Moral Costs Research Articles

What’s The Point of Constitutional Monarchy?

Abstract The article examines the point of constitutional monarchy as a form of leadership. It considers five functions of leadership and examines the extent to which constitutional monarchy fits these functions. It concludes the best argument for monarchy is found in the role of leader as exemplar, the capacity to act as prototypical group member. As such, the monarch exemplifies the values of state membership, acting as a point of reference and reassurance. Moreover, as the monarch can embody a range of differing conceptions of prototypicality, she can possess different meanings for different state members, providing a shared point of identification for those who would otherwise disagree. However, the mode of selection of the monarch is problematic, making it improbable officeholders will invariably possess the capacity to fulfil the role and bringing moral costs. In consequence, monarchy is a time-limited constitutional form, a transitional mode of leadership.

Employer Screening and Optimal Unemployment Insurance

Abstract Field experiments show that employers are less likely to consider long-term unemployed job-seekers for interviews. We study the implications for optimal unemployment insurance (UI). Based on a structural model of job search and recruitment, estimated with German data, we analyse the optimal two-tier unemployment system. We find that screening makes the optimal initial benefit level four percentage points higher and the potential benefit duration seven months longer. Using an extended Baily-Chetty formula, we study the mechanisms through which screening affects the consumption smoothing gain and moral hazard cost of providing UI and highlight the role of the externality from endogenous firm behaviour.

Risky first-in-human clinical trials on medically fragile persons: owning the moral cost.

The purpose of a first-in-human (FIH) clinical trial is to gather information about how the drug or device affects and interacts with the human body: its safety, side effects, and (potential) dosage. As such, the primary goal of a FIH trial is not participant benefit but to gain knowledge of drug or device efficacy, i.e., baseline human safety knowledge. Some FIH clinical trials carry significant foreseeable risk to participants with little to no foreseeable participant benefit. Participation in such trials would be a bad deal for participants, and the research is considered justifiable because of the promise of significant potential social benefit. I argue that there is an ethical tension inherent in risky FIH research and that researchers should fairly compensate risky FIH trial participants. This does not make the risk-benefit outcome more favorable for participants; rather, it amounts to a collective reckoning with the ethical tension inherent in the research.

In Defense of the Common Good

Abstract Vermeule argues that law should uphold community morality, and critiques originalists and progressivists for losing sight of this. Though his critique is powerful, the book shares those problems Vermeule diagnoses in the work of others. As with the originalists, Vermeule’s theory of interpretation is not yet able to provide guidance. We need to know more about its content and its moral base to evaluate its attractions. Additionally, Vermeule underplays strong similarities between progressivists and his own scholarship. Acknowledging these similarities draws attention to a pair of shared institutional problems. First, the moral cost in taking decisions away from individuals and passing them to state institutions: using law to regulate an issue runs the risk of error, and may produce morally significant side-effects by coercively limiting people’s options. Secondly, morality speaks to the institutional process by which decisions are produced as well as their substance: the way we decide is important.

Nudges versus prices: Lessons and challenges from a water-savings program

This study evaluates the effects of two exogenous interventions targeting residential consumers using both pecuniary and nonpecuniary incentives, with the potential of increasing the moral and monetary costs of water use. The first intervention provided households with personalized reports including normative information regarding household water use compared with neighbors. The second intervention consisted of an exogenous change in water tariffs. The timing of the interventions provides a unique opportunity to separately assess both the individual and combined effects of each policy instrument. The empirical analysis was conducted on the same sample households assessed in the field experiment by Jaime and Carlsson (2018), whose behavior was followed one year after implementation. The results reveal that both nonpecuniary and pecuniary incentives significantly reduce water use when each instrument is applied separately, with the change in tariffs generating larger reductions in water use, compared with information provision, at 11% vs. 7%, respectively. However, the effectiveness of the combined policy depends on the setting of implementation. While the differentiated effects of the social information campaign associated with the change in tariffs suggest this policy remains effective, the evidence also suggests potential crowding-out effects arising upon the introduction of the new tariff regime. The largest reductions in water use are achieved when the instruments are jointly implemented. Findings shed light on the importance of accurately defining the timing and order of the interventions to maximize their impact on resource conservation.

