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The moral costs of markets: Testing the deterioration hypothesis

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  • Callais, Justin
  • Harris, Colin
  • Borchard, Ben

Abstract

The expansion of markets has generated significant material benefits. Yet some worry that this increase in wealth has come at a significant moral cost. Markets may crowd out or even corrupt existing moral values, causing moral deterioration. We test this hypothesis using both fixed effects and matching methods to estimate the impact of market institutions on a society's moral values. Contrary to the deterioration hypothesis, we find that market-oriented societies have a greater aversion to unethical behavior, higher levels of trust, and are not significantly associated with lower levels of morality under any model specification. Furthermore, we find that becoming more market oriented does not cause a significant reduction in a society's moral values. Together, our results suggest that being or becoming more market oriented does not cause moral deterioration.

Suggested Citation

  • Callais, Justin & Harris, Colin & Borchard, Ben, 2022. "The moral costs of markets: Testing the deterioration hypothesis," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 200-220.
    • Handle: RePEc:eee:jeborg:v:204:y:2022:i:c:p:200-220
    DOI: 10.1016/j.jebo.2022.10.007
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