Friday, March 17, 2006

Economics and morality: a case study

Dear visitors:

As the recent poll in our blog suggests, economists should (may) talk about morality, "only if it is rational." So allow me to discuss an issue of morality from an economic-cum-public policy analysis perspective. As you may guess, the issue is the Anti-pornography bill (RUU APP).

Please read my take on that issue in my personal blog. Apologize to the non-Indonesian speakers, the posting is in Indonesian. I was too lazy, though laziness may not be rational action, to translate it into English.

The main idea is, if 'morality' (in this case, eliminating the overconsumption of pornography) is an objective to serve, then the bill will be a poor means to achieve it. The reasons are:
  1. It is inefficient -- it requires a too many resources to achieve the goal, at the same time it potentially creates new, bigger costs. The same objectives can be achieved by some other means: regulating (limiting) the distribution side, not the production side.
  2. It is also ineffective -- the bill views that the decline in moral standard -- and the consequences of it -- as mainly supply-side problem. It is the mistake of the girls wearing appropriate dress, the nude women in the pictures, etc. It fails to realize the bigger problem from the demand side. When you rape a woman, or get turned on by one, it is their mistake, not yours. So let's punish them for inviting you, instead of giving harsher punishment to the violators.
So, this is not an argument based on ideology (like the Arabization or Islamization vs. liberalism-secularism). This is simply how we apply rationality framework in analyzing a public policy. The moral of the story is, even if moral standard is the objective, rationality still matters.


  1. ap,what you said is economic efficiency; it doesn't tell something as "good" or "bad" --the stuffs that morality deals with. Using the same rationality, you can argue that doing 'bad' thing might be efficient, too.

    Using economic tools, we can propose solution to prevent bad thing happens --incentive, compensation, etc--; but only after we agree that thing is indeed bad, as what morality said.

  2. This comment has been removed by a blog administrator.

  3. Rizal -- I didn't disagree with that. My point was: even when we've anonimously agreed that some thing is 'good' (by any standard), the way how we're going to achieve it also matters. Remember our discussion on education?

    So, I used a stronger assumption in making my position there.

  4. ap, I got insomnia now, so let's discuss a bit more on your two points in your posting --inefficency and effectiveness of the law.

    I am fine with your argument on the supply-side bias of the law --although, loosely, you can also argue otherwise by (mis)using Say's Law :-)

    But on the first point, inefficiency, you propose limiting distribution, rather than production. Hell, no, this requires a (public) agreement that producing porn is, at least, not bad or less sinful than distributing it. Can economics help to point out that this is indeed the case?

  5. Rizal -- no, the (moral) argument on whether producing or distributing porn is bad, or which one is more/less sinful, is not in the economic domain. In other words: I don't really care about that.

    The main issue here is 'overconsumption of pornography' -- because it is too accessible. Both sides of the RUU can agree on this problem. This is what the regulation should deal with.

    I argued that the intervention should focus on the distribution side. Not because distributing pornography is more sinful, but trying to solve the 'production' side potentially creates greater problem. Hence, in the perspective of public policy, the RUU is not a good means.

    Why greater problem? Because while all can agree that overconsumption of pornography is a problem, it is harder to reach an agreement on what constitutes 'producing pornography.' Is wearing a shirt or miniskirt in malls part of pornographic action? [Hint: remember Arrow's impossibility theorem].

    In short, no -- economics don't provide basis for judging a sinful or morally wrong. Rather, economic theory says that we won't agree on that standard. So let's focus on solving the problem that all of us can agree on.

  6. Ap, if you don't know --and don't care-- which one is more morally incorrect, then how could you decide that limiting porn distribution imposes lower cost than preventing to produce it?

    It maybe costlier in doing the latter, but if it gives you greater benefit -by having no porn-, so what do you do, sire?

    And you said, interpreting the production is harder. I know this is your position. But the other camp may say otherwise. Can economics, once again, help to reconcile this --using the so-called rational non-partisan analysis?

    It sounds like those good old days, eh? A (non)sensible debate on smelly carpet of BOE :-). Let's invite the other folks to jump in, then. Come on

  7. I actually made my point based on my observation of what people from each side says:
    1. all agreed that we have excessive consumption of pornographic commodities [note: commodity].
    2. all can't agree on what's the boundary/definition of pornography.

    given (2), if we set the definition too broad, we will also eliminate the likes of Saman, Supernova, Serat Centhini or Pengakuan Pariyem. and police will be very busy arresting those teenage wearing tight shirts in the malls.

    yes, there will be a benefit of having no-porn society. but the costs of losing creativity, and the cost of enforcing it, would outweight the benefit.

