1. Gouging as distributive mechanism

Several economists have defended price gouging as increasing available resources and so benefitting disaster survivors (see summaries by Giberson Reference Giberson2011; Dorfman Reference Dorfman2016; Cowen Reference Cowen2017; Millsap Reference Millsap2017; Murphy Reference Murphy2017). First, higher prices create an incentive for sellers to bring more resources into the area or stock more in advance of a disaster, increasing supply. Summarizing these arguments, Zwolinski writes that price gouging facilitates ‘allocative efficiency’. In Hayekian terms, prices have a signalilng function, and higher prices signal the higher demand created by scarcity – leading to increased supply. Because markets are dynamic, not static, increasing prices can increase supply, eventually leading to lower prices (Zwolinski Reference Zwolinski2008: 360; see also discussion in Lamont and Favor Reference Lamont and Favor2009: 52–53).

Second, higher prices create incentives for buying less and conserving more – they prevent people from wasting or stockpiling scarce resources. For example, higher prices would dis-incentivize buying extra drinking water to cook spaghetti or taking two hotel rooms when a family could fit into one (Zwolinski Reference Zwolinski2008: 363). Price gouging, as Tyler Cowen points out, also discourages black markets in which profiteers buy up goods and re-sell them at higher prices (Cowen Reference Cowen2017). Finally, foreknowledge of price gouging might encourage preparedness, so that people in a disaster-prone area stock up before prices rise.

One problem with these predictions is that economic models depend on idealized assumptions. In disasters, conditions are likely to be even further from the idealizations, limiting the usefulness of the models. Even in normal times, limits on communication and supply chain disruptions can block the signalling power of prices; in a large-scale catastrophe, communication devices and infrastructure may be disabled, so that it is impossible to learn where prices are higher or whether to bring goods there. Especially in the critical early stage of a catastrophe, price signalling may not be able to take effect quickly.

Furthermore, once we recognize that different disasters pose different challenges, it seems clear that the most efficient methods of supply and conservation will vary with the context. Price increases might serve as an incentive to bring supplies into a flood zone – but not to an area where there is a pandemic or nuclear explosion and higher perceived risk for the supplier. In disasters where people are forced from their homes, survivors will abandon stockpiled supplies and be unable to hoard – ‘stashes become irrelevant when everyone must abandon their homes, and [this] puts everyone in the same boat (or swimming)’ (Gregory A. Daneke, private correspondence). In other cases supplies might have to be airdropped, with no price increases sufficient to compensate sellers. Access might be limited due to infrastructure damage, as in Puerto Rico after Hurricane Maria.

Moreover, human agents do not act as rationally as economic models assume, and we are particularly unlikely to do so during disasters, due to panic. Rather than preventing hoarding, a $44 case of water might suggest that water is so scarce that consumers should stockpile it, triggering hoarding; someone who would not ordinarily spend so much on water might buy as many cases as they can because of the fear of scarcity. Catastrophes involve objective uncertainty and subjective panic, which affect people’s behaviour. Markets can fail, and we should be wary of basing law on economic predictions which are vulnerable to unknowns of communication and infrastructure and the irrationalities of human behaviour.

Even if markets were to function roughly as predicted, however, there is another problem. These arguments depend on economic predictions, but as a moral defence of price gouging, they also depend on the assumption that a certain distributive outcome is morally preferable. The underlying assumption is that price gouging is morally justified if it furthers allocative efficiency. However, this assumes a view of the morally best rationing outcomes. This assumption regarding the morally best rationing outcome itself needs defence.

Price gouging faces an objection on grounds of equity, understood as equitable access on the basis of ability to pay: price gouging allows wealthier people to buy more, even hoard, while the poor may not be able to meet their basic needs. While the effects of price gouging on conservation and supply are unpredictable and depend on various factors, there is one likely direct consequence of allowing price gouging: poorer people’s access to basic necessities will decrease, at least in the short term. If permitting price gouging leads to an immediate increase in prices, lower-income people will have diminished access, at least until supply increases and prices become lower (if this does indeed happen as predicted). While it seems likely that permitting price gouging will lead to increased prices in the short term, the longer-term desired result of increased access depends on numerous other factors, and so seems less likely. In other words, it is highly predictable that price gouging will lead to increased prices in the short term, making the poor worse off – but less predictable that this will have the desired long-term effect of benefitting the poor. Rationing through price gouging will not benefit all the vulnerable in the same way; it will benefit the economically better-off – who can afford to pay higher prices – at the expense of the economically worse-off – who cannot, at least in the short term.

This is significant because disasters already disproportionately affect the worst-off. Those who are socioeconomically worse-off are more likely to be the victims of disaster in the first place, less likely to be able to evacuate, and have fewer resources to enable them to rebuild or relocate (Zack Reference Zack2009; see also Gardoni and Murphy Reference Gardoni and Murphy2008: 319). Environmental injustice has led to the distribution of vulnerability to disaster on the basis of race and class (Bullard Reference Bullard2008). Thus, the poor, who are already more vulnerable due to their poverty, are likely to be further disadvantaged by price gouging which pushes them out of the market – particularly if poorer people are already in ‘food deserts’ with higher prices, or lack transport to seek out affordable goods, or storage for goods they obtain. Price gouging will increase the already disproportionate effect of disaster on the worst-off.

The argument that price gouging is immoral because it fails to ensure equitable access to basic necessities, and that this violates a duty of equal respect for persons, has been made by Jeremy Snyder in response to Zwolinski (Snyder Reference Snyder2009a; see also Zwolinski Reference Zwolinski2009 and Snyder Reference Snyder2009b). But while Snyder is right that equitable access is morally relevant, there are different conceptions of equity. For example, equity can be understood objectively, in terms of quantity of goods received (e.g. one unit per person), or subjectively, in terms of impact on well-being (e.g. each person reaches the same level of well-being, or each person’s well-being is increased by the same amount). Equitable access can also be assessed in terms of categories other than socioeconomic class, such as race, ability, and age.

