Markets and Morality: How Markets Shape Our Dis(Regard) for Others

Abstract

Scholars since Hume and Smith have debated possible causal connections between market experiences and moral beliefs. Here, we study the impact of market interactions on utilitarian versus deontological values, charitable donations, and whether individuals have differential in-group / out-group moral views. Through a labor market intermediary, we randomly assign workers residing across several nations of varying income levels to different market conditions: tournament or individual. We find that, in low-income nations, tournament-based compensation increases deontological commitments in general, deontological commitments specifically toward out-group members, and donations by productive workers but decreases charitable donations by less productive workers. In higher-income nations, the effect of tournament-based compensation on deontological commitments in general reverse while effects on attitudes toward out-group members and charitable donations become insignificant. These experimental findings are consistent with the evolution of the doux commerce thesis, where scholars in previous centuries during early stages of market development posited that commercial exchange increases deontological commitments and scholars in the past century posited that commercial exchange erodes them. These findings suggest that if utilitarian attitudes lead to more market-oriented policies, then multiple steady states may arise wherein some countries sustain high levels of utilitarian attitudes, market orientation, and economic growth alongside progressively weakening deontological commitments and interpersonal regard for others, putting the interests of economic rationality and liberal moral development at odds with one another.

Reference

Daniel L. Chen, and Eric Reinhart, “Markets and Morality: How Markets Shape Our Dis(Regard) for Others”, The Journal of Law, Economics, and Organization, 2024, forthcoming.