Bryan Caplan  

Markets Without Limits and Ashley Madison

Why bubbles are so hard to spo... Good News That Should Have Bee...
As a rule, news is a distraction from worthy intellectual pursuits.  But Jason Brennan manages to thoughtfully filter the Ashley Madison hack through the lens of his new Markets without Limits (co-authored with Peter Jaworski):

Most people believe what Ashley Madison did was wrong, because they profited from immorality. I agree what they did was wrong, but the problem wasn't that they profited. Peter Jaworski and I have a book on commodification, Markets without Limits, coming out next month. Our thesis is that any service or good that you may give away for free, you may sell for money. The only types of goods and services that are not properly objects of sale are the things you shouldn't do or have anyways. In our view, most of the objections to commodifying this or that are really objections to how the thing is sold, not what is sold.

So, for instance, we agree that child pornography and nuclear weapons ought not be bought and sold, but that's because people ought not have them in the first place. If people were distributing these goods for free, it would still be wrong...

Ashley Madison provides a nice illustration of our central thesis... [T]he problem with Ashley Madison is not primarily that it helps people break promises for profit. It's that it helps people break promises, period. If Jaworski and I were to set up the Help You Secretly Cheat On Your Spouse Charitable Foundation, an NGO that matches would-be paramours, the service would also be wrong. The wrongness here doesn't originate in the market, in the buying and selling of the service. It originates in the activity itself.

In surveying the various books on the limits of markets, we find that about half of the so-called "contested commodities" or "noxious markets" that the authors discuss concern cases like Ashley Madison, where the good or service in question is something people should not have or do anyways. Sure, if some behaviors are wrongful or some products bad, then we generally don't want to industrialize providing them. Still, we need to be clear what the issue is. Markets in bad things are bad because bad things are bad, not because markets are introducing badness where there wasn't any.

COMMENTS (15 to date)
Eric Crampton writes:

I'm curious whether the proportion of members who were there with their partner's permission and knowledge was closer to 1% or closer to 20%. There've been more than a few stories out since about people who'd signed on with their spouse's consent because of medical issues preventing normal familial relations.

BJ Terry writes:

I don't know that I totally buy this argument. Suppose a medieval church is selling indulgences, which, for the sake of argument, means that you can purchase absolution of the sins you've committed. (This is not historically accurate, if my reading of the Wikipedia article is correct, but it is how its commonly understood so makes a fine basis for an argument.) One can argue whether absolving people of their guilt of past sins for free is bad or not, but it is accepted doctrine in many (most?) modern sects of Christianity. Most people would agree that creating a market in indulgences either makes this process evil, or at the very least brings its own element of badness to an already questionable practice. It may be because of the bad incentives the market creates among those who can create an indulgence out of whole cloth, but in order to argue around this you at least have to acknowledge this and what makes it different from normal economic trade. Of course, this is probably a technicality, as a market for indulgences would be unusual among markets generally. It is actually a market that deals directly in items that have moral valence as their only fundamental attribute, making it uniquely self-referential from a moral perspective.

Markets by their nature make more efficient trade possible, by lowering search and information costs. If you are someone who creates a market in evil that more efficiently matches buyers and sellers, thereby increasing the amount of badness in the world, I think you are partially responsible for that incremental badness (whether or not you profit by operating the market). And if you are setting up a market that doesn't intend to create badness, but you do anyway, your inability to align incentives properly to not increase badness makes it also at least partially your responsibility.

I already don't have a really strong thesis with this post, so I'll throw out another musing. The incentives of profit-making give you additional resources to promote badness, and the mere existence of market in bad things can create new Schelling points in society. Before there was no efficient way to find other adulterers. If you start your own free (i.e. non-profit) market of adulterers you may operate it as a small non-profit and have a few thousands of users. But if you charge, you are suddenly strongly incentivized to encourage adultery, AND have the resources to run millions of dollars worth of ads, such as the ones I used to hear on LA radio for Ashley Madison. This can also encourage new marketplaces offering similar services, and as we know with moral issues, if there are many people engaging in the behavior, it is much less likely to be judged as immoral. If you think something is immoral, people who create marketplaces do deserve a special amount of discouragement if you hope for that thing to be continued to be judged as immoral, from a game theory perspective, because markets are such a powerful force of plenty.

Miguel Madeira writes:

An example perhaps similar to the BJ Terry example of indulgencies - imagine a market for favorable film reviews, or for favorable opinion articles about politicians.

Jody writes:

Miguel - again, the actual issue would be the (presumed) dishonesty of the reviews, not the financial transaction.

ThomasH writes:

I somewhat agree but have the following thought. Suppose adultery is bad and there and there is an equilibrium amount of it going on, amount demanded being balanced by costs and social pressure against it. By assumption no additional taxes or regulations are just or cost effective are called for to reduce the level of adultery.

Now suppose there is a new technology is invented to reduce those costs supplied by a third party (at cost or for profit seems to make no difference except that for profit may increase the supply.) Is it possible that it would be just or cost effective to tax or regulate the new technology supplier? I'd say yes. The new tax or regulation would still have to pass a cost benefit text so the fact that the underlying acts being facilitated by the technology are wrong does not necessarily mean that any conceivable regulation or tax is right, but the possibility of justifiable regulation of the market exists even when there is no justification for regulation of the underlying activity.

