A mouse in a rolled up dollar note and pile of old coins.
Photo from Hubspot

Would you accept money in lieu of saving the life of a mouse?

Economics professors Armin Falk and Nora Szech of Germany evaluated this question in their 2013 research “Morals and Markets.” In the study, Falk and Szech evaluated how “buyers” and “sellers” would act when given financial incentives to allow the killing of a lab mouse.

The experiments compared decisions made on individualbilateral double auction, and multilateral double auction levels and found that the percentage of participants who chose financial gain in lieu of saving a mouse’s life increased from 45.9% to 72.2% to 75.9%, though the amount gained declined, across the three situations. 

After conducting individual treatments, Falk and Szech conceded that “for a given population, markets erode moral values” (2013). A summary on the study from Discover Magazine concluded “the researchers say the outcome is clear: markets make us more willing to fudge on our moral values.”

Noteworthily, Falk and Szech recognized that markets do have economic virtues and that other economic systems do not necessarily boast higher value on morals. Nevertheless, their research indicated that markets do carry a risk of moral decline.

Comic credit Nina Paley

In contrast, in Do Markets Corrupt Our Morals economics professors Virgil Henry Storr and Ginny Seung Choi of George Mason University argue that markets coexist and actively promote morality and social engagement. Neuroeconomist Paul J. Zak makes a similar argument in his Moral Markets: The Critical Role of Values in the Economy.

In their critique of the mouse/market study, Friedrich Breyer and Joachim Weinmann, two other economics professors from Germany, reevaluted the data results to demonstrate that they did not imply the conclusion that Falk and Szech drew. They named four objections:

  1.  The experiments executed do not reflect typical market situations.
  2. The treatment designs differed by more than one element.
  3. Falk and Szech did not investigate the moral leanings of the participants regarding mice killing. (Do the participants believe that killing mice is unethical?)
  4. The study judged the ethical quality of an institution on the behavior of participants rather than the outcomes of the institution, of which the latter is the prime concern of economists.

Considering my experience as a consumer, I favor the view that markets encourage morality. Especially as the internet gives us more insight into their practices, businesses are obligated to operate transparently, demonstrating to customers their integrity. If they breach ethical guidelines, consumers are likely to withdraw or withhold their support.

Photo found on change.org

For example, in 2001 news coverage on Nike’s employment of child labor prompted boycotts of its products, and since the 1970s some have boycotted Nestle for its false advertising. In the banking world, Wells Fargo is still fighting to regain its customer base after the 2016 fake accounts scandal.

Can consumers and producers act immorally in a market economy? Of course. After all, the market is composed of human beings, and human beings do not always accord to morals. However, this breach of morality is not unique to markets.

What are your thoughts on the morality (or immorality) of the market system? Do you agree with Falk and Szech’s conclusions? with Breyer and Weinmann’s?