Michael Sandel: What Money Can't Buy: The Moral Limits of Markets

[Music] today I'd like to invite you to join me in a discussion of one of the great moral and Civic questions of our day what should be the role of money and markets in our society today there are fewer and fewer things that money can't buy if you should be sentenced to a jail term in Santa Barbara California if that ever happens to any of you you should know that if you don't like the standard accommodations and if you can afford it you can buy a prison cell upgrade it's true for how much do you

suppose what would you guess it's about $90 a night or suppose you're going to Washington DC you want to sit in on a congressional hearing but you don't want to stand in the long line that sometimes forms for the free public seats you can now go to a Lin standing company engage them and they will hire for you a homeless person or someone else who will stand on the line maybe overnight if if it's a popular hearing so that you can take your place just before the hearing begins you can do that also to hear

oral arguments before The Supreme Court hire a linander or suppose you want to contribute to alleviating a tragic social problem in this country every year thousands of babies born to drug addicted mothers there is a charity could contribute to that uses a cash incentive to try to solve this problem the charity offers any drug addicted woman $300 to undergo sterilization the use of a market incentive to try to solve a social problem or suppose you're a pharmaceutical company and you have a new drug that you want to bring to the attention of consumers by now

it's common place that you can Market directly to Consumers with ads on television you've seen them I'm sure if you watch sporting events or the Nightly News on television you could be forgiven for thinking that the greatest Health crisis in the world today is not malaria or river blindness or sleeping sickness but a rampant epidemic of erectile dysfunction Market drugs directly to consumers or if you want to fight a war but you don't have enough soldiers you can hire private military companies to do the job in Iraq and Afghanistan there were more paid military contractors

on the ground than there were US military troops over the past three decades we have drifted almost without realizing it from having a market economy to becoming a market Society the difference is this a market economy is a tool a valuable and effective tool for organizing productive activity market economies have brought prosperity and affluence to countries around the world but a market Society is different it's a place where almost everything is up for sale it's a a way of life where Market thinking and Market values reach into to spheres of Life previously governed by other

values non-market values take education and here's where I'd like to begin our discussion there are many school districts around the country that are struggling with the challenge of improving the academic achievement of kids from poor backgrounds a number of experiments are being done in major school districts Urban school districts primarily to try to lift up academic achievement through the use of cash incentives pay for grades this has been tried in New York in Washington DC and here in Chicago a few years ago there was a pilot program with 20 Chicago schools that are offered kids

payment for good grades $50 for an a $35 for a b in Dallas they have another version they pay second graders $2 for each book they read I'd like to see what you think about this use of cash incentives to try to improve academic achievement people disagree about it so let's see what you think let's imagine that you are the head of the Chicago public schools and to make things simple let's assume someone comes to you with a proposal to pay young children $2 for every book they read let's begin with a poll a survey

of opinion in the room how many think it's an idea worth trying and how many would be opposed let's say let's see first how many would be in favor or at least think it's an idea worth trying raise your hands in favor keep your hands up and how many are opposed how many would reject the idea out of hand all right let's start the majority in this Hall are against let's start and we have Runners with microphones so that we can hear from you let's start with those of you who would reject this proposal why

would you object to it what's wrong with it who will get our discussion started yes stand up and we'll get you a microphone yes please and give us if you would your first name okay uh my name is Leslie and I would worry that we're going to drive the wrong performance cuz we're using the wrong incentive and the wrong behavior and they'd figure out a way to read stupid books or things that wouldn't really get at what we're trying to change so I think the the incentive isn't as isn't measuring the right thing it's not

measuring the right thing says lesle um let's hear from someone someone do you agree or disagree with Le well I go ahead stand up and tell us your first name name hi my first name is Karen and I'm a Early Childhood educator and I believe in developing passions and love for things and you cannot buy those things they're Priceless so those things are developed by good parenting good values and mories of a society good teachers and good principles passion wait stay there passion and the love of learning for its own sake yeah and money can't

buy that no those things those things can't be bought by certain things just can't be bought by money you can be rich in job and pour in paycheck and being a school teacher develops the love and the passion for learning what grade level do you teach Early Child well I'm not teaching right now Early Childhood I was really three four and fivey olds really early child really young kids in the beginning in the beginning so you wouldn't pay them money to read books no no not at any age all right stay there it's Karen Karen