Corruption, unemployment, and clientelism: A Political Economy approach

We present a theoretical general equilibrium model that incorporates capital allocation dynamics between licit and illicit activities, endogenous unemployment, idiosyncratic moral costs, and the influence of corrupt political power. Our inquiry focuses on the endogeneity of corruption, highlighting its reciprocal relationship with political power, which is mediated through clientelist practices. Using data from Sub-Saharan African countries, our model reveals multiple equilibria, establishing a negative correlation between output and corruption and a positive correlation between corruption and unemployment. In addition, our analysis suggests that implementing appropriate tax rates to fund unemployment benefits can effectively alleviate corruption by transforming unemployed individuals’ perception of subsidies; this shift in perspective diminishes their susceptibility to corrupt practices, underscoring the significance of policy interventions targeting unemployment reduction to weaken clientelist mechanisms and reduce corruption. This study enriches our comprehension of the nuanced impact of corruption on economic outcomes and offers valuable insights for formulating effective anti-corruption policies.

Explaining the Selection Dilemma in Human Rights INGOs

Abstract Why do human rights INGOs choose to work on some issues and not others? This article contends that, since the 1990s, the proliferation of issues within the remit of human rights INGOs has increased the moral opportunity costs of selection decisions. Growth in the number and diversity of issues has led to a “selection dilemma” where decision-makers face onerous ethical choices among a significant menu of options. To explain how decision-makers deal with this dilemma, the article builds on existing theoretical work on INGOs, primarily by constructivists, proposing that heuristic-led judgment on the part of key decision-makers is a central determinant in the (non-)adoption of issues. This explanation is examined empirically using a within-case paired analysis of decision-making in Amnesty International and Human Rights Watch. The article’s findings provide preliminary evidence that heuristics shape selection outcomes in INGOs, adding further weight to IR scholarship, which stresses the influence of psychology and leaders in organizational and group decision-making.

Incomplete promises and the norm of keeping promises

Promises, like contracts, are inherently incomplete and rarely specify what the promisor ought to do in different possible contingencies, thereby being apt to be interpreted differently by the promisor and promisee, with their conflicting interests, and in a self-serving manner whenever circumstances change. This article studies the effect of the incompleteness of a promise on the decision to keep the promise and on individual beliefs that are relevant for the social norm of keeping promises. It investigates, in a laboratory experiment, how individuals form beliefs about how promisors behave, how promisees expect promisors to behave, and how neutral individuals evaluate the immorality of breaking promises when a contingency that was not explicitly addressed by the promise materializes. Promisors distort their beliefs to breach without incurring guilt or moral costs when the promise is incomplete, but even neutral individuals believe that breach is more socially acceptable in this case. Results further reveal substantial heterogeneity in individual beliefs, providing insights into why people do not always respect a fundamental social norm such as keeping promises, at times violating it and at times keeping it.

Costly voting in weighted committees: The case of moral costs

We develop a theoretical model of voting behavior in committees when members differ in influence and receive payoffs that condition on the individual vote and the collective decision. Applied to a group decision involving moral costs, the model predicts that the distribution of decision-making power affects committee members’ incentives to make immoral choices: More influential agents tend to support the immoral choice, while less influential agents free-ride. A skewed power distribution makes immoral collective choices more likely. We then present results of a laboratory experiment that studies committee members’ voting behavior and collective choices under different distributions of decision-making power. As hypothesized, we find that the frequency of immoral decisions is positively related to an agent’s voting power.

It's time to cheat!

We study the correlation between time preferences and cheating. In our experiment, cheating increases the earnings of those who commit it and only entails a moral cost. We are the first to measure both (a proxy for) the propensity to cheat and time preferences at the individual level, determining whether cheaters are more likely to be more present-biased or to have a higher discount factor. We observe widespread cheating, which prevails among subjects with present bias and overconfidence.