Thus, different rationing systems serve different conceptions of equity and enable equitable access for different groups. Rationing purchases (e.g. one unit per person) would aim at equitable distribution of goods. Triage, as practiced in emergency medical care, would distribute on the basis of need, aiming for greater equity in subjective condition. Zero price rise, or first-come first-served, would allow more equitable access for rich and poor, but would favour those who arrive first, which might correlate to ability or age (see Lamont and Favor Reference Lamont and Favor2009: 51; Zwolinski Reference Zwolinski2009: 298). A system of state-issued surge pricing vouchers (described in Sorkin Reference Sorkin2017) would distribute on the basis of ability to pay combined with the foresight and ability to obtain a voucher.

Each system will advantage some and disadvantage others and thus faces moral complaints. Zero price rise, or first-come first-served, might seem fairer than price gouging because it does not translate pre-existing economic inequality into inequality in ability to obtain basic necessities. But this may improve access for the economically worst-off at the expense of other groups. Poverty is not the only source of vulnerability to disaster. Children and some people with disabilities have to depend on others for resources and transport. First-come first-served would exclude some people with disabilities, elderly and children without a social network or transport. And, under zero price rise, sellers must absorb increased costs of supply and labour.Footnote ³ Surge pricing vouchers would disadvantage those unable to obtain them in advance – which presumably would reflect education, access to information, cognitive ability and social support networks. Equal distribution of goods (one per person) would fail to take into account differing needs – someone with type 1 diabetes might need more sugary food in case of life-threatening hypoglycaemia. While triage avoids this, it is the most difficult to implement practically. These shortcomings reflect the fact that, under emergency conditions of scarcity and limited access, no system will be able to meet everyone’s basic needs (Zwolinski Reference Zwolinski2009: 298). If the morality of the pricing scheme is determined by its outcome, the question remains which outcome is morally preferable.

Defenders of price gouging rightly point out some problems of zero price rise without rationing. However, allocative goals can be pursued by other methods than price gouging. The prior moral question is which outcome is morally preferable. Due to epistemic barriers and wildly varying contextual factors, it is likely that no feasible rationing mechanism will reliably satisfy the plausible contenders for morally preferred distributions: objective equality in holdings, subjective equality in condition, or equitable access across economic or racial groups or ability levels. Price gouging may sometimes reach the morally preferred outcome, and sometimes it may not. But, unlike some other rationing systems, it does not directly aim at implementing a moral norm, such as equality or distribution on the basis of need. In light of the epistemic hurdles and contextual challenges, a rationing system which explicitly aims at implementing a moral norm (such as ‘one per customer’ or ‘on the basis of need’) seems prima facie morally preferable to one which does not. But of course, given a desired distributive principle, we can ask which rationing schemes are most likely to achieve it, and this could include some price increases – for example, up to the point at which they begin to price poorer people out of the market (California’s 10% cap on price increases might be an example of this).

However, identifying the morally preferable outcome does not settle the question of whether price gouging should be legally permitted. Other considerations shape law. Rights such as freedom of contract have a special priority within liberal theory – and so, arguably, does a right to rescue. In the next section, I turn to these considerations.

2. Rights and duties

While distributive outcomes are relevant in framing law, there are other significant moral claims. This is not to pre-judge the case of price gouging, as these constraints could be adduced on either side. Laws against price gouging could be seen as unacceptably limiting freedom of contract. On the other hand, price gouging could be seen as violating deontic constraints against exploitation or – as I will argue – failing a legally enforceable duty of easy rescue.

Zwolinski’s defence of price gouging suggests a deontic objection against prohibiting consensual exchanges. He criticizes laws against price gouging because they prohibit ‘mutually beneficial exchange’ (Zwolinski Reference Zwolinski2008: 351).Footnote ⁴ In a liberal society, there is a presumption against prohibiting competent adults from engaging in consensual transactions. A special case must be made for burdening such exchange.

However, in the case of price gouging, this case can be made on multiple fronts. Even in Nozick’s rights-based libertarianism, with its stringent views of property rights and freedom of contract, rights to exclusive ownership of basic necessities are overridden under disaster conditions (if ‘some natural catastrophe destroys all of the supply of something except that in one person’s possession’; Nozick Reference Nozick1974: 180, see 174–182). Ordinarily, within rights-based libertarianism, a property right entails the right to transfer the property as desired: as a gift, in a gamble, or for any agreed-on price. Restricting the right to sell at a desired price violates this right under Nozick’s principles of justice in transfer. But Nozick’s own account of property rights entails that property rights do not hold in a ‘catastrophe’ characterized by extreme scarcity and threat to life. This is entailed by the Lockean proviso: property rights hold so long as there is ‘enough and as good’ left for others, and transfers which culminate in one person owning all of a scarce substance in the area are illegitimate (Nozick Reference Nozick1974: 175, citing Locke Reference Locke and Laslett1967 [1689]: sect. 27). Thus, he writes, ‘a person may not appropriate the only water hole in a desert and charge what he will. Nor may he charge what he will if he possesses one, and unfortunately it happens that all the water holes in the desert dry up, except for his. This unfortunate circumstance … brings into operation the Lockean proviso and limits his property rights’ (Nozick Reference Nozick1974: 180).

The Lockean proviso might explain the widespread intuition that taking basic necessities in disasters in order to survive is permissible. For example, people who took water or food from stores following Katrina were not blamed as harshly as those who took non-essential items, such as TVs.Footnote ⁵ Nozick’s comments suggest that the proviso kicks in when a supply of goods is the only one in a limited geographical area, such as a desert; this also applies in disasters where mobility is curtailed, and only one supplier is physically accessible. If the Lockean proviso applies, then property rights are limited, so that taking necessities or burdening the exchange of goods with anti-price-gouging laws does not violate property rights. And it is difficult to see how an account of property rights could be grounded in deontic values such as freedom or respect for persons and yet fail to incorporate something like the Lockean proviso. Indeed, Nozick writes that ‘any adequate theory of justice in acquisition will contain a proviso similar to the weaker of the ones we have attributed to Locke. A process normally giving rise to a permanent bequeathable property right in a previously unowned thing will not do so if the position of others no longer at liberty to use the thing is thereby worsened’ – and this constrains subsequent transfers (Nozick Reference Nozick1974: 178; see also 179).