Harris okay now let's hear from someone on the other side someone who as superintendent of the schools sees a problem and thinks it might be worth giving it a try what yes tell us your name hi Ivan Ivan Ivan what would you say speak directly to Karen and tell her why you think this is a plan worth trying even in her school so to put it in context um not an educator I know relatively little about education but my daughter has started kindergarten recently the kids get green red or yellow based on Behavior every week

all the kids who are Green get to pick out a prize at the end of the week and the teacher said ever since she's instituted this uh process all the kids have been green every week for years so and would you go from green to the other kind of green cash well I mean this this is a physical prize so in their world uh in the kindergarteners world this is currency it's as valuable as cash and so what what about when they reach fourth fifth sixth grade ninth grade then would you start paying they they

don't want little tokens will you pay them cash Ivan uh I I think that it all depends on execution it goes back to your point about or someone's point about reading dumb books if they're paying $2 to uh and they can game the system then I would say no if there's a clear way to align Financial incentives with the overall educational goals I would absolutely support those financial incentives what do you say Karen well I I think that um children should love to go to school they should be running into their school it's a place

that should make them feel safe and happy and want to participate in the things that are intriguing and interesting around their classroom and the people who are teaching in that classroom right so I'm I can't relate to that sort of um but we're talking about perhaps two different types of communities do you see what I'm saying all right let's hear from someone else who favors this proposal as a way of motivating the kids who who else uh all right toward the back yes stand up stand up and tell tell us your name my name is

Xavier Smith from epic Academy and I do favor this because I love reading books and why not get paid for reading something that you love so wait wait tell me your name again Xavier Smith Xavier says why not the best of both worlds Karen he reads books he's learned to love reading but Xavier also likes to make some money on the side why not you should get a job all right here let's get it back to Karen I think you're I think the wrong value is being said about passion no but he has the right

value he loves learning he says well but you love learning but maybe you should get a maybe you should get a job too a part-time job I don't know it just I can't relate to those all right all right what it's a different sense of value I find that if you are reading a lot and then you do read more like rigorous books and you keep doing it and you're getting money obtaining it and you keep going you're going to love to read even more so well all right who who who agrees with Savior and

would try would like to go for the financial incentive and is there someone who would like to add to that side of the argument go ahead yes hi I'm John we have uh children we don't allow TV in our home during the week because we love to read we promote reading but uh we also believe in financial incentives and I was on vacation with my kids and my wife on an overseas trip and we were having a little difficulty motivating them to read their books and how old how old are the kids 8 and 10

8 and 10 so we said we will pay you $20 for each book that you read wow guess how many books they read on the vacation how many 15 each that was an expensive vacation much more expensive than I expected but I will say I don't expect to pay my kids to read books for the rest of their lives but it absolutely motivated them in a unique way they could earn that and I think it was a good jump start to help them grow in their love of learning over time they won't need that all

right it was a jump start to cult and I'm sorry what's your name again John John John said says it was the money was a jump start to get them to love learning yes what do you say they'll pass the microphone down hi my name is Zoe um I'm a high school student at global citizenship experience um I have to say something about my belief in the way uh we raise our children now and I'm 17 so I'm still being raised but um but I think that this kind of and I'm not saying that I

don't love Mr Rogers but um this idea of everyone's special and we're kind of we're raised with this um like soccer trophy everyone gets a trophy for just showing up type mentality and I don't think that that's fair I think that you should did you vote for or against the cash incentive I'm not sure you were in the middle I'm in the middle but you've heard the arguments now have you been swayed no no um what about Johan's example where the $20 per book got his kids to read 15 books each but that's saying that

because you're doing something you automatically get a reward and I don't think that's fair I think that you have to you have to earn what you're doing and by telling students that if you read a book if you just do this little thing for me you're going to get $20 that's saying that you know they're going to expect a reward for everything they do and I don't think that that's the real world uhhuh yes go ahead on the side um hi my name is kanta Dixon I'm from an organization called in bark and I am

