Robin Hanson observes that prospects are not promising for health-case cost containment, in part due to a normal reluctance to give up on sacred values in exchange for money. I wonder if this same psychological factor is activated in emergency conditions which present opportunities to trade the sacred for cash, and if it is how it complicates recovery efforts.
Hanson quoted a few lines from Scientific American, “The Psychology of the Taboo Trade-Off“; here is the full paragraph:
What truly distinguishes sacred values from secular ones is how people behave when asked to compromise them. When people are asked to trade their sacred values for values considered to be secular—what psychologist Philip Tetlock refers to as a “taboo tradeoff”—they exhibit moral outrage, express anger and disgust, become increasingly inflexible in negotiations, and display an insensitivity to a strict cost-benefit analysis of the exchange. What’s more, when people receive monetary offers for relinquishing a sacred value, they display a particularly striking irrationality. Not only are people unwilling to compromise sacred values for money—contrary to classic economic theory’s assumption that financial incentives motivate behavior—but the inclusion of money in an offer produces a backfire effect such that people become even less likely to give up their sacred values compared to when an offer does not include money. People consider trading sacred values for money so morally reprehensible that they recoil at such proposals.
I further wonder if the outrage that is sometimes expressed with respect to price gouging is related. Not all price gouging episodes are so threatening as to demand a trade off of sacred values for money, but possibly the emotional responses are related.
In the price gouging case, paying a few extra dollars for a hotel room during a hurricane evacuation may not force a family to – say – have to toss out a boxful of old family photos, so there isn’t an explicit “money for your sacred values” demand being made. But facing price increases during an emergency may force a consumer to contemplate transactions that require thinking across normally separate ethical domains.
As Alan Fiske and Philip Tetlock explain in their article “Taboo Tradeoffs: Constitutive Prerequisites for Political and Social Life,” when someone seems to apply a inappropriate social model – say a merchant treating a consumer’s demand for emergency goods and services as an ordinary economic situation – the person is seen as suspect and morally dangerous. The merchant in this example reveals that he is not “one of us,” that is to say, not part of the community which is drawing together in response to the emergency.
More work would have to be done to explore whether these emotional reactions are closely related or not, but maybe it would explain the sometimes excessive moral outrage that some people express in response to allegations of price gouging. To the economist it may just look like a consumer had to pay a few extra bucks to fill up his automobile with gasoline, but to the consumer the transaction confronts him with the strong feeling that the merchant he has been doing business with for years just doesn’t care about his family’s needs during the emergency, and, in fact, that the merchant doesn’t share similar moral values, can’t be trusted when it really matters and really isn’t part of the local community.