THE ECONOMIST: What heroin, horsemeat, sex work and surrogacy reveal about modern morality and money

Why is buying heroin easier than hiring a hitman? Both are illegal. Yet find yourself in an unfamiliar town and ask around where you might get your fix and — possibly after being met by a few disgusted glances and wide-eyed stares — you are eventually given a phone number or directions to some sketchy area.

Even if someone bothers to report you to the police, the constabulary is too busy to follow up on a single user.

Start asking where you can get the services of a contract killer, however, and if you receive any leads at all, you are most likely to find yourself talking to an undercover policeman.

This is one of the questions asked in Moral Economics, a new book by Alvin Roth, a Nobel-prizewinning economist at Stanford University.

Mr Roth’s Nobel was for his work on market design, particularly in those markets where two or more parties must be paired up in the absence of price signals (think university places or marriage).

His studies led him to the trade in human organs — he set up a kidney exchange in which donors who are not a match for their respective intended recipients can swap — and, more broadly, to the murky world of “repugnant transactions”.

These Mr Roth defines as ones where, like scoring heroin but not securing a hitman, buyers and sellers would happily transact but someone else not directly harmed by the exchange wishes to prevent it.

Mr Roth’s subject is a good one. Morality clearly shapes markets far beyond those for heroin and hitmen.

Like all of his discipline, he makes moral economics about trade-offs: are the harms of allowing an activity greater than the harms of disallowing it?

After all, he writes, people “can’t generally expect to reach a consensus” about the principles at stake.

The clear-eyed evidence he gathers is a useful place from which to argue about when prohibition works.

Yet despite his attempts to “take moral and ethical concerns seriously”, the book too often treats other people’s principles as an irrational bias to be managed rather than a reasoned position to be argued against. That is a missed opportunity.

Some of his frustration is understandable. What different societies consider repugnant can seem arbitrary. Horsemeat, a delicacy in parts of Europe, is off the table in California following a referendum in 1998.

Many European countries forbid surrogacy on the ground that it violates the dignity of women to make the body into a tradeable commodity, yet they permit some forms of sex work.

In America it is the other way around: prostitution is illegal everywhere except for a few counties in Nevada whereas surrogacy is widely available. California allows paid sex — so long as it is being used to make pornography.

Americans can be paid to donate blood but could not partake in “challenge trials” for covid-19 vaccines, tested on donors who expose themselves to the disease. British blood donors can count on at best a biscuit but are allowed to offer their life for a fee to see if a jab works.

Such inconsistencies infuriate ethicists trying to find a coherent set of moral intuitions. For Mr Roth, they are a godsend. They provide an opportunity for some field experiments to see what happens when markets are legal or not and what kind of black markets come with them.

Some rules of thumb emerge: bans never work perfectly but they do reduce the frequency of the activity. There are usually ways around restrictions for the suitably motivated.

A forum for Kazakhs in America suggests trying one or two Uzbek restaurants in Philadelphia for your horsemeat fix, or heading to Quebec. Horse lovers in California can content themselves that fewer are being eaten locally.

Mr Roth suggests, reasonably, that policy should weigh the costs and benefits of banning an activity. He cites a paper by Scott Cunningham of Baylor University, in Texas, and Manisha Shah of the University of California, Berkeley, that took advantage of an accidental legalisation of indoor prostitution in Rhode Island after state lawmakers did not fully think through the implications of a bill.

The researchers found that the result was fewer sexual assaults and sexually transmitted infections. This argues for policy experiments with licensed sex work. Where evidence is scarcer or more ambiguous, as with prohibitions on drugs that are both addictive and lethal, he suspends judgment.

Too often, though, Mr Roth retreats to the position that there is not much point in discussing the principles because there will be no agreement.

That makes morality an exogenous fact of life, something generated outside the economic model. It is a constraint, like geography, that must be recognised by economists.

Sometimes, on Mr Roth’s view, it is useful: in contrast to this newspaper, he seems sceptical about legalising many drugs.

Sometimes it is deadly: hundreds of thousands die every year because they cannot get the organ donations they need.

An accounting for taste

Mr Roth’s reluctance to engage in arguments about principles is a shame. For one thing, he has nothing to be ashamed of. The picture that emerges from the book is of a deeply moral person, who believes in bodily autonomy, in not subordinating individual lives to a collective and in not accepting unnecessary deaths to spare some people from feeling squeamish.

Perhaps more important, it lets Mr Roth skirt an uncomfortable question about the role of repugnance.

He is right that it often serves to exercise social control: dietary restrictions let an in-group that shuns pork, or beef, or meat, ostracise the out-group that does not. But it is also a tool of social cohesion.

Emile Durkheim, a French sociologist at the turn of the 20th century, argued that societies divide the world into the sacred, covered by ritual and taboo, and the profane, the ordinary.

One that treats everything as tradeable might struggle to sustain the tacit co-operation on which markets, repugnant or otherwise, ultimately rely.

Moral Economics: What Controversial Transactions Reveal About How Markets Work by Alan Roth; Hachette Australia, $34.99