17 a Harper high school student and I think you need passion to start off anything you need to progress so if a second grader don't like to read you can start them off with paying $2 and then next thing you know they ain't going to need the $2 no more they going to want to read anyway and next thing you know they probably use the money to buy books all right but suppose now you have a lot of faith that once they start reading motivated by the $2 they're going to learn to love it yes

what if they become addicted to the cash and come to expect to be paid anytime they read a book doesn't that worry you all you have to do is maybe stop the cash and see what happens then and if they keep reading then you have progress then well then you would have progress okay so maybe that would be the test I I want to uh all right over here we'll take one more go ahead um my name is nii I'm from epic Academy so I don't believe paying kids is a good way to start them

reading B book because if you start paying them in their mind they're going to say I'm I'm going to love I'm going to love reading book but and their mind they going to say because I'm going get money so if you say do you love reading books they going to say okay are you going to give me the money and if you don't have the money to give them yeah so that's going to become a problem so I don't believe that all right so n you're saying that if you offer kids money to read books

they're going to read B books for the love of money not for the love of reading yes and so you disagree with John's philosophy yes I do all right all right well this helps I want to I know there are other people who have things to say about this but I want to step back and notice something about what's emerged from this discussion those who worry about using the cash incentive to improve academic performance worry is Naji just said that the money will teach the wrong lesson and cultivate the wrong attitudes toward reading and maybe

even obstruct or crowd out the intrinsic love of learning the higher good whereas those like John who say money can sometimes help they argue well no maybe if people start to read if young people start to read for money it will Kickstart them it will get them hooked and they will develop the love of reading and all will be well a friend of mine pays his children $1 for each thank you note they write I've received some of these thank you notes and I can tell by reading them that they were written under a certain

pressure my wife and I look a scance at this practice we wonder how these kids will turn out and there are two scenarios it could be that by getting paid to write thank you notes they'll get in the habit of writing thank you notes and pretty soon The Habit will take and they will eventually learn the right reason for writing thank you notes namely to Express gratitude and all will be well or it could turn out the other way it could be that the lesson they're being taught is that thank you notes are a chore

a form of pie work that you do if you're paid and if that's the lesson they learn then when the money stops so will the thank you notes they may find it difficult ever to learn the virtue of gratitude and their moral education will have been corrupted it's hard to know something similar is at stake in the debate about cash incentives in school tools to read books actually in the case of Chicago the money for grades did lead to somewhat higher attendance and slightly higher grades though it did not improve score uh test scores standardized

test scores in Dallas the $2 to the second graders did lead them to read more books it also LED them to read shorter books but the real question is the one that's been raised especially by the students who have spoken here what will happen in the long run what happens when the money stops and that in a way is a test of whether the attitude the intrinsic love of reading takes hold or whether the money has crowded out maybe even corrupted the intrinsic love of reading this tendency or this risk of markets and cash incentives

crowding out non-market Goods higher Goods can be seen in many spheres of social life in Switzerland a few years ago they were trying to decide where to locate a nuclear waste site no Community wants one in its backyard they had identified one place as likely to be the safest it was in a small Swiss town in the mountains under the law the members of the community had to approve the choice so before it was finally made some economists did a survey they asked the residents of the town if the parliament chooses this town would you

vote to approve the nuclear Wayside here despite the risk 51% said yes yes we would vote to accept then the economist asked a follow-up question they sweetened the deal they said suppose they vote to put the nuclear waste site here and offer to pay each resident of the Town a financial sum in compensation a yearly amount as high as $8,000 a year now how many people do you think voted to accept well would you say just 95 75 and less what would you guess the percentage fell from 51 to 25% when the money was offered

now from the standpoint of standard economic analysis this is a paradox usually if you offer people money to do something you get a greater willingness not a lesser willingness to do that thing so what happened what are you suppos happened in this Swiss Town what was going on what explains it anybody have an explanation just call it what would you say just call it out I would say that all right let let's get a microphone hi my name is Terry I would say you know probably explaining that phenomenon that if you offer money it's probably

going to be really bad much worse than what you anticipate oh I see so therefore I'm going to vote against it so the the the people said Gee now that you're offering all this money to do it it must really be riskier than I thought most likely that's one plausible explanation they tested for that and it turns out that the estimate of the risk was about the same before and after they offered the money so they has the people who changed why did you change your mind when money was offered they said we didn't want

