Wednesday, September 2, 2009

The Income Elasticity of Demand for Public Morals

. Wednesday, September 2, 2009

I have hinted at this concept several times in the past, especially in discussions of things like the politics of climate change, health care, food/agriculture, immigration, foreign aid, and other public policy concerns. I haven't explicitly stated a general theory, but my discussions of these topics often have some symmetry. Namely, relatively rich countries want to "do something" to resolve these issues while relatively poor countries are somewhat nonplussed (if not antagonistic: if it is often argued that richer countries have an obligation to "fix" climate change, e.g., while poorer countries have no such moral mandate. I spelled this out clearly, if briefly, in this post on climate change).

Even further, relatively rich people within relatively rich countries are usually the main proponents of carbon caps, public health care, and sustainable farming. This despite the fact that those things will primarily benefit relatively poor members of relatively poor societies (at least that's what the proponents claim, but there may be a reason why people on food stamps don't generally complain about farm subsidies, and they've already got public health care through Medicaid).

These arguments are almost universally couched in moral terms: we are "killing" or "raping" the planet by emitting too much carbon, everyone has a "right" to health care regardless of income, industrial inorganic farming is "poisoning" our society, etc. The use of that sort of language is purposeful: the intension is to give moral weight to an argument in the hope of being more persuasive.

I am not writing this to protest discussing the moral dimension of public policy concerns. To the contrary, I think this is important, valuable, and done too infrequently and with too little care. There are certainly aspects of morality that is central to the formulation of any public policy and we shouldn't shy away from those conversations. My point in this post is to point out how moral intuitions that seem so obvious to some are so absurd to others. Or, more marginally, how moral considerations are often a function of wealth. Of course if this is true it should push us all towards humility when making moral judgments.

The impetus for this post was the recent NPR story describing how states are loosening their restrictions on gambling in order to boost tax revenue in the hopes of keeping budgets in the black:

In Ohio, Gov. Ted Strickland, a Democrat facing re-election next year, had long rejected the idea of expanded gambling — a view shared with a majority of Ohio's voters. They have said "no" to casino gambling in four referendums since 1990, the latest just last year.

But with a projected $3.2 billion deficit, Strickland fell in line with his fellow Democratic lawmakers and agreed to allow as many as 2,500 slot machines at each of Ohio's seven race tracks. The state believes will bring in $933 million in new licensing fees and taxes. ...

Ohio is far from alone when it comes to budget problems. According to the Center on Budget and Policy Priorities, a Washington-based think tank, every state but Montana and North Dakota is up against shortfalls in the 2009 and 2010 fiscal years.

Politicians are turning to gambling to help close that gap, sometimes with the backing of voters. For example, in the 2008 election cycle, Colorado voters backed the expansion of table gaming and betting limits at casinos; Missouri voters approved the end of "loss limits" during casino sessions.

Meanwhile, Delaware's legislature has legalized sports betting in casinos, although that is being fought in the courts by the major professional sports leagues. Pennsylvania and Illinois are moving to place video poker machines in bars.


It isn't limited to gambling; Oakland, CA has taken to taxing marijuana, and the entire state is considering legalizing and taxing the herb to raise revenue. We don't care all that much about malfeasance in the finance industry until the global economy collapses, but when it does collapse we go on a witch-hunt. Jeff at Cheap Talk called the instinct to relax moral standards during hard times the "Repugnance Margin", and I like that phrase quite a lot. Morality gets fuzzy when we actually have to make a hard choice, and it's often surprising how many principles will be sacrificed when it comes right down to it. There's a reason why richer people/countries make moral pronouncements of the kind under discussion: they can afford to pay the costs.

We don't like to think of morality in terms of costs, but it's clear that we do it on some issues. Our moral expectations are often shaped by the capabilities of the societies we live in or our personal capabilities within those societies. Indeed there is a quite high income elasticity of demand for morals, at least for certain types of morals (e.g. those that are "socially conscientious", or any paternal instinct). The moral calculus for rich states is very different from that of poor states just as the moral calculus for rich people is very different from that of poor people. Great works of art are dedicated to this dynamic.

What does that mean? If our moral sense towards certain issue areas is strongly sensitive to costs, then perhaps we should give heavier weight to those considerations in our discussions. In other words, perhaps our discussions should talk explicitly about trade-offs rather than one-sided obligations. Maybe we should carefully examine where our margins falls, i.e. what costs we are willing to pay to achieve what outcomes. In other words, we should think about what means justify our ends.

Absent that conversation our moral pronouncements contain no morality; they are merely expressions of preference. But simple preferences don't carry the same weight in argument as moral pronouncements. So to get to that point maybe we should shore up our microfoundations, as SBD might say, or find another language in which we can discuss public policy.

2 comments:

Sarah Bauerle said...

was catching up on my blog reader today and came across the shout out. H00T H00T for microfoundations!

Sarah Bauerle said...

I think I meant W00T W00T instead (my cyber-world slang is rusty)

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