Repugnance as externalities

Trying to find a definition of repugnance is not that easy. Kimberly Krawiec notes in her article that ‘[t]he term “repugnance” does not have a consistent meaning in the literature’ (Reference Krawiec2022: 3). One might try to suggest, as Krawiec does in her contribution here or as Élodie Bertrand did (Reference Bertrand2021), that repugnance is a form of ‘moral externality’. Bertrand thus showed that the positive and the normative views on repugnance, those of the economists and those of the philosophers can all be interpreted in the same way, in terms of external or harmful effects.

One of the problems here does not so much come from the use of the concept that from the normative conclusions that can then be derived. It is exactly the same problem with how externalities are used in economics. An external effect is most of the time viewed as an objective phenomenon that is characterized by the existence of interdependencies between the individual utility and production functions. It is indeed a fact that consumption or the production of a good appears in the utility or production function of other individuals. Each individual behaviour affects others, but this effect is not taken into account in the private calculations. Consequently, the allocation of resources cannot be optimal. From this observation, which can be made by any external observer, it is concluded that an action must be taken to correct the lack of optimality of the situation.Footnote ²

Krawiec also uses the concept of externality in her article published in this special issue – ‘Markets, repugnance, and externalities’. More precisely, she analyses the claim according to which ‘some markets are “repugnant” because they degrade and corrupt a variety of nonmarket values and relations’. In that sense, the degradation and corruption of values that result from adopting a repugnant behaviour or engaging in a repugnant transaction do not only affect ‘the willing parties to the exchange’, but also spread ‘to larger segments of society’, in this sense, it creates third-party effects, which could be considered as externalities. But is this always the case? Are these harmful effects always observed? Can an effective corruption of the values accepted in a society be observed when repugnant behaviours are adopted? No, answers Krawiec: ‘the negative effects predicted by market skeptics do not appear to have materialized’. Indeed, ‘corruption theorists… fail to provide evidence of this predicted corruption’. This has been noted previously, as Krawiec reminds us, quoting for instance Martha Nussbaum who wrote that prostitution did not destroy love or the desire to fall in love, ‘any more than a Jackie Collins novel removes the desire to read Proust’ (1998: 713, cited in Krawiec, Reference Krawiec2022: 6). Krawiec's point that she makes after having analysed kidney exchange or egg donation is that the development of these transactions did not destroy but rather preserved certain values such as the sacredness of motherhood and the sacredness of life. The development of these markets leads to discussions and debates that contributed to the preservation of these values.

The lack of evidence that repugnance corrupts values may be interpreted as meaning that what is perceived as repugnant by some theorists is actually not perceived as such by the individuals themselves. As we show in a note written as a comment on Krawiec's article (Daou and Marciano, Reference Daou and Marciano2023), this can be explained by the fact that corruption theorists rely on a definition of externalities as an objective phenomenon. They thus believe that identifying a negative externality necessarily implies that values will be corrupted. If one adopts an alternative, subjective view on externalities and therefore on repugnance, then the conclusion is totally different: that theorists observe an externality does not mean that individuals perceive that something has to be done about it. Put differently, the lack of evidence Krawiec points at means that there is no repugnance where corruption theorists see it. This then raises the question of an alternative approach that would allow to include the individuals and their perception in the definition of repugnance. This can be done by using the concept of the environment or what can be called the ‘context’ in which behaviours, activities or transactions take place.

Towards an institutional definition

One of the main features that characterizes repugnance is that it is not an absolute concept or phenomenon. The behaviours that are viewed as repugnant and listed as such in many of the papers devoted to the question are extremely heterogeneous; they change from one society or culture to the other, and from one period to the other. Thus, at a certain time and place, some behaviours are deemed acceptable and others not; or, put differently, depending on the context, some behaviours are repugnant or not. This means that a behaviour or an activity is repugnant when it is not adapted to the context in which it takes place.