    [note that this point is based on the fact that many people still hates the idea of losing creativity because of the RUU. so it's valid to claim that the benefit is small, and the cost is large.]

    as for the distribution. we actually have the infrastructure: show guide/rating, (possible) regulations on selling magazine or VCD/DVD, etc.

    we may not agree whether something should be totally banned from the society. but it's easier to agree that something should be limited only for adults.

    again, I don't know if economics dan (and should) reconcile the different camps [remember Arrow again -- not Enny Arrow..!!!]. but when people can agree on certain objectives, economics provide tools on how to achieve them.

  8. to be very honest, i have to disagree with most of what you are saying in here.

    Actually, no, not really :-)

    As in the previous post on ethical trade, i think it is clear that economic incentive is a useful instrument in shaping/implanting values/moralities into community short of a totalitarian regime.

    Whereas to argue if a porn-less society is for the better or worse i think will be a lot harder to quantify using economic tools. As in any other policies, it will definitely have economic repercussion, regardless how dismal (tax revenues etc.) I don't think these assumptions were considered in the drafting of the said bill as the draft was prepared from moral/virtues standpoint only.

    i am not too sure on the assumption of 'overconsumption' either. First, i find it rather hard to determine a suitable consumption level (?!?) of porn (far too much download guys!), and second it is difficult to say that to exceed such suitable level is actually bad (except that some'd probably think you're a pervert and like it anyway).

    While tempting, trying to look at the particular RUU as an attempt to regulate the 'demand' aka production side, is a bit inaccurate, since demand in economic term would assume some sort of limitation in the availability of raw resources/ability to produce, no? whereas we can argue that the very definition of the 'end product' as it is in the RUU (girls in tight shirt), isn't there simply -potentially - unlimited supply anyway?
    Isn't commoditization good? at least for the general public?

    In any case, i think the problem with the RUU is more in the absurdities, both in regards to the complexities in enforcement as well as potentially misleading interpretation. The Bill as it is really is a perfect mix of both and thus set a perfect example of its failure.

    I'm not an economist, and wouldn't dare to propose to know anything about the subject, but on the issue of moral values/law/economics, there's a paper by Lloyd Cohen, titled Marriage, Divorce and Quasi Rent, as well as a Theory of Prostitution by Lena Edlund.
    i find both pretty interesting tho not directly addressing the issues you discuss. It should be up there somewhere on the net, or mail me direct if you need it.

    Okay okay... i have to stop leaving this long rants everywhere. nice place tho guys!

  9. Hi treespotter--
    thanks for the commen, you raised a very good and interesting one. some clarification:

    1. I nowhere argued that having a porn-less society, or having a lower level of porn that it is now, is good or bad from the economic perspectives (that's what I was trying to say to Rizal...). I believe the basis for such argument lies not in the economic domain. what I argued was the RUU is not a good tools to achieve its means.

    2. on the 'overconsumption' -- I didn't define what it is, nor what the optimal consumption should be. my point was much simpler than that. people are complaining that adult movies, magazines, pictures are everywhere. even kids can easily access that. even those who rejects the RUU can agree on that. it's valid to say that the situation is a 'bad' one.

    3. I think you misinterpreted my point on the 'production' side. production side is supply, not demand side. my argument was that the RUU should be focusing on distribution, rather than 'production.'

    on the other hand, I even argued that the RUU "fails to realize the bigger problem from the demand side" (read again the line).

    4. I argue with you - the RUU is absurd. that's the simplest way of saying everything.

  10. hi, sorry.. can't resist... :D

    don't you think your point 1 and 2 are contradictory? you said that the 'goodness' isn't in the economic domain, so it don't matter. but on point 2 you assumed that it's bad?

    i get ur point though... tx

  11. No, I didn't ASSUME it. I CONCLUDED it (from various discussions).

    But pls read carefully. There was only one thing I concluded: there people can agree on one thing -- DISTRIBUTION of pornography should be limited. But people still disagree whether the PRODUCTION should also be totally banned.

    And on why people may like or dislike either situation, that doesn't always have to be based on economic reason.

  12. almost OOT, but the two essays i mentioned earlier presents the argument how certain moral values make economic sense (it's primarily on marriage, and why marriage is economically sensible, but also prostitution and at some point applicable to porn, too).

    i agree fully on the distribution point.