A social and ethical game-changer? An empirical ethics study of CRISPR in the salmon farming industry

The genome editing technology CRISPR is described as a technological game-changer because of its flexibility and precision, and as an ethical game-changer due to its ability to engineer traits in living organisms without crossing species, avoiding a significant objection to genetically modified organisms (GMOs). In salmon farming, applications of CRISPR in breeding hold the promise of handling environmental and fish welfare challenges yet require social acceptance. Adopting an empirical bioethics framework, this stakeholder interview study shows that respecting species borders is important, but not decisive, for acceptance among Norwegian stakeholders. The main objections are based on moral reflections about technology use and outcomes. These reflections combine principles and pragmatic deliberations of moral costs and benefits, suggesting that CRISPR applications with environmentally and ethically significant benefits can be socially acceptable. This indicates that the game-changing potential of CRISPR relies on the characteristics of the editing and the context in which the application takes place.

Tax evasion and governance quality: The moderating role of adopting open government

One of the reasons why many developing countries struggle to provide basic public services to citizens is a lack of tax revenue owing to corruption and illicit financial outflow transfers. Trade misinvoicing is one of the main channels taxpayers use to evade taxes and transfer money abroad, particularly in developing countries. Although scholars have been cognizant of the gravity of corruption, little empirical evidence exists on tax evasion through trade, which is mostly related to the decline of tax revenues in developing countries. To bridge this research gap, this study examines the impact of governance quality and adoption of the Open Government Partnership on trade-related tax evasion in developing countries. Governance quality and open government initiatives are expected to reduce tax evasion by increasing moral cost and transparency, improving the legitimacy of tax burden and tax expenditure. The results show that government effectiveness, regulatory quality, control of corruption, and adoption of open government contribute to combating trade-related tax evasion. Moreover, the government's adoption of an open government moderates the association between governance quality (regulatory quality) and trade-related tax evasion; that is, governance quality significantly impacts reducing tax evasion in countries where open government initiatives are more prevalent. This study holds several implications for leveraging the nationwide adoption of open government, which may directly and indirectly help governments reduce trade-related tax fraud and improve tax revenue. Points for practitioners Governance quality and the adoption of open government initiatives effectively reduce trade-related tax evasion. The impact of governance quality on reducing tax evasion can be enforced by adopting open government partnership.

Unemployment benefits and redundancies: Incidence and timing effects

The literature on unemployment insurance (UI) has primarily focused on its impact on unemployment outflows. Using administrative data and a discontinuity in UI benefits at a job tenure threshold, I show that inflows also respond to the generosity of UI. Based on bunching estimates, I measure that 10% of layoffs in an 4-week window before the threshold are delayed, creating a bunching mass on the high-benefit side of the cutoff. Examining the mechanisms, the evidence suggests that employers and employees bargain over contract termination. Taken together, employers and employees show sophisticated reactions to UI with effects on employment duration. However, this retiming response accounts for a very small share of the fiscal externality of differentiating UI benefits at a tenure threshold, relative to the moral hazard cost.

Flexicurity, education and optimal labour market policies

AbstractThe paper provides a theoretical rationale for flexicurity policies, consisting of low employment protection, generous unemployment insurance and active labour market programmes. Education efforts give access to high productivity firms, more likely to survive and thus exposing less their workers to unemployment risk. Activation programmes support reallocation from risky and unproductive to safer and more productive firms, reducing unemployment. Low employment protection can provide incentives for self‐insurance against unemployment risk through education, mitigating the moral hazard cost of unemployment insurance and activation programmes. The paper identifies conditions for flexicurity to be optimal and confronts theoretical predictions to the data.

License to Layoff? Unemployment Insurance and the Moral Cost of Layoffs

This study presents moral cost as a novel behavioral constraint on firm resource adjustment, specifically layoff decisions that can cause severe harm to employees. Revising the prevailing negative view of managers as purely self-interested, we propose that managers care about their employees and incur moral cost from layoffs. We leverage expansions in unemployment insurance as a quasi-natural experiment that reduces economic hardship for laid-off workers and, in turn, the moral cost of layoffs to managers. We find that these expansions license larger layoffs. The effects are stronger for chief executive officers (CEOs) with stronger prosocial preferences who dismiss fewer workers despite low performance, such as non-Republican, internally promoted, small town, or family firm CEOs, and weaker for CEOs who lack the discretion to avoid moral cost due to shareholder or financial pressures. Our findings suggest that the role of moral cost is substantial but also highly heterogeneous and readily suppressed by external pressures. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2022.16734 .

