Markets and Morality: Do Free Markets Corrode Moral Values?
TSE Working Paper No. 16-692
64 Pages Posted: 7 Mar 2017 Last revised: 28 Aug 2019
Date Written: August 2019
Scholars since Hume and Smith have debated possible causal connections between market experiences and moral beliefs. Here, I study the impact of market interactions on utilitarian versus deontological values, other-regarding preferences, and charitable donations. Through a labor market intermediary, I randomly assign workers to different market conditions – competitive (tournament) versus commodifying (piece-rate). Competition increases deontological commitments, deontological commitments towards out-group members, productivity, and donations by productive workers but decreases donations by less productive workers. The effect of competition on deontological commitments reverses with income, consistent with the intellectual history of the doux commerce thesis. If utilitarian attitudes lead to market-oriented policies, multiple steady states arise where some countries sustain high utilitarianism, market-orientation, and economic growth.
Keywords: Normative Commitments, Deontological Value Choices, Other-Regarding Preferences, Charitable Donations, Moral Trolley Problem
JEL Classification: B51, C93, D63, D64, J15, K00
Suggested Citation: Suggested Citation