What is the context of a transaction? How to define this context that gives behaviours and transactions their repugnant dimension? From the literature on this topic, four models of relationship can be identified that people use to make sense of their interactions, or four contexts that allow to identify whether a behaviour or a transaction is repugnant or not: (i) charity, (ii) contract, (iii) solidarity and (iv) status (see Khalil and Marciano, Reference Khalil and Marciano2018) or (i) communal sharing, (ii) authority ranking, (iii) equality matching and (iv) market pricing (Fiske, Reference Fiske1991, Reference Fiske1992, Reference Fiske2000, Reference Fiske2002, Reference Fiske and Haslam2004). Therefore, in a given context, individuals are expected to behave in a certain way; if they deviate from what they are supposed to do in the context in which they are, their behaviour is repugnant. From this perspective, trading goods (commodification) is not repugnant when it takes place in a market exchange – contract (ii) for Khalil and Marciano's classification or market pricing (iv) for Fiske's classification – and becomes repugnant when it involves actions that pertain to the three other contexts. To put it differently, commodification – the use of money in an interaction – is not repugnant in itself. It depends on the context.

In addition, one also understands that (and why) repugnance is broader than commodification and market exchange. Indeed, repugnance is not only ‘an objection to markets’, to paraphrase Krawiec. A behaviour – giving, for instance – that makes sense in a certain context – charity – can be repugnant in another context – such as contract; one does not pay a good in a store with a gift; or, another instance, behaving self-interestedly – which is the kind of behaviour that corresponds to a market exchange – is not adapted to a context like friendship, solidarity or equality matching. Complementarily, the kind of behaviour that is adapted in a family or among friends would certainly not be adapted and can even be repugnant in a status context or on markets.Footnote ³ Many other examples could be given to highlight the complexity of the issue.

One has to mention that the context can be defined at two different levels. First, the context of a behaviour or a transaction may be defined by the shared and deeply held values, the norms and rules that exist in a society, on which the society is built and that tie individuals together. Put differently, the context can be socially defined. It then imposes on the individuals. From this perspective, the values and norms can be considered as universal and thus acquire a form of objectivity. In that sense, these values and norms are uncontroversial and valid independently from the transaction that is taking place and from the actors involved in the interaction. Here, repugnance is not a matter of personal opinion or individual judgement.Footnote ⁴ Thus, selling human beings is now, in almost all societies today, viewed as repugnant independently from what individuals possibly involved in this kind of exchange believe. Similarly, slavery is repugnant because buying and selling human beings violate today's moral and social rules and it is in that sense unanimously rejected. In that case, repugnance refers to the violation of deeply held and shared social or moral rules, norms and values by society.

Second, the context of a transaction or the context in which a behaviour takes place can, alternatively, be defined at a local – micro – level, that is by the actors themselves when they enter a transaction. The context then depends on the opinion and personal judgement of the actors themselves. In this case, the type of behaviour to be adopted and conversely the behaviour judged as contested or repugnant is defined on the basis of a personal judgement or opinion. Repugnance is then defined by the violation of the norms and values linked to the local context. This is the case with, for instance, ‘dinner guests … offer[ing] to pay for their dinner’ (Roth, Reference Roth2007: 44) or when one leaves a price tag on a gift offered to a friend. Being invited at a dinner or offering a gift is a matter of friendship. The context is therefore specific to a given relationship. In this context, paying or emphasizing the monetary value of a good is unacceptable and therefore can be viewed as repugnant. Not because they are violating a universally accepted norm, but because they violate the norms that correspond to a specific context.

We therefore have a definition of repugnance with two dimensions. This is interesting for various reasons. One of them is that it affects the regulation and the management of repugnance. These will be different in their forms but also probably in their effectiveness depending on whether it comes from one or the other dimension.

Regulating repugnance

How repugnance is regulated depends on whether the context is defined by the parties themselves or not. If it is the case, then repugnance is a matter of personal opinion and it is up to the individuals who are involved in the transaction to decide the type of punishment to adopt. Legal punishment is almost impossible – the law cannot punish people for being tactless, or impolite. Informal mechanisms – verbal reprimands to make distasteful people feel embarrassed – are generally used in that case. By contrast, when repugnance consists in violating rules that have a global or collective dimension, that is when the context of a transaction is defined socially, then repugnance becomes a legal issue. In that case, actually, the rules that are violated are so largely accepted that they certainly are already part of the legal system or will soon be. Therefore, adopting such behaviours, violating legal rules or the norms and values a society rests upon, is a crime against the law and against morals too. There is no real need to enter into the details of the sanctions that could be used – from shaming to imprisonment in passing by fines – but what matters here is that they must carry a social weight. They are not a matter of personal opinion. Punishment here is, one might say, applied by the community and has a collective nature.