Of course, there are multiple interpretations of the proviso. In Nozick’s interpretation, it applies only if the affected individual is made worse off than if the goods had been left in the state of nature (Nozick Reference Nozick1974: 181).Footnote ⁶ Thus while the proviso would straightforwardly apply to land (higher ground in a flood, perhaps), it is much less clear whether it applies to bottled water, and clearly would not apply to many pharmaceuticals created in the lab. Perhaps a case could be made that appropriation in systems of commerce – such as bottling and selling water – has led consumers to become less self-reliant. This clearly raises puzzling issues which I cannot address here. For now, note that the proviso only applies where there is a compelling account of how the original appropriation has made those now in need worse off.

But even if the Lockean proviso does not apply in some such cases, so that property rights are not limited, violating property rights can be excusable in disasters. Emergencies can excuse acts of wrongdoing. As Tom Sorell puts it, in emergencies, ‘ordinary moral obligations may either lapse or may excusably be broken’ (Sorell Reference Sorell2003: 21). A boat might be requisitioned, for example, to save lives or distribute supplies. So even if property rights continue to hold in conditions of life-threatening scarcity, they may be excusably violated as a necessary means to survival.

Further, catastrophic events are not only characterized by scarcity of basic necessities, but also by breakdown in social order and rule of law – under these conditions, extraordinary measures, such as quarantine, curfew and requisitioning, might be taken to preserve rule of law.Footnote ⁷ In these cases, the state may do what is otherwise impermissible in order to restore order, especially if a Hobbesian state of nature threatens (Sorell Reference Sorell2013: 27). Prohibiting price gouging may be a way to do so.

Thus, a case against legal prohibition of price gouging based on property rights and freedom of contract faces serious challenges. In a disaster, imposing price controls on basic necessities either does not violate property rights (due to the Lockean proviso) or else the violation is excused under the circumstances. A price gouger’s claim that his right to free exchange is being violated has no traction.

It could be objected that if price controls excusably violate property rights, the violation leaves a residual obligation to repair the injury after the fact, reimbursing sellers for (demonstrable) increased costs in supplies and labour. But the obligation would not plausibly extend to reimbursement for speculative claims about profits sellers might have made. Residual obligations must stop somewhere, and the line between costs actually borne by the seller (as increased charges for labour, etc.) as opposed to speculative potential profits is a plausible one.

Deontic constraints may be adduced against price gouging. Statutes prohibiting it, as well as intuitive reactions, suggest that it is wrongfully exploitative (see Zwolinski Reference Zwolinski2008: 356, fn. 30). Exploitation can be defined as taking unfair advantage of another person.Footnote ⁸ The charge of exploitation, however, is not on its own sufficient to justify legal prohibition. As Alan Wertheimer argues in his influential analysis of the concept of exploitation, at least some ‘mutually advantageous and consensual exploitative agreements’, even if morally wrong, should be legally permitted in light of their benefits and respect for the parties’ autonomy (Wertheimer 1996: 296, see 296–309).

Furthermore, some argue that mutually advantageous exploitation is not morally wrong. Zwolinski has responded in this way to exploitation-based arguments against price gouging. According to the ‘nonworseness claim’, a consensual, morally optional transaction which does not make the other party worse off ‘cannot be seriously wrong’ (Zwolinski Reference Zwolinski2008: 357). That customers are willing to buy goods, even with price increases, shows that they believe the transaction benefits them. This claim is also used to defend sweatshops or pharmaceutical testing in developing countries: even though these take advantage of vulnerability, the poor are still better off for having the opportunity to work in sweatshops or receive medical treatment.

The nonworseness claim is controversial.Footnote ⁹ But rather than pursuing it here, I will set aside the argument that price gouging should be prohibited because it is exploitative. Regardless of whether it is wrongfully exploitative, and (requiring further argument) should thus be legally prohibited, the exploitation point misses what is distinctively wrong about price gouging. Price gouging in emergencies involves a wrong not inherent to exploitation.

Consider the following cases, which are plausibly cases of exploitation. Universities profit from the minimally compensated work of student athletes and graduate teaching assistants. Fertility clinics’ pricing trades on prospective parents’ desperation and sometimes unrealistic expectations. Manufacturers of addictive goods, from cigarettes to social media, profit from consumers’ vulnerability. In these cases, businesses arguably exploit consumers, taking unfair advantage of vulnerabilities in order to profit – but while these transactions can affect the life and health of those exploited over time, they do not take place in the context of immediate threat to life and health. Exploitation can occur in the absence of immediate threats. This is why exploitation is not the most morally salient feature of price gouging.

What distinguishes price gouging is that, by definition, it raises prices on basic necessities in emergency situations characterized by scarcity, suddenness and threat. In such contexts, people are endangered by lack of access to basic necessities. While exploitation takes advantage of vulnerability, it does not conceptually require the victim to be in danger; but it is precisely the fact that lacking access to basic necessities is dangerous that determines the morality of price gouging.

Because it limits access to basic necessities through price increases, price gouging risks serious harm to those unable to purchase goods. Of course, those who defend price gouging claim that it improves access to such goods; however (setting aside the merits of this claim) each instance of price gouging threatens harm to those priced out of the market. In doing so, price gouging violates a legally enforceable duty to easy rescue.

3. The duty of easy rescue

Perhaps the most famous example of a duty of easy rescue is Peter Singer’s: you walk past a shallow pond in which a small child is drowning. It would be very easy to save the child, but doing so would ruin your new shoes. It would be wrong to let the child drown in order to save your shoes. Singer, of course, is a utilitarian; but deontologists may also admit duties of easy rescue. Price gouging violates this duty.Footnote ¹⁰

Imagine someone is drowning, and someone sails up selling life preservers. They offer the life preserver at an inflated price, say, a million dollars. There are several legal and moral problems here: this is not a legally enforceable contract because it is made under duress.Footnote ¹¹ Also, the seller is taking advantage of the swimmer’s vulnerability: this is exploitative. But surely the most significant moral wrong is that the seller is willing to allow the swimmer to die if she does not pay, when he can save her with minimal effort. To be more precise, by withholding the life preserver, the seller fails to perform the action required by the duty of easy rescue. What stands out morally about this case is the magnitude of the possible harm.

