Endogenous morality

Recent events pose a challenge to conventional neoclassical economics. I refer not to the financial crisis, but to a fat Geordie's attempt to twat a police horse.

This seems to undermine the standard economics of crime, as developed (pdf) by Gary Becker. This says that people will commit crimes if the expected benefits outweigh the costs. Such a theory, however, doesn't fit two big facts. One is that many crimes, such as twatting p.hs, are just moments of madness. The other is that many people eschew crimes even though they might well get away with them. These two facts can co-exist in the same person; if we take our fat Geordie at his word, he has "never been in trouble before."

However, a new paper by Matteo Cervellati and Paolo Vanin of the University of Bologna helps to explain such behaviour.

They start by recognizing weakness of will, that we are tempted to do things we'll regret. This introduces a role for morality. It works as a self-commitment device; "thou shalt not steal" stops us breaking into people's houses if we see the window open.

Such moral codes can explain our fat Geordie's behaviour. Whilst they can stop us committing otherwise profitable crimes, they don't always prevent us being stupid in the heat of the moment.

So far, so trivial, you might think. No so. Morality has a cost; it can either prevent us committing profitable crimes or it can impose a burden of guilt upon us if we do so. It follows that parents who care for their children's material welfare will not always want to inculcate into them a strong moral code. If you think your children will be so poor they will starve to death unless they steal food, you'll be less keen than others to tell them that theft is wrong. Or if you think your children will be so rich they can do what they like, there'll be no point burdening them with guilt.

Cost-benefit considerations, therefore, tell us that moral codes will be strongest among what used to be called the middling sorts. Parents who feel their children will be sufficiently poor that they'll be tempted to steal, but also sufficiently well-off that they have something to lose, will be most keen to inculcate morality.

This fits historical stereotypes; the feckless underclass, the dissolute aristocrat, the respectable working class man and the priggish bourgeois are all cliches. But they are cliches for a reason. Cervellati and Vanin use people's attitudes to tax-dodging, fare evasion and benefit fraud in the World Values Survey to show that, indeed, middling classes do have a stronger moral code.

We might add that this also explains why bourgeois morality has so often been accused of hypocrisy. It's because such morality was partly cultivated by self-interest. (I nearly wrote "arose out of" but that pitches it too strong.)

Cynics might think all this is yet another exercise in economic imperialism - an attempt to explain everything with the tools of costs and benefits. But it is hinting at something which might be both true and important - that social norms and moral codes are not (just) exogenous constraints, but are instead economically endogenous. In this sense, neoclassical economics and Marxism agree.

Comments

[Tiago]

There are some other interesting narratives at miss here:

There is also a rational economic argument for collectivist morality: While I could violate a certain rule and get short-term profit, if that violation happens in society at large, the cost TO ME (not to speak of the cost to society in general) might outweigh the benefits. Therefore I do not do it and I might also police my peers.

For example: when I deposit money in a bank, I TRUST the bank not to reduce the value of my wealth (by say, sneakily take out a some quantity every so often). The bank looses in the short term (does not get the money that could make by stealing costumers), but gains a lot for the general trust in banks (obviously, were such a thing to happen, people would start using their mattresses en masse and banks would go bankrupt before someone could shout: "bailout")

[FromArseToElbow]

Bourgeois morality is economically endogenous because it privileges property: something you possess but are fearful you may lose. The only way to stop assaults on police horses is to give everyone a pony.

[David Ellis]

`that moral codes will be strongest among what used to be called the middling sorts'

I think we are about to see the mass breakdown of moral codes (or at least their replacement with new more radical ones) amongst the middling sorts very soon as the currency becomes more debased and the nation's bankruptcy begins to tell.

The guy punching the police horse wasn't committing a crime (except in the eyes of the law) he was pursuing his politics by other means.

[Stuart Brown]

"So far, so trivial, you might think. No so."

Is that a typo or a very clever attempt at a Geordie accent?

[dirigible]

"Cynics might think all this is yet another exercise in economic imperialism - an attempt to explain everything with the tools of costs and benefits"

Well-poisoning aside, that is precisely what this exercise does. Where economics cannot intrude it will attempt to smother with towering confections.

The economist who does not calculate the cost of each breath before taking it has some explaining to do. I wouldn't recommend that they do so using an Excel spreadsheet.