to be bribed what seems to have happened is that when the majority were willing in the first case without the money to accept the nuclear waste site it was out of a sense of civic responsibility the waste had to go somewhere the country as a whole needed the energy they were willing to accept the risk and the burden for the sake of the common good but when money was offered what had been a sense of civic virtue became a financial transaction and people were not willing to subject themselves and their families to risk for money

that's why it felt like a bribe so it seems that the offer of money in this case at least crowded out the sense of civic responsibility a willingness to undertake a sacrifice for the sake of the common good in Israel they have every year a donation day where school children go door Todo sisting funds for worthy causes one year they did an experiment some economists did they divided the students into three groups the first group they gave them a short talk about the importance of the causes that were being supported and sent them on their

way the second group gave them the same talk but offered them a one% commission to be paid independently of the funds they raise in the third group they offered a 10% commission which group do you suppose raised the most money what would you guess it was well it was the first group The the group that was paid no commission they raised 55% more than the second group who got 1% offering the 10% commission actually LED them to do better than if they only got one but the group that got nothing for it collected more even

than the 10% commissioned group how to explain it again from the standpoint of standard economic analysis this is paradoxical but what what seems to have happened is that offering the money changed the character of the activity what before was a Civic and philanthropic Endeavor now with the offer of a commission was redefined for the participants as a deal as a financial deal as a kind of job and so you might think well simply adding a financial incentive on top of a Civic one or a moral one is additive don't two incentives work better than one

not always because sometimes turning an activity into a deal into a financial transaction may change its character and crowd out or corrupt or erode other values non-market values a sense of responsibility or commitment to the cause in this case what these examples illustrate is that there is a flaw in standard economic reasoning many economists assume that markets are inert that they do not touch or taint the goods they exchange this may be true enough if we're talking about material Goods flat screen televisions for example or toasters if you sell me a flat screen television or

if you give me one as a gift the flat screen television is the same it works just as well but the same may not be true if we're talking not about material Goods but about social practices informed by values and attitudes and Norms worth caring about in education in health in family life in Civic life in criminal law in National Security in in nonmaterial domains such as these there may be certain Goods certain values certain ideals and attitudes that are part of the activity that can be eroded or corrupted or crowded out if we turn

them into Market transactions c s what's striking is that during the last few decades as more and more has come to be for sale in our society we have not really had a public debate about where markets belong and where they don't about where markets serve the public good and where they may crowd out other values one of the most important values that is by degrees being corroded undermined by the marketization of everything is commonality a sense of community let me give you a small example when I was a kid I I grew up in

the midwest I'm from Minneapolis I was a Minnesota Twins fan and I would go to the old outdoor min Twins baseball stadium this was in the mid-60s there were always box seats and bleacher seats and the box seats cost more but what do you suppose was the The Gap the difference between the most expensive box seat and the cheapest seed in the bleachers anybody remember in the mid-60s 10 10 bucks it was 350 for a box seat and a dollar for a seat in the bleachers even less the the result was that if you went

to a baseball game it was a place where CEOs and Mail Room clerks found themselves more or less sitting side by side it was a a class mixing experience everybody had to wait in the same long lines for the for the restrooms everyone ate the same soggy hot dogs and drank the same stale beer and when it rained everyone got wet it isn't that way today if you go to a baseball stadium or most sports stadiums today there are sky boxes that enable the affluent and the privilege to sequester themselves from the common folk in

the seats below and no longer is it quite the class mixing experience it used to be not everyone has to wait the long lines for the restroom and when it rains not everyone gets wet something similar has been happening throughout our society at a time of rising inequality the marketization of everything means that increasingly people of affluence and people of modest means live Separate Lives we live and work and shop and play in different places our children go to different schools you might call it the Skybox ification of American life it's not good for democracy

nor is it even a satisfying way to live not for those down in the bleacher seats and not for those I think those of us who May inhabit have the privilege of inhabiting the sky boxes why not democracy does not require perfect equality but what it does require is that there be places and occasions public places and Civic occasions when men and women from different social backgrounds from different walks of life can share common experiences can encounter one another can bump up against one another in the course of everyday life because this is how we

learn to negotiate and and to abide our differences and this is how we come to care for the common good and so the question of markets in the end is not mainly an economic question it's really a question about how we want to live together do we want a society where everything is up for sale or are there certain moral and Civic Goods that markets do not honor and money cannot buy thank you very much [Applause] [Music]