications.

Guest blogger Joshua Glenn is a Boston-based writer, publisher, and freelance semiotician. He was the original Brainiac blogger, and is currently editor of the blog HiLobrow, publisher of a series of Radium Age science fiction novels, and co-author/co-editor of several books, including the story collection "Significant Objects" and the kids' field guide to life "Unbored."

Guest blogger Ruth Graham is a freelance journalist in New Hampshire, and a frequent Ideas contributor. She is a former features editor for the New York Sun, and has written for publications including Slate and the Wall Street Journal.

Joshua Rothman is a graduate student and Teaching Fellow in the Harvard English department, and an Instructor in Public Policy at the Harvard Kennedy School of Government. He teaches novels and political writing.


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