Could price gouging during a crisis actually be moral?

Price gouging is prohibited in 34 US states and Washington D.C. But two scholars ask whether that's the way it should be.

  • Paper products, hand sanitizer, masks, and cleaning wipes—all are in high demand and short supply during the COVID-19 crisis.
  • Price gougers are viewed as villains in this crisis—but two scholars argue that price gouging is, in most cases, morally permissible.
  • Increased prices prevent unnecessary hoarding. Buyers purchase only what they need when they need it. Also, producers are incentivized to make more. When the supply rises, prices will fall.

At the Safeway grocery store in Southwest Washington, D.C., the toilet paper and paper towels section has been empty for most of the last two months. When the store does restock, supplies don't last long on the shelves. "Do you know if they have paper towels?" a pedestrian outside the store asked a stranger exiting the Safeway in late April. The answer was no: "Still out."

Paper products, hand sanitizer, masks, and cleaning wipes—all are in high demand and short supply during the COVID-19 crisis. Shoppers across the country are facing empty shelves and out-of-stock signs.

But any seller who reacts to current crisis conditions by increasing prices on in-demand products may be committing a crime. Thirty-four states have laws against price gouging. In March, a bipartisan group of state attorneys general wrote a letter urging online marketplaces to crack down on price spikes.

"[W]hile we appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging as the American community faces an unprecedented public health crisis, we are calling on you to do more at a time that requires national unity," the letter said.

A price gouger makes a good temporary boogeyman. One could look at high prices during an emergency and think: They're trying to profit off of my desperation.

What exactly is price gouging, and what distinguishes it from a normal price increase? New York Attorney General Letitia James told NPR that "there's no definitive answer" but "you know it when you see it—[it's] when individuals are taking advantage of the market, particularly when a neighboring store is selling the same product for much less." New York's price gouging complaint form, which consumers can use to report retailers, defines it as "unconscionably excessive pricing of necessary consumer goods and services during any abnormal disruption of the market." However different states might define it, price gouging is widely understood to be exploitative, sleazy, and heartless. Laws against it are popular.

But Michael Munger, professor of political science at Duke University, says that high prices are a crucial part of dealing with scarcity during an emergency.

"If you use the police to keep prices artificially low, it makes the problem of scarcity much worse," Munger says in a short Institute for Humane Studies video on price gouging. Price gouging during an emergency allows more people to get what they need as soon as possible. "And that's true even for those who can't afford the gouger's prices," Munger explains.

How? Increased prices prevent unnecessary hoarding. Buyers purchase only what they need when they need it. Also, producers are incentivized to make more. When the supply rises, prices will fall.

"Price gouging laws keep the shelves empty longer," Munger says.

Matt Zwolinski, professor of philosophy at the University of San Diego, argues in his paper "The Ethics of Price Gouging" that "most, though not all, cases of price gouging are at least morally permissible, if not morally praise-worthy."

"Relative to the baseline of no exchange at all, the gouger's proposal stands to improve the lot of the buyer, not to worsen it," Zwolinski writes. If a buyer purchases a product at an exceptionally high price during an emergency, the buyer has decided that their emergency need justifies the high price. As Zwolinski puts it: "[W]hile the price of generators might rise dramatically in the wake of a disaster which knocks out power to a certain population, so too does the need people have for generators." A seller who raises prices did not create the buyer's increased need; he or she is merely reacting to it.

This doesn't mean, of course, that the price gouger is motivated by altruism. "[T]he fact that there are good arguments to be made for the moral permissibility of price gouging in certain cases does not mean that those who actually engage in the practice are motivated by these considerations," Zwolinski writes. But that's also true of normal market activity: As Adam Smith says in The Wealth of Nations, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." A price gouger makes a good temporary boogeyman. One could look at high prices during an emergency and think: They're trying to profit off of my desperation.