The duty of easy rescue obtains in cases of immediate and preventable risk to life or health.Footnote ¹² Risks to health are those that would impede long-term functioning – preventing a minor scratch or bruise would not constitute rescue, whereas preventing malnutrition, severe dehydration, hypoglycaemia, or exposure would. Lack of necessities – food, water, shelter, ice and fuel for evacuation – can lead to serious physical harm or death. Plausibly, the duty extends to mental as well as physical health; long-term effects of trauma affect functioning. When the threshold of threat to life or health is met, the duty of easy rescue requires providing such necessities, if one can do so at trivial, or modest, cost to oneself. In Singer’s example, the cost is a new pair of shoes. I leave it open whether the threshold should be set at the level of trivial or modest cost; henceforth I will refer to ‘trivial’ costs, for simplicity.

The claim that, by charging an exorbitant sum for rescue, a potential rescuer may fail a moral duty of rescue has been made before. Wertheimer suggests the point in his discussions of the ‘Drowning Case’Footnote ¹³ and the case of ‘the greedy snowstorm rescuer, where B’s need to be rescued arguably makes it wrong for A to ignore B’s plight’ (Wertheimer 1996: 290). Cases like these, which feature a rescuer uniquely placed to save a single victim, trigger the intuition that charging an exorbitant amount in these situations fails a duty to rescue. But as far as I know, the point has not been extended to the context of ordinary ongoing commerce.Footnote ¹⁴ Price gouging in the context of ongoing commerce introduces complexities such as larger numbers of potential rescuers and rescuees and sellers’ dependence on profits for their livelihood. These complexities, as we will see, create challenges for the application of the duty of easy rescue broadly across commercial cases of price gouging. And, on Wertheimer’s view that permitting mutually advantageous consensual transactions should be the legal default, likely some such cases of commerce would be legally permitted (Wertheimer 1996: 296–305).

Invoking the duty of easy rescue to justify laws against price gouging, as I do, raises two acute challenges which I will go on to address. First, if the duty of easy rescue applies, why does it not require the seller to do more than refrain from gouging – why does it not require the seller to give away necessities? Second, why is the duty of easy rescue legally enforceable in this context? Even if it is morally wrong to fail to perform an easy rescue, it is contentious whether such a duty is legally enforceable.

In the next section, I will address the question of legal enforceability. First, through a series of illustrative examples, I will set up the argument that the duty of easy rescue requires sellers to refrain from price gouging – and no more.

1. (1) De-caffeinated hiker

   A hiker is deep in the wilderness. She has a craving for coffee. She meets another hiker who has a thermos of coffee. His charging an inflated price for it would take advantage of her vulnerability (her craving for coffee), but it would not threaten her life or health.

2. (2) Dehydrated hiker.

   The hiker is perilously dehydrated. She meets another hiker with plenty of water (he brought extra for a trivial purpose providing a small aesthetic or hedonic benefit, such as washing his feet). He asks for payment; if she cannot pay, he will go on his way, leaving her in peril. His failure to give her the water risks allowing her to die.

In (1), there is no duty of easy rescue – even though charging an inflated price for the coffee is exploitative. In (2), there is a duty of easy rescue, and charging money for water violates it.

The duty of easy rescue requires the water-carrier to give the hiker water. This is a rescue because the hiker is endangered by dehydration; it is an easy rescue because the cost to the water-carrier is trivial. Charging her for water is an objective wrong: it is a failure to perform the act required by the duty of easy rescue. Setting a price for some good sets a condition on transfer: it states that the seller will withhold the good until the price is paid. It makes the transfer of the water conditional upon payment.

Making the performance of the duty conditional is wrong for two reasons. First, assuming that the duty-bound agent does not know whether the price will be paid, the agent risks failing to do his duty. Risking failure to do one’s duty – where the risk is not justified by countervailing morally significant reasons – is itself a moral failure. It is tantamount to threatening not to do one’s duty: ‘I know it’s required, but I might not do it’. But, second, introducing a delay by making the performance of a duty conditional (where the condition is morally irrelevant) is a failure to do the duty, at least until the condition is met, and thus prima facie wrong. Conditions involving the agent’s ability to carry out the action or competing moral considerations would be morally relevant. But this is not the case in (2). By withholding the water until the condition is met, the water-carrier violates his duty. On both counts, risk and unnecessary delay, stopping to ask for payment is like stopping to check one’s email while the boy in the pond drowns.

It could be objected that the water-carrier could change his mind in the face of non-payment and give the hiker the water.Footnote ¹⁵ The threat not to do his duty could be part of a process whereby the agent decides to do his duty after all. But the temporal element is important here. True, if he changed his mind, he would – at last – be doing his duty. But his previously withholding the water violated the duty. Timing matters in the duty of easy rescue, as the drowning case suggests: rescue demands immediate response. In urgent situations, asking for payment can cause harmful, or fatal, delay. Taking time to ask the drowning person for reimbursement violates the duty of easy rescue; the first act should be to rescue.

Likewise, it is wrong for the agent to withhold the water in the belief that he will later encounter another dehydrated person who can pay. Someone might think that price gouging can be defended on such grounds: if the seller believes that all the water will be sold, and all the buyers are in need of rescue, then turning away those who cannot afford it does not fail the duty of easy rescue (the objection goes), because the seller will rescue other people later.Footnote ¹⁶ But this faces an epistemic objection: the seller may be wrong in the belief that he will be able to rescue others later. If he does not sell all the water, then he has failed to rescue without ‘substituting’ another rescue. Additionally, there is strong intuitive pull to the thought that the duty of easy rescue requires that one rescue the person they are immediately confronted with, not postpone action to another potential rescue later.