This can be viewed as a general frame to understand how repugnance can be regulated. Krawiec (Reference Krawiec2009) gave more details about what she calls herself the regulation of ‘contested’ or ‘taboo raw materials’. She showed that there exist wide variations in the laws governing industries, both between ‘taboo’ industries and the others, but also between ‘taboo industries’ themselves. For instance, considered illegal in most industries, anti-competitive behaviour such as horizontal price-fixing is common when it comes to human egg (or ‘oocyte’) donation. Even worse, it is also the case between very close or similar ‘taboo’ industries, more concretely between human egg and sperm donation business, where for the first industry the attempted collusion has not generated the same public and regulatory concern than the second industry.

Péter Cserne's article in this special issue, ‘Disciplinary accounts of moral repugnance: reductionism, romance, and rationality’ (Reference Cserne2023), continues the reflection on the regulation and legal aspects of repugnance. He underlines that ‘there are as many different “theories of repugnance” as national (as well as sub- and supranational) legal regimes’. He also finds that, because of the morally heterogeneous nature of repugnance, law fails to resolve normative questions about how repugnant transactions should be regulated. Conversely, this aspect is dealt with by economics. However, it would be for Cserne the only aspect dealt with by economists, who tend to be normative in their analyses, only reduced to, Cserne himself writes, a ‘commeasurable dimension’.Footnote ⁵ Moreover, Cserne's analysis allows us to go further and to open the frontiers of repugnance analysis by questioning the links and interconnections between disciplines and more specifically between economics and law. Thus, Cserne questions the way in which economics and law study the conceptual, empirical and normative perspectives of repugnance. But above all, he shows that these two disciplines have a very incomplete analytical framework for analysing repugnance. Not only does it seem necessary to combine them but above all to complement them with other disciplines.

Managing repugnance

Beyond the regulation of repugnance and its interconnections with other disciplines, there is also the more general question of its day-to-day management. As said above, repugnance consists of adopting a behaviour that should not be in the context in which the individuals are. It nonetheless happens that individuals cross the borders between these different contexts. In other words, individuals behave repugnantly, despite the costs they have to incur when adopting such behaviours. As Alan Fiske and Philip Tetlock explained, crossing such boundaries ‘trigger[s] negative cognitive, emotional, and behavioral reactions’ (1997: 257). They call these transgressions ‘taboo trade-offs’ (Fiske and Tetlock, Reference Fiske and Tetlock1997; McGraw and Tetlock, Reference McGraw and Tetlock2005; Tetlock et al., Reference Tetlock, Mellers and Scoblic2017). More precisely, a taboo trade-off is the comparison individuals make when they are facing a transaction that is not adapted to the context in which they are. Put differently, it is ‘any explicit mental comparison or social transaction that violates deeply held intuitions about the integrity, even sanctity, of individual-to-individual or individual-to-society relationships and the values that animate those relationships’ (Fiske and Tetlock, Reference Fiske and Tetlock1997: 256).

Paradoxically, individuals frequently and repeatedly tend to engage in such trade-offs (Fiske and Tetlock, Reference Fiske and Tetlock1997; McGraw and Tetlock, Reference McGraw and Tetlock2005; Tetlock et al., Reference Tetlock, Mellers and Scoblic2017; see also Zelizer, Reference Zelizer2005). This type of situation can be viewed as evidencing the point noted earlier, namely that what appears as repugnant for an external observer is actually not perceived as such by the individuals who are involved in the transaction. It is certainly frequently the case but not always, especially from the moment where individuals invent means, devise ways that make such trade-offs and the related transactions (more) acceptable. This shows on the contrary that individuals do find what they are doing is repugnant and they need a mean to manage that.

One of the ways to make repugnant or taboo trade-offs acceptable is to invent stories which work as ‘absolving narratives’ or as ‘excuses’ (Benabou et al., Reference Bénabou, Falk and Tirole2018) that are therefore supposed to allow individuals to change ‘the perception of ethically disputed transactions’ (Elías et al., Reference Elias, Lacetera and Macis2017: 80) and manage ‘these awkward exchanges’ (Healy and Krawiec, Reference Healy and Krawiec2017). Numerous (more or less extreme) examples can be given. Thus, one can cite surrogate mothers who are not said to be ‘paid’ in exchange of eggs but are ‘compensated’ (Healy and Krawiec, Reference Healy and Krawiec2017). It is also the case with the narratives firms use for advertisement and marketing purposes with the intention to alter how their actions are perceived in order to make them precisely acceptable for customers (McGraw and Tetlock, Reference McGraw and Tetlock2005: 14).