But if we heed the work of scholars like Michael Munger and Matt Zwolinski, we might begin to see price gouging as a rational and necessary part of emergency response. During normal times, a pack of hand sanitizer might cost the same as a bottle of red wine. But right now, during the COVID-19 pandemic, does anyone place nearly the same value on a bottle of wine as on a pack of hand sanitizer? By using the law to forcefully keep prices below what people would pay in an emergency, states enable hoarding. For Americans who would like to buy hand sanitizer—or paper towels, toilet paper, cleaning wipes, or masks—and can't find any, price gouging laws are a cold comfort. Most would rather have the option of paying increased prices than no options at all.

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Are we really addicted to technology?

Fear that new technologies are addictive isn't a modern phenomenon.

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This article was originally published on our sister site, Freethink, which has partnered with the Build for Tomorrow podcast to go inside new episodes each month. Subscribe here to learn more about the crazy, curious things from history that shaped us, and how we can shape the future.

In many ways, technology has made our lives better. Through smartphones, apps, and social media platforms we can now work more efficiently and connect in ways that would have been unimaginable just decades ago.

But as we've grown to rely on technology for a lot of our professional and personal needs, most of us are asking tough questions about the role technology plays in our own lives. Are we becoming too dependent on technology to the point that it's actually harming us?

In the latest episode of Build for Tomorrow, host and Entrepreneur Editor-in-Chief Jason Feifer takes on the thorny question: is technology addictive?

Popularizing medical language

What makes something addictive rather than just engaging? It's a meaningful distinction because if technology is addictive, the next question could be: are the creators of popular digital technologies, like smartphones and social media apps, intentionally creating things that are addictive? If so, should they be held responsible?

To answer those questions, we've first got to agree on a definition of "addiction." As it turns out, that's not quite as easy as it sounds.

If we don't have a good definition of what we're talking about, then we can't properly help people.

LIAM SATCHELL UNIVERSITY OF WINCHESTER

"Over the past few decades, a lot of effort has gone into destigmatizing conversations about mental health, which of course is a very good thing," Feifer explains. It also means that medical language has entered into our vernacular —we're now more comfortable using clinical words outside of a specific diagnosis.

"We've all got that one friend who says, 'Oh, I'm a little bit OCD' or that friend who says, 'Oh, this is my big PTSD moment,'" Liam Satchell, a lecturer in psychology at the University of Winchester and guest on the podcast, says. He's concerned about how the word "addiction" gets tossed around by people with no background in mental health. An increased concern surrounding "tech addiction" isn't actually being driven by concern among psychiatric professionals, he says.

"These sorts of concerns about things like internet use or social media use haven't come from the psychiatric community as much," Satchell says. "They've come from people who are interested in technology first."

The casual use of medical language can lead to confusion about what is actually a mental health concern. We need a reliable standard for recognizing, discussing, and ultimately treating psychological conditions.

"If we don't have a good definition of what we're talking about, then we can't properly help people," Satchell says. That's why, according to Satchell, the psychiatric definition of addiction being based around experiencing distress or significant family, social, or occupational disruption needs to be included in any definition of addiction we may use.

Too much reading causes... heat rashes?

But as Feifer points out in his podcast, both popularizing medical language and the fear that new technologies are addictive aren't totally modern phenomena.

Take, for instance, the concept of "reading mania."

In the 18th Century, an author named J. G. Heinzmann claimed that people who read too many novels could experience something called "reading mania." This condition, Heinzmann explained, could cause many symptoms, including: "weakening of the eyes, heat rashes, gout, arthritis, hemorrhoids, asthma, apoplexy, pulmonary disease, indigestion, blocking of the bowels, nervous disorder, migraines, epilepsy, hypochondria, and melancholy."

"That is all very specific! But really, even the term 'reading mania' is medical," Feifer says.

"Manic episodes are not a joke, folks. But this didn't stop people a century later from applying the same term to wristwatches."

Indeed, an 1889 piece in the Newcastle Weekly Courant declared: "The watch mania, as it is called, is certainly excessive; indeed it becomes rabid."