Case (2) suggests two other important features of the duty of easy rescue: it obtains in cases where life is not at risk and where the agent does not know the probability of risk. In (2), the hiker might not die from dehydration. She might simply suffer very unpleasant symptoms, or lasting, but not life-threatening, harms. But severe dehydration is enough for the duty of easy rescue to kick in; this duty extends to preventing easily avoidable, predictable and severe harm. Further, although the hiker is clearly unwell, the water-carrier has no way of knowing how severe her need is. If it is reasonable to predict she may suffer significant harm, the duty of easy rescue obtains. In disasters, lack of basic necessities might not cause death; but so long as it might lead to severe harm, or it is reasonable to predict that it will, the duty of easy rescue applies.

At this point, to parallel price gouging cases more closely, we must introduce other factors.

1. (3) Thirsty group.

   A group of dehydrated hikers encounters the water-carrier. If the water-carrier gives water to them all, he will not have any left, and will himself risk dehydration.

In (3), as the water-carrier gives away water, at some point there is no longer a duty of easy rescue, because rescue is no longer easy. (While we might, alternatively, say it is prima facie wrong not to rescue, but that prima facie wrongness is overridden by costs to the agent, it seems to me more accurate simply to say there is no duty of easy rescue if the rescue is difficult.) More rescues beyond this point will involve significant costs for him. Perhaps this point comes when giving more would not allow him to cook his freeze-dried meal, or when he would no longer have water to drink. At some point, giving away the water becomes supererogatory. But up to the point of significant cost to himself, the water-carrier has a duty of easy rescue, though he must choose whom to rescue.Footnote ¹⁷

But (3) still leaves out a crucial feature of many sellers, which the next case introduces:

1. (4) Sherpa.

   The group of dehydrated hikers ascends a mountaintop. There they find a Sherpa who has carried up a case of water which he is selling. The Sherpa’s family or other important projects depend on his selling the water, and hikers constantly arrive at the top dehydrated and penniless. If the Sherpa gives away water, he will make no profit and lose his investment, and his family or other important projects will suffer.

(4) is different again. Unlike the water-carrier in (2) and (3), all of the Sherpa’s stock serves his significant interests: supporting himself and his projects. He does not carry any extra water for trivial interests. Unlike the water-carrier in (2) and (3), the Sherpa is not required to give away water; the cost to his significant interests is too great for a duty of easy rescue.Footnote ¹⁸ If giving away a single bottle of water would not jeopardize the Sherpa’s interests, then the case would be morally different, and the duty of easy rescue would obtain.

In (2), the hiker clearly violates a duty of easy rescue if he does not share his water. But as (3) and (4) show, as numbers increase and as costs to the agent’s interests increase, there is no longer a duty of easy rescue. In real-world cases, however, price gouging does not usually involve Sherpa-like entrepreneurs who risk their personal interests. We will return to such people later. Price-gouging more typically involves corporations or small business owners whose business depends on selling goods at a certain price. The duty of easy rescue cannot generally require them to give away these goods – presumably, this would not be an easy rescue but would involve a costly sacrifice for business owners or shareholders.

The Sherpa is not morally required to give away water. Nor was he required to carry water up the hill in the first place. But it would be wrong for the Sherpa to raise prices when he realizes the dehydrated hikers will pay more. In offering the water for sale, he set the prices at a level that allowed him to support his family or important projects (that made it worth his while to carry up the water). Let us assume, further, that any profits above this level would provide only trivial benefit to the Sherpa (this assumption will be revisited below). If he now raises prices, he will be withholding water from those who cannot pay, for only a trivial benefit to himself. This is wrong for the same reason the actions of the water-carrier in (2) are wrong: he fails to perform the duty of easy rescue for only a trivial benefit.

The duty of easy rescue, which prohibited the water-carrier in (2) from charging for water, obtains here: in Sherpa-like situations, the duty of easy rescue requires making goods available at standing prices, with increases to cover additional costs. Likewise, if sellers during a disaster raise prices on basic necessities, they would withhold them from some people who could not pay for only a trivial benefit. Raising prices above the status quo would allow some to suffer or die for a trivial benefit.

The point is not that moving from the status quo is inherently wrong, but that if sellers set the status quo at the point at which profit was sufficient to protect their significant interests, raising prices would provide only an insignificant benefit to the seller, while lowering prices would impose significant costs on the seller. Thus the duty of easy rescue does not require sellers to lower prices (unless the cost to them would be insignificant), but it prohibits raising prices (if that would provide only an insignificant benefit). But it allows sellers to raise prices to compensate for additional costs of labour and supply during a disaster – if absorbing such costs would be significant.

This explanation of the moral relevance of status quo pricing depends on the idealized assumption that prices are set to protect the seller’s significant interests. In fact, though, this assumption likely will often not hold, because prices are set to maximize profits, not simply to protect the seller’s significant interests. There are, however, two important contexts in which this idealized assumption may approximate reality; although they are rare, they are worth notice. The first is the case of small businesses in which the owners need to charge certain prices to keep the store open. Prices are set to protect a significant interest – their livelihood. The second are cases of individual entrepreneurs who drive goods into disaster zones at personal risk to themselves. Raised prices here can be considered hazard pay – what they charge to take on the risk.

But much commerce involves large corporations which can survive such events and in which those who profit are not assuming personal risk. If their prices are set to maximize profits, then status quo prices at the onset of an emergency may already violate the duty of easy rescue by pricing basic necessities beyond what is needed to protect the seller’s significant interests. This might seem a reductio of my argument that pricing basic necessities beyond what is required to protect sellers’ significant interests violates a duty of easy rescue.

But this conclusion does not seem unacceptable. If lives or health are at stake for want of food, water and shelter, pricing those basic goods for a profit serving insignificant interests does seem morally criticizable. Further, two considerations lessen the force of this potential reductio.

First, such moral criticism does not entail legal intervention. In the next section, I will argue that the duty to easy rescue is enforceable on sellers in emergencies. The case I make will not apply more generally. This suggests that setting high prices on food in food deserts shares morally wrong-making features with gouging, but that the legal treatment of the two cases diverges. (A further complication, which I cannot pursue here, arises if sellers have created the conditions of scarcity – such as creating a food desert by driving out competing business. Such situations involve still further wrongs.)