These strategies to reduce repugnance are also the topic of Erwin Dekker and Julien Gradoz's article in this special issue, ‘Managing repugnance: how core-stigma shapes firm behavior’, that focuses on what they call ‘repugnant firms’ or ‘core-stigmatized firms’. Indeed, being stigmatized for supplying repugnant goods or for adopting repugnant behaviours imposes constraints on firms, forcing them to develop specific strategies, which for Dekker and Gradoz implies that transaction costs are higher than in the absence of repugnance. In their paper, Dekker and Gradoz study the case of two companies: first, MindGeek, the mother company of Pornhub, operating on a repugnant market, and which used specific strategies to reduce its transaction costs linked to the stigma; and, second, Sears, Roebuck and Company, which has suffered high transaction costs due to its competitors which accused it of behaving repugnantly – being racially biased – to prevent its entry on market. More generally, Dekker and Gradoz show that stigmatization is not without consequences and obviously affects the functioning of markets, the organization of firms and the message they send to potential customers. In that sense, effects can turn out to be huge, as highlighted by Dekker and Gradoz. The latter have opened up a new subfield of economic research with their study.

Repugnance forces firms to be innovative whether in their strategy (Dekker and Gradoz, Reference Dekker and Gradoz2022) or because it leads them to adopt repugnant innovations, to paraphrase the title of the article written by Darcy W.E. Allen, Chris Berg and Sinclair Davidson (Reference Allen, Berg and Davidson2022), which is included in this symposium. Thus, where Roth was claiming that repugnance was a constraint on the functioning of markets, Allen, Berg and Davidson argue that repugnance can offer opportunities of profit. Indeed, some entrepreneurs might be tempted to innovate by using repugnance, that is by ‘evading’ existing norms. The literature calls them ‘evasive entrepreneurs’.Footnote ⁶ Analysing their role is particularly important. First, because they play a significant role in the rise of new innovations, there is evidence that innovation can take place independently from any government policy. Second, these repugnant entrepreneurs are agents of institutional and social change. Indeed, with their repugnant innovations, they contribute to change the existing norms and modify the limits of what is perceived as repugnant. In their article, Allen, Berg and Davidson explore precisely this aspect from three examples, e-cigarettes, online gambling and webcam modelling.

Are institutions intrinsically repugnant?

The institutional character of repugnance is also at the heart of Roth's seminal article (2007). Roth indeed analysed repugnance from an institutional perspective, namely as a market designer, interested in building market-like mechanisms or institutions, i.e. capable of allocating resources efficiently, and whose goal is to ‘realiz[e] gains’ (Healy and Krawiec, Reference Healy and Krawiec2017: 87). More precisely, in his article, after having described several behaviours usually regarded as repugnant, from eating dog or horse meat to dwarf throwing, in passing by selling babies or organs (see Roth, Reference Roth2007: 39), Roth more specifically focused on one specific transaction, organ trading, he suggested a mechanism to exchange kidneys, namely ‘in-kind exchanges’, and that ‘unlike the buying and selling of kidneys,… have not aroused a repugnant reaction’ (2007: 52). To qualify this kind of trade, Roth spoke of ‘repugnant markets’. That the term ‘market’ is not in the singular is extremely important here. Indeed, to Roth, the market, in general, as an institution, does not imply repugnance.

Elias et al. (Reference Elias, Lacetera and Macis2015a, Reference Elias, Lacetera and Macis2015b), for instance, complete the analysis of Roth. They (2015b: 361) show that individuals may change their mind about some transactions that they found repugnant but that they eventually admit if they receive information about it. Thus, individuals end up by accepting the possibility to trade organs after they have been informed of the costs due to organ shortage and the potential benefits that a market for organs would induce (see also Elias et al., Reference Elias, Lacetera and Macis2015a). Thus, the ‘skepticism’ with which ‘markets and money prices are viewed’ diminishes with the information provided to individuals. Not any kind of evidence or information, though. Thus, information on the efficiency of markets in general does not change how individuals perceive organ trading. Also, this change in perception does not occur for all types of repugnant activities or transactions. Despite possible benefits which could be associated with prostitution and slavery, for instance, more information about such possible benefits will not affect how individuals perceive these repugnant behaviours. The moral views individuals have about certain transactions remain intact.

From what has just been said, it does not seem that the market, as an institution, creates repugnance. Markets are not repugnant by nature and do not introduce wrongness where there is none. The problem is not the market but the commodification of some goods. Put differently, problem lies in what is traded, the objects that are commodified (Brennan and Jaworski, Reference Brennan and Jaworski2016: 29–42). As Brennan and Jaworksi (Reference Brennan and Jaworski2016: 8) note, market can be seen ‘moral and morally ameliorative’ and thus, ‘many of the objections to money and markets raised by anti-commodification theorists can be conceived of as complaints about particular markets, rather than about markets as such’ (2016: 35); or, still in other words, there is nothing intrinsically repugnant to markets in general or to a market society (see Brennan, Reference Brennan2013). Better still, the market would make it possible to introduce more morality, since according to Brennan and Jaworski (Reference Brennan and Jaworski2016: 36–37), any alleged immoral outcomes of a market exchange can be avoided by changing the ‘settings’, namely the market rules.

In his critical essay on Brennan and Jaworski's book (Reference Brennan and Jaworski2016), Hodgson (Reference Hodgson2021) gives a case which questions this thesis. Thus, he shows that ‘the transition from gift to contract or market exchange may raise moral issues that are additional to those intrinsic to the goods or services being traded’ (153). Contrary to Brennan and Jaworksi who supported the idea that the transition from gift to contractual exchange does not create moral wrongness where there was none before, Hodgson showed (Reference Hodgson2021: 156) exactly the opposite that ‘immorality begins when the gift ends’. For that, he referred to the example of co-writing in the scientific world. When it is a possibility which is offered to a supervisor of a PhD student who publishes his paper, it is a gift but if the student asks for money in exchange for adding the supervisor's name as a co-author, then the perception changes or, Hodgson (156) writes, ‘The moral scales tip dramatically. It is no longer a gift. It is authorship and scientific reputation, bought and sold. It is science depraved by money’.

Armin Falk and Nora Szech (Reference Falk and Szech2013) also call into question the morality of market. Their analysis differs from Hodgson's. They use an empirical study, in which subjects are confronted to a choice between saving the life of a mouse or receiving money. They show that both ‘in a bilateral and a multilateral market…the willingness to kill the mouse is substantially higher than in individual decisions’ (707). Although they study a specific transaction, Falk and Szech derive normative general conclusions about ‘market interaction’ that, for them, ‘causally affects the willingness to accept severe, negative consequences for a third party’ (707; italics added) and ‘displays a tendency to lower moral values, relative to individually stated preferences’ (710).

The same kind of generality is indeed found in the analyses made by the moral philosophers who study (and most of the time oppose) commodification (among others, Anderson, Reference Anderson1990, Reference Anderson1993; Radin, Reference Radin1987, Reference Radin1996; Sandel, Reference Sandel2012, Reference Sandel2013; Satz, Reference Satz1992, Reference Satz1995, Reference Satz2010): ‘markets… corrupt or crowd out nonmarket norms of moral importance’ (Sandel, Reference Sandel2012: 123). They do what economists do not – see ‘commodification as a moral problem’ (Healy and Krawiec, Reference Healy and Krawiec2017: 87), passing ‘judgment on repugnance’ (Sandel, Reference Sandel2013: 124) and ‘ask[ing] which instances of repugnance reflect unthinking prejudice that should be challenged and which reflect morally weighty considerations that should be honored’ (124). These philosophers try to identify ‘The Moral Limits of Markets’ (Sandel, Reference Sandel2012; Satz, Reference Satz2010) or ‘The Ethical Limitations of the Market’ (Anderson, Reference Anderson1990; see also 1993). According to them, the market is not necessarily intrinsically repugnant, meaning it is not repugnant as long as it remains limited to the exchange of certain goods. According to the opponents to commodification, the goods that play a crucial role in the functioning of human societies – organs, human beings, votes and nature, and many others – should not be commodified because it would ‘erode certain moral and civic goods worth caring about’ (Sandel, Reference Sandel2013: 121). Their exchanging on markets would be repugnant on principle.Footnote ⁷

Beyond markets and commodification, this raises the question of the repugnance of institutions in general. Brennan claimed that democratic institutions are repugnant because democracy relies on institutionalized violence. By contrast with a market, where individuals interact as traders, political institutions are characterized by a desire to ‘get what we want… competition in democratic politics just is competition for a monopoly on the use of violence. Democratic competition determines who gets to hold the whip and the sword’ (Brennan, Reference Brennan2013: 280).