Truth and consequences.

In his 1987 paper "Truth or Consequences," Dan Brock describes a deep conflict between the goals and virtues of philosophical scholarship and public policymaking: whereas the former is concerned with the search for truth, the latter must primarily be concerned with promoting good consequences. When philosophers are engaged in policymaking, he argues, they must shift their primary goal from truth to consequences-but this has both moral and methodological costs. Brock's argument exemplifies a pessimistic, but not uncommon, view of the possible shape and nature of applied philosophy. The present paper paints a richer and more optimistic picture. It argues that the difference between theoretical philosophy and applied philosophy is not best understood as a choice between truth and consequences. On the contrary, applied philosophers engage in forms of truth-seeking that are properly concerned with consequences-including the consequences of philosophical practice itself.

Stare Decisis and Equitable Power

One of the main moral costs of stare decisis lies in the continuous possibility of entrenching morally deficient decisions in the law. Although legal systems usually make provision for dealing with morally deficient precedents, there are cases in which the legal obligation of later courts to follow one of these precedents is undefeated. This possibility affects the overall justification of stare decisis. One traditional answer to this problem consists in accepting this moral cost, on the belief that the benefits of stare decisis outweigh it. On this view, when there is an undefeated legal obligation to follow a morally deficient precedent, the court must simply follow precedent. In this article, I question this approach and defend an alternative solution. I argue that, under some conditions, a court facing a morally deficient precedent should have the power to either follow the precedent or suspend its application to the parties by ordering a temporary stay of proceedings and referring the case to a higher court with power to overrule the precedent. This proposal entails exercising an equitable power recognised by the legal system, which I defend against three possible objections.

Morally questionable decisions by groups: Guilt sharing and its underlying motives

We conduct a theory-guided experiment where subjects are matched in groups of three and vote on a morally questionable decision. We find that the frequency of votes for this decision increases with the number of votes required for it (threshold effect). This effect persists even when only considering pivotal voters, who cannot rely on sufficiently many votes for the decision by other group members (thereby reaping a benefit without own moral costs). Our design allows us to attribute the threshold effect to guilt sharing. A series of novel treatments then identifies shared responsibility and a preference for group consensus as independent motives contributing to guilt sharing.

The effectiveness of weather index insurance in managing mariculture production risk

AbstractMariculture is a high‐risk industry that is susceptible to weather disasters. However, due to moral hazard, adverse selection and high transaction costs, traditional indemnity insurance policies are not available. An emerging alternative is the development of weather index mariculture insurance. This research assesses the effectiveness of weather index mariculture insurance by using the swimming crab precipitation index insurance as an example. The theoretical and empirical results suggest that weather index mariculture insurance is not always effective. It cannot be guaranteed to promote the welfare of mariculturists and reduce the tail risk of income, especially in the case of gross rates. However, in the case of low basis risk, it could be a viable option for the government because of the low subsidy cost required.

The Morality of Kidney Sales: When Caring for the Seller’s Dignity Has Moral Costs

Kidney markets are prohibited in principle because they are assumed to undermine the seller’s dignity. Considering the trade-off between saving more lives by introducing regulated kidney markets and preserving the seller’s dignity, we argue that it is advisable to demand that citizens restrain their own moral judgements and not interfere with the judgements of those who are willing to sell a kidney. We also argue that it is advisable not only to limit the political implications of the moral argument of dignity concerns toward a market-based solution but also to re-evaluate the dignity argument itself. First, if the dignity argument is to be given normative force, it must also consider the dignity violation of the potential transplant recipient. Second, there seems to be no compelling notion of dignity that demonstrates why it is morally permissible to donate but not to sell a kidney.