The second consideration is that, in ordinary circumstances, social welfare nets discharge the duty of rescue. In societies with successful social welfare nets, risk to life and health due to lack of basic necessities will be infrequent – except in emergencies. If people can obtain low-priced food and water from many stores or food banks, they will not be in need of rescue, so some sellers’ charging higher prices seems less morally objectionable. But where people have tenuous access to necessities – in food deserts or high-priced housing markets – the charge that pricing them beyond what is needed to protect significant interests is morally objectionable seems plausible.Footnote ¹⁹ Disasters are characterized by even more limited access to food, water and shelter; whereas consumers would otherwise have options, in disasters, this lack of access threatens life and health. This pushes back against the worry that my account characterizes all profit-driven pricing of necessities as price gouging; a successful safety net and a normal range of options, outside disaster situations, will limit the scope of this implication.

Another line of objection against the account of price gouging as violating the duty of easy rescue turns on the thought that the price gouger who sells all his goods does in fact rescue. That is, it might be thought that when someone pays the increased price, rescue has occurred, and so the gouger has not failed the duty. Thus, the objection continues, this account can only explain the wrongness of gouging when people cannot, or will not, pay.

Put thus, this misconstrues the strategy. As I wrote above, pricing goods sets a condition on transfer: the seller will withhold them unless the price is paid. If the gouger sets such a condition on a transfer which the duty of easy rescue requires for only a trivial benefit, they risk failing to do their duty and introduce a delay.

However, the objection could be pressed by considering cases which eliminate the risk of not saving.Footnote ²⁰ If numerous people want to buy water at once, and there is not enough water for all, the Sherpa must choose whom to save. One way he could choose would be to auction off the water, using willingness to pay as the allocative principle. The Sherpa cannot rescue everyone, and he must use some method to allocate the water; what is wrong with using willingness to pay as the allocative principle?

There is a practical, and a principled, response. In practice, selling necessities in a disaster will often not involve auction-like scenarios in which it is certain that all goods will be sold, so there is no moral risk: customers enter a store or come to a hotel sequentially. Timing matters morally, because the duty of rescue applies whenever an agent is confronted with someone needing rescue. The moral concern is that higher prices will prevent some customers from obtaining what they need due to inability to pay, and the seller will have failed the duty of rescue with these customers. Let us call them the ‘EARLY POOR’, and call later customers who can pay the ‘LATE RICH’. The objection suggests that it is morally equivalent whether the seller saves the EARLY POOR or the LATE RICH, as he cannot save everyone. However, if the seller fails to rescue the EARLY POOR when he can, this is not morally equivalent to failing to rescue the LATE RICH because he has sold out of supplies. Failing to rescue LATE RICH because he has sold out does not violate the duty of rescue – if he has no goods left, he cannot rescue and so is not required to rescue. This is why timing is morally relevant. Thus, the objection applies only to auctions or cases in which customers simultaneously throng a store and their needs outnumber the available goods.

Responding fully to the objection requires a principled response. Imagine an analogous case in which the Sherpa decides whom to rescue based on hair colour – or skin colour. One might think that the Sherpa has performed his duty to save, although the performance is tainted by racism, in the latter case. However, I want to say something stronger: the Sherpa has failed his duty to save towards those excluded by his policy. This is because he excluded them as recipients, in advance, on a morally arbitrary basis. There is controversy over the morally relevant grounds for rescue, but plausibly, they include need, proximity or personal relationships – but not ability to pay. Because the Sherpa’s policy would exclude in advance those unable to pay more, it excludes them as recipients of rescue on arbitrary grounds, and hence fails the duty vis-à-vis them. Presumably, at some point in the auction, even the well-off will reach a point at which they cannot pay more than others who are even more well-off.

Someone might reply that willingness to pay is evidence of a morally relevant feature, and not arbitrary, because it tracks need: those in greater need will be willing to pay more. However, willingness to pay also tracks ability to pay and other morally irrelevant features, such as degree of alarm (as opposed to need). There is reason to think ability to pay is a stronger driver of WTP than need. Consider recent pandemic panic-buying of items like toilet paper: many middle-class people will buy much more than they need. Raising prices would be less likely to deter the well-off than the worse-off. Those with less money will be less likely to pay higher prices because the cost will be a greater percentage of what they have and may necessitate other sacrifices (rent, medication). Under economic inequality, WTP does not reliably track need, as the better-off will usually be willing to pay more than the worse-off irrespective of need.

This point recalls a critique of using WTP, based on workers’ actual compensation, to assign value to risk in cost-benefit analysis. As Cass Sunstein summarizes the critique of using this data to determine workers’ WTP to avoid risk:

WTP reflects economic constraints. Bluntly, if the choice is starvation or risk, a worker will accept less compensation for risk. In the case of price gouging, a lower-income person will be willing to pay much less than a well-off person, because spending more will impose more significant costs; their willingness to pay reflects their ability to pay.

If this is right, economic inequality will affect WTP significantly. While this could be tested by empirical studies of the kind which Sunstein cites, there is at least reason to think that this will render WTP an unreliable predictor of need.

It might also be objected that any criterion will result in some people being turned away for morally arbitrary reasons, due to shortages and epistemic constraints. But we should distinguish adopting a morally arbitrary criterion from the downstream effect of people being turned away for morally arbitrary reasons. It is true that even if we adopt a morally relevant criterion (such as equality or need), some people will still be turned away for morally arbitrary reasons. But although it is unlikely that any rationing system will always achieve the morally preferred outcome, adopting morally relevant criteria is morally preferable. To the extent that we can try to implement moral norms, we should, even if some mistakes will be inevitable. A morally relevant criterion also seems prima facie more likely to achieve the desired result, because it takes more direct aim. Finally, adopting morally relevant criteria may also have the further effect of sending the message that moral norms matter.Footnote ²¹

Another line of objection concerns the purposes of the gouger. Morally significant purposes might seem to justify gouging. In a ‘Robin Hood’ case, a seller gouges the rich, knowing they can pay, to sell goods more cheaply to the poor. The difficulty remains that, in practice, the gouger cannot know that his policy will not exclude some who are unable to pay, and thus, he risks failing to rescue. But if he somehow could overcome this epistemic hurdle, it might be right to say that in this case, the exploitation of the rich is outweighed by the further rescues made possible.

