Markets can make people do bad things.
That's the disturbing -- but sadly not all that shocking -- conclusion of a recent experiment by two German economists, who found that people were more willing to let laboratory mice be killed in exchange for small sums of money if they were involved in financial markets where the mice's lives were bought and sold. The more people in the market, the cheaper the lives of the mice were. Markets eroded the morals of the people involved.
The study helps explain how people who might ordinarily be horrified by labor conditions in Bangladesh or environmental devastation in China can end up supporting those things without thinking about it. It's much easier for us to buy that cheap T-shirt made with sweatshop labor if financial markets shield us from the ugly reality of how it got made, or at least help us pass off responsibility for those things onto somebody else in the market. It helps explain how Wall Street traders can ignore the potentially devastating consequences of pumping dangerous bubbles higher.
In the study, by Armin Falk of the University of Bonn and Nora Szech of the University of Bamberg, one group of people was given a simple, stark choice: They would get 10 euros if they agreed to let a mouse be killed. Nearly 46 percent of the people in that group chose the 10 euros, consigning their mice to death. You might call this the "control group," or "mouse murderers."
Then, the experimenters put several more people in trading markets, where rights to trade the lives of the mice were bought and sold. In a simple market, 72 percent of the people involved were willing to trade the lives of mice for money, usually for much less than 10 euros.
In a more complex market, involving more traders, roughly 76 percent killed mice for cash, at even lower prices.
The study used mice known as "surplus" mice, which are routinely killed because they aren't useful for other scientific experiments. (Which is a horrible thing to learn all by itself.) The researchers say that all of the mice in the experiment were going to die anyway, and that the experiment saved many. Those mice that made it through the study without being killed lived out the rest of their natural lives in comfort, with medical care. The rest were killed humanely. There is no word on how everybody slept at night after the experiment was over.
Markets are not inherently evil. They can do a lot of good, as the German researchers allow. But they are not infallible. The study comes at the end of a long stretch of decades in which "free markets" have been elevated to near-sacred status and have infiltrated our lives, not always in good ways. Harvard economist Michael Sandel has warned that America risks becoming a "market society," a place without a soul.
Formerly public institutions have been privatized, including the warehousing of human beings in prisons, as The Huffington Post's Chris Kirkham has documented extensively. People get the names of casinos and porn sites tattooed on their faces. Pension plans have been replaced by market-based 401(k)s, which gradually eat away at retirement security. Some would like to replace social programs like Medicare and Social Security with market-based accounts. Satisfying the god of the free market has led to widening income inequality, with soaring stocks and stagnant wages.
The devastating collapses of the dot-com and housing bubbles in recent years have finally led us to start questioning the value of unfettered markets. This study suggests there is good reason to put limits on just how far we let markets go.
"We as a society have to think about where markets are appropriate," the researchers write, "and where they are not."
Correction: An earlier version of this story incorrectly identified one of the researchers as "Nora Szechone." The correct name is Nora Szech.