Sunday, 5 August 2012

How Economics Solves Moral Problems


In the book I’ve written on morality, a common theme throughout is this; the trick in solving moral problems that have lingered for decades or centuries has been to apply logical reasoning by assigning value to things.  However, sometimes problems come unexpectedly and take a little bit more consideration.  Here's an example.  I know a married couple who recently got divorced. Both are wealthy, and have agreed amicably on an equitable settlement regarding their house and possessions.  There is one exception though - the couple were bought a carriage clock for their wedding by a much valued friend who later died of cancer. 

The clock is not valuable in monetary terms, but it has huge sentimental value to both the husband and the wife, and both are insistent they want it.  It seems that there are no facts that give either of them more entitlement than the other, and it appears that neither will cede any ground to the other.  How can it be decided who gets the clock?

At first this is the sort of stalemate that seems unsolvable in any moral terms.  But it isn't unresolvable.  All we need to do is ascertain which of them wants the clock the most.  Quite naturally, the fairest thing to do is give it to the person to whom it would mean most to keep the clock - because fairness (along with justice and equality of opportunity) is a primary keystone of morality.  So how could the couple decide who wants it the most?  That's not too difficult - the person who is willing to pay the most for the clock wants it the most.  That's how we could assign value to a situation and come up with a moral decision. 

The difficulty with having them each bid for it is that personal feelings might become involved, and thus the winning bid after a series of rounds of auctioneering might have been as much about winning as it was about wanting.  Therefore, to find out their true valuation I suggest they do the following; Have each of them place a sealed bid in a box.  The winning bid gets the clock, but the winner has to give the loser half the value between the winning bid and the losing bid.  So if the husband wins the clock with a £200 bid, and his wife loses out with a £100 bid, the husband keeps the clock and gives his wife £50.  Giving the loser half the value between the two bids is the only way I can think of ensuring that genuine bids are submitted, because the concomitant costs ensures that the bidder won't bid unnecessarily high or unnecessarily low.

It's probably best if I don’t mention this to the couple though – these things can be quite sensitive, and often fractious couples don’t like rational interference!



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