Similar concerns have echoed throughout history about the radio, telephone, TV, and video games.

"It may sound comical in our modern context, but back then, when those new technologies were the latest distraction, they were probably really engaging. People spent too much time doing them," Feifer says. "And what can we say about that now, having seen it play out over and over and over again? We can say it's common. It's a common behavior. Doesn't mean it's the healthiest one. It's just not a medical problem."

Few today would argue that novels are in-and-of-themselves addictive — regardless of how voraciously you may have consumed your last favorite novel. So, what happened? Were these things ever addictive — and if not, what was happening in these moments of concern?

People are complicated, our relationship with new technology is complicated, and addiction is complicated — and our efforts to simplify very complex things, and make generalizations across broad portions of the population, can lead to real harm.

JASON FEIFER HOST OF BUILD FOR TOMORROW

There's a risk of pathologizing normal behavior, says Joel Billieux, professor of clinical psychology and psychological assessment at the University of Lausanne in Switzerland, and guest on the podcast. He's on a mission to understand how we can suss out what is truly addictive behavior versus what is normal behavior that we're calling addictive.

For Billieux and other professionals, this isn't just a rhetorical game. He uses the example of gaming addiction, which has come under increased scrutiny over the past half-decade. The language used around the subject of gaming addiction will determine how behaviors of potential patients are analyzed — and ultimately what treatment is recommended.

"For a lot of people you can realize that the gaming is actually a coping (mechanism for) social anxiety or trauma or depression," says Billieux.

"Those cases, of course, you will not necessarily target gaming per se. You will target what caused depression. And then as a result, If you succeed, gaming will diminish."

In some instances, a person might legitimately be addicted to gaming or technology, and require the corresponding treatment — but that treatment might be the wrong answer for another person.

"None of this is to discount that for some people, technology is a factor in a mental health problem," says Feifer.

"I am also not discounting that individual people can use technology such as smartphones or social media to a degree where it has a genuine negative impact on their lives. But the point here to understand is that people are complicated, our relationship with new technology is complicated, and addiction is complicated — and our efforts to simplify very complex things, and make generalizations across broad portions of the population, can lead to real harm."

Behavioral addiction is a notoriously complex thing for professionals to diagnose — even more so since the latest edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM-5), the book professionals use to classify mental disorders, introduced a new idea about addiction in 2013.

"The DSM-5 grouped substance addiction with gambling addiction — this is the first time that substance addiction was directly categorized with any kind of behavioral addiction," Feifer says.

"And then, the DSM-5 went a tiny bit further — and proposed that other potentially addictive behaviors require further study."

This might not sound like that big of a deal to laypeople, but its effect was massive in medicine.

"Researchers started launching studies — not to see if a behavior like social media use can be addictive, but rather, to start with the assumption that social media use is addictive, and then to see how many people have the addiction," says Feifer.

Learned helplessness

The assumption that a lot of us are addicted to technology may itself be harming us by undermining our autonomy and belief that we have agency to create change in our own lives. That's what Nir Eyal, author of the books Hooked and Indistractable, calls 'learned helplessness.'

"The price of living in a world with so many good things in it is that sometimes we have to learn these new skills, these new behaviors to moderate our use," Eyal says. "One surefire way to not do anything is to believe you are powerless. That's what learned helplessness is all about."

So if it's not an addiction that most of us are experiencing when we check our phones 90 times a day or are wondering about what our followers are saying on Twitter — then what is it?

"A choice, a willful choice, and perhaps some people would not agree or would criticize your choices. But I think we cannot consider that as something that is pathological in the clinical sense," says Billieux.

Of course, for some people technology can be addictive.

"If something is genuinely interfering with your social or occupational life, and you have no ability to control it, then please seek help," says Feifer.

But for the vast majority of people, thinking about our use of technology as a choice — albeit not always a healthy one — can be the first step to overcoming unwanted habits.

For more, be sure to check out the Build for Tomorrow episode here.

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