I think this is the correct way to think about drug laws, too. It's not good for people to shoot up heroine and it is not necessarily bad to have laws that seek to reduce the amount of heroin shooting up, but criminalization as actually practiced creates huge ills (many of them falling on people outside the US when we off shore some of the anti-drug enforcement activities). Quite possibly the most cost-effective regulation would apply only to for-profit supply of drugs. [I'd argue that the same logic does not apply to marijuana -- no taxes or regulations are needed -- as the underlying activity should not be discouraged, but that's an empirical matter about harm from using marijuana.]

In other words, the principles applying to how the market for adultery-facilitating technology or drugs, or milk should be regulated are the same: do the costs of a specific actual or proposed regulation or tax exceed benefits?

Hazel Meade writes:

I think BJ Terry has hit upon the key issue.
It's not the profit-making per se that's the problem, it's the fact that profit-making incentivizes producing more of the bad stuff that people ought not to have. If there are profits to be made buying and selling child porn, more people will make child porn. If there are profits to be made buying and selling nuclear weapons, more people will make nuclear weapons.

Of course, we have to be careful about what we decide is immoral. Personally, I'm not sure there's anything really wrong with what Ashley Madison is doing. While a spouse may be harmed by the other spouse having an affair, that's a private matter between them. It shouldn't be a matter of public concern.

Anonymous writes:

@Hazel Meade:

Personally, I'm not sure there's anything wrong with what Ashley Madison is doing. While a spouse may be harmed by the other spouse having an affair, that's a private matter between them. It shouldn't be a matter of public concern.

I'm not sure I understand how the second of these points implies the first. Is public harm wrong but private harm fine? If someone punches you in the face would you consider that to be bad and justify why it's public not private harm, or would you admit it as private harm and say it's therefore fine?

This seems like an odd train of logic to me.

_NL writes:

I agree that anything you can do for free you can for money. By this logic, not only prostitution and organ selling should be legal, but so should blackmail (if you can choose to withhold gossip for free, then you can withhold it for money).

The problem highlighted by other commenters above is actually a problem of conflict of interest. So it would be wrong for the Church to distribute indulgences that had no religious basis for free, but we suspect they are more likely to do this when it serves their political or pecuniary interests. But here it's still wrong even if no money changes hands and if instead it's based on caprice, bias, favor, animus, politics, or any other reason.

If critics or opinion writers sold their opinions for money, the problem is they are giving poorer critiques and opinions, not that they took money. If they did so because of sloth, anger, procrastination, personal relationships or anything else, then the product is just as bad. When we suspect that David Brooks or Tom Friedman or Jon Stewart may have been wooed by President Obama into giving excessively flattering coverage, there is no money changing hands yet still the value of their craft is diminished.

Money might be a common reason to do bad work, but it is not the only reason. It might also provide more capital to expand bad work, but again the problem is the badness, not the profit.

Dustin writes:

Facilitating a bad thing is bad, and taking personal gain for facilitating a bad thing is bad.

They are both bad and for different reasons.

Hazel Meade writes:


I think the difference that in the case of adultery you have a consentual act that violates a contractual agreement with a third party. In the case of the face puncher, there are only two parties and generally it isn't a consentual act.
Assault is illegal because the person getting assaulted doesn't agree to it. That makes it a public matter.
Adultery isn't illegal because the people actually commiting adultery are both consenting partners. The person who is cheated on doesn't participate in the act and isn't directly harmed, except in the sense that a private agreement not to cheat was violated.

So to summarize: Non-consentual acts - public matters. Consentual acts that violate private agreements - private matters.

Michael writes:

I bet most people on Ashley Madison weren't using it for its claimed purpose. Among many possibilities are couples where the "infidelity" is consensual, but using Ashley Madison seemed more dirty (exciting) than gross.

I wish there were a way to know how many true cheater-to-cheater hookups there were. I bet the fraction is tiny.

Jesse writes:

If Ashley Madison were "sin-taxed", their lawyers would make sure they toe the line so that you could use it to cheat, but that's not the intended purpose. At that point, they would be no more facilitating cheating than a motel.

Michael: I share your suspicion. I also suspect there are plenty of people who just aren't in a relationship at all. My younger brother's initial reaction was, "Oh no, I hope none of those women find out I'm not married." (He was joking, I'm pretty sure.)

Anonymous writes:

@Hazel Meade

Maybe I'm misunderstanding what you mean by 'private matter'. Are you saying, essentially, that you think Ashley Madison or similar websites shouldn't be illegal, and that if you thought they should then that would be a public matter, but not otherwise?

I would probably agree that it shouldn't be illegal, but I don't think I would use a distinction between public concern versus private matter as synonymous with what should be illegal versus legal. Nor do I think the number of people involved has anything to do with it - if I call you a rude name, that might upset you, and it involves two parties - is that a public concern? Should that be illegal? If someone sells trade secrets against the terms of their contract with their employer, that involves three parties - is that a private matter? Should it be legal?

Nathan W writes:

I think that if someone wants to cheat on their spouse, they should get divorced first and then go on their merry way with their new partners.

But that's just my opinion.

Since when is it anyone else's business to get involved in the bedrooms of consenting adults?

John T. Kennedy writes:

Nathan writes:

"Since when is it anyone else's business to get involved in the bedrooms of consenting adults?"

Why would we think the cheated spouse consents? If you know a used car salesman was cheating customers by lying to them, presumably that wouldn't count as interaction between consenting adults and revealing the lies would be morally permissible.

I think the more interesting question is wheter what the hackers did was wrong, ad I've yet to hear a convincing argument that it was.

Comments for this entry have been closed
Return to top