In another case, ‘the structured emergency Sherpa’,Footnote ²² the seller’s business depends on gouging. This Sherpa usually operates at a loss because hikers drink from a nearby stream. On days when the stream dries up, the Sherpa steeply raises his prices. By gouging, he subsidizes his losses on other days; gouging thus protects significant interests. Such an example does not fit most real-world providers of basic necessities, but it would apply to businesses specializing in disaster, such as those providing expensive charter flights out of disaster zones or private rescue operations. If such services stay in business only by charging exorbitant prices during disasters, it appears they are not violating the duty of easy rescue, although they still might be criticized as inequitable and exploitative.

An instance of price gouging may be exploitative and inequitable as well as withholding rescue. Withholding rescue is the most serious wrong. However, in most real-world cases inequitable distribution on the basis of race or class is a serious accompanying injustice. In cases in which price gouging does not fail the duty of easy rescue – such as the structured emergency Sherpa – it may still be morally criticized on these grounds.

The duty of easy rescue obtains in cases of immediate risk to life or health. In some cases, gouging may cause inconvenience or discomfort without life or health being at risk. In these cases, the duty of easy rescue does not apply, but steep price rises can still be criticized as exploitative and inequitable. Considerations of equity might prompt policy responses in such situations: if lower-income neighbourhoods are affected more severely, for example, the state might offset price increases. Similarly, concerns of exploitation could require policies regulating such practices, with oversight increasing as the interests involved grow more significant. In what follows, I will suggest another ground for laws against price gouging.

4. Legally enforcing a duty of easy rescue

So far, I have argued that price gouging fails a moral duty of easy rescue. But the question remains as to whether this duty is legally enforceable. While there is a widespread intuitive response that it would be wrong not to save someone when one could easily do so, it is more contentious whether this is a failure of beneficence or a rights violation meriting legal intervention.

This distinction relates to the question of whether the duty of easy rescue should be legally enforced. In Judith Jarvis Thomson’s terms, failing to be a Good Samaritan may be morally indecent, but as a matter of charity, not justice; and only claims of justice, not charity, are proper bases for legal enforcement (Thomson Reference Thomson1971).Footnote ²³ On a Kantian understanding of rights and liberties, coercion is acceptable only in order to prevent a rights violation, as the limitation on liberty involved in coercion is made permissible because it prevents the limitation on liberty which the rights violation would involve. This entails that the state’s use of coercive force is legitimate only if a rights violation is at stake, and cannot extend to enforcing imperfect duties of beneficence, to which no-one has a right (Kant Reference Kant and Gregor1999 [1797–1798]: 386–390). Within similar deontic frameworks, legally compelling a duty of easy rescue is just only if the rescuee has a right to be rescued (on this point, see McIntyre Reference McIntyre1994: 159).

A general imperfect duty of beneficence does not generate claims against specific agents on the part of those who would benefit. A legally enforceable duty of easy rescue conceptually correlates to a right. The argumentative burden is thus to show why consumers have such a right against would-be gougers.

In some contexts, such a right exists through professional obligations or voluntary contractual agreements – as in the case of lifeguards, doctors and patients, and spouses. It can also arise through special relationships, such as those of family members.Footnote ²⁴ In disasters, hospitalized patients would have such claims against their health-care providers, nursing home residents against their caregivers, spouses against each other and children against their parents. Everyone might have a claim against responders who are professionally or contractually obligated to save lives.

But the difficult question is how a person in peril gets a claim against a passerby (in this case the seller) who is not obligated by a special or contractual relationship or a professional or legal obligation. Indeed, in the USA there are no legal duties of easy rescue – although other developed legal systems include them. (In the USA ‘Good Samaritan laws’ refer to laws which protect bystanders who help against liability; such laws contrast with laws punishing inaction, or ‘Bad Samaritan laws’; see McIntyre Reference McIntyre1994: 158.) One approach is to argue, as does Joel Feinberg, that there are rights to be rescued (Feinberg Reference Feinberg1992: 188). While legislating such a general duty poses practical evidentiary challenges, if there is such a right, it could ground laws against price gouging. Indeed, the threat to withhold owed rescue would then entail that gouged contracts were made under duress, and hence unenforceable.Footnote ²⁵ But in light of the fact that the existence of such a claim right is contentious, I will argue, for those who do not accept a general right to rescue (such as Murphy Reference Murphy1980: 168 n. 6), that sellers of basic necessities can be prohibited from price gouging, in order to discharge a societal – as opposed to a private – duty of easy rescue.

One approach to grounding an enforceable duty of easy rescue would be to argue that in cases of failure to rescue, the failure to rescue causes the harm.Footnote ²⁶ If refraining from rescuing disaster victims is tantamount to harming them, then it is the kind of action, falling under the harm principle, which can be compelled – as, indeed, John Stuart Mill suggested (McIntyre Reference McIntyre1994: 178 n. 39, citing Mill 1978 [Reference Mill1861]: 10–11). In the price gouging case, it might be argued that by raising prices the shopkeeper causes the poor to go without necessities.

However, this is implausible as an attribution of moral responsibility. Many factors may contribute causally to an event without the agents involved being morally responsible. The shopkeeper may play a causal role in an outcome without being morally responsible for it. For example, if the shopkeeper were to lower soda prices, more people might drink more soda and develop diabetes. While perhaps there should be a soda tax to prevent this public health crisis, it is overly simplistic to say the shopkeeper has caused the harm, partly because it is indirect (it would be different if they sold a diabetes-causing serum) and partly because the causality is diffuse or collective (candy-makers, advertisers, consumer choice and the state’s failure to regulate also play a causal role). Disasters have such complex and collective causality, a fact which attributing full moral responsibility for harms to individual sellers ignores (Murphy and Gardoni Reference Murphy and Gardoni2011).

In the case of price gouging, the seller may foresee that raising prices will lead to harm to some people; but unless the seller owes customers access to goods at standing prices, it is unclear why he is morally responsible for the harm. If the seller owed something which he failed to provide, he may be morally responsible for resulting harm; but not (generally) if he merely foresaw the harm. So, the question of moral responsibility for harm caused depends on whether the shopkeeper owes customers necessities at standing prices in emergencies.

But there is another interpretation of the legal enforceability of the duty to rescue. Construed as a private duty, owed by one individual who happens to be uniquely placed to help to another who needs help, it threatens to limit freedom unacceptably and appears morally arbitrary (the rescuer is bound simply by being uniquely positioned to help at that time). However, as Arthur Ripstein argues, the duty to easy rescue can also be construed as falling under a general social responsibility.Footnote ²⁷ Rescue in emergency situations is a matter of basic security (setting aside cases of recklessness, such as a foolhardy mountaineer whom we might hold responsible for the costs of his rescue). Generally, the state, as a ‘scheme of social coordination’, provides conditions in which we can live our lives by providing basic security, including emergency response services (Ripstein Reference Ripstein2000: 778). Basic security can be thought of as part of the terms of social cooperation defined by principles of justice.

In ordinary circumstances, citizens contribute to basic security services as we do to other social goods (public education, a police force) – through taxation. In the normal case, we are not required to carry out rescue personally: contributing through taxation discharges our social responsibility, while requiring individual action would limit our liberty. But Ripstein argues that in emergencies, when background social institutions fail or are not at hand, the individual citizen can be required to take action (by calling the emergency services or throwing a life preserver, for example).Footnote ²⁸ I am not defending Ripstein’s argument for a general duty to rescue in emergencies such that all citizens should be required to carry out easy rescues in emergencies (nor I am adopting his Kantian approach). Rather, I want to extract a crucial insight from Ripstein’s argument: a social responsibility for security which is normally discharged through background social institutions may fall onto private entities when those institutions cannot function.

On Ripstein’s account, we ordinarily do not owe aid to others because we have contributed through paying taxes to background social institutions. But when background social institutions are not at hand or do not function, as in emergencies, the societal duty falls on individuals positioned to carry it out.Footnote ²⁹ We can compare requisitioning: generally it would unacceptably limit liberty for the state to take your boat, but during a flood, responders may requisition it to save lives in the service of the social responsibility for basic security.

Because the duty to rescue can sometimes require providing basic necessities (food, shelter, water), basic security extends to access to basic necessities. Plausibly, access to basic necessities is ordinarily best assured through allowing the market to set prices, with redistributive taxation providing assistance to those without means who cannot work (children, the elderly, people with certain disabilities). Such assistance is the background social institution through which society’s responsibility to those in need of basic necessities is discharged. (This also explains why, in a liberal egalitarian society with such programmes, pricing will rarely violate the duty of easy rescue.) Libertarians might dispute the claim that the general societal responsibility for basic security extends to ensuring access to basic necessities for those who cannot access them through the market. However, recall the point made above: in disasters, the Lockean proviso seems to apply, or else rights may be excusably violated, so the libertarian argument against price gouging is refuted on independent grounds.

In disasters, background social institutions are temporarily disabled. Their disruption is in fact a defining characteristic of disaster. This includes local emergency response, transport and government services. It also extends to normal channels for acquiring food, water and shelter. Citizens’ access to basic necessities is affected by the suddenness, unpredictability and curtailed options characteristic of disaster. Disasters undo plans and diminish options by curtailing travel and basic services. If people are forced to leave their homes, they lose their supplies; if the area is unsafe, they lose their shelter; if they are unable to travel, they lose access to a wider range of providers.

Under such conditions, the background social institutions that enable access to necessities (including the normal working of the market) have failed. Sellers, like others, normally discharge their general societal responsibility for basic security (including access to basic necessities) through paying taxes. But when the social institutions which enable access cannot carry out their function, institutions can act as agents of justice in such emergencies. This is not to say that institutions should undertake to fill all the functions of background social institutions on an ad hoc basis, or that they should be required to provide basic necessities on an ad hoc basis. Efficiency and order militate against this. However, institutions can be designed to fill these roles in predictable circumstances. For example, teachers can be trained to look for signs of child abuse; they are uniquely placed to discharge the social responsibility of protecting children, and training them to do so allows them to discharge this social responsibility. Market institutions are uniquely situated as sources of basic necessities. When background institutions which provide access to necessities fail in emergencies, market institutions can be designed to discharge the general social duty of easy rescue, in a narrow way related to their practice of selling.Footnote ³⁰

Designing market institutions thus by prohibiting price gouging need not raise concerns about liberty (as enforcing the duty of easy rescue on individuals might). There is a difference between regulating individual action and regulating trade. Market exchange is constructed and regulated by the state. The state determines which contracts to enforce and sets conditions on their legitimacy – not enforcing contracts, for example, entered under undue influence or resulting in unjust enrichment, and enforcing minimum wage and worker safety laws. Such regulation is only a part of how the state constructs the conditions of exchange. Public resources facilitate exchange by providing predictability and security: infrastructure, communications, the civil and criminal courts, police, contract law and subsidies. Builders follow codes for seismic safety; transport follows TSA rules; food handlers follow food safety rules. Laws concerning price gouging are simply another aspect of the state’s regulation of trade.

Arbitrary restrictions on freedom of contract, or restrictions based on comprehensive moral, religious or philosophical doctrines, would be illiberal within political liberalism (for a classic statement, see Rawls Reference Rawls1993). But my account has suggested public reasons to which such a theory could appeal in justifying laws against price gouging: preserving lives and health, maintaining order during emergencies, and enabling citizens to pursue their plans on the basis of reasonable expectations. For those who would appeal to a liberty to trade without such regulation, recall that I have already argued that, even on a stringent account of property rights, absolute property rights are overridden in disasters due to the Lockean proviso, or else excusably violated.

It might be thought that this account proves too much. Price gouging only occurs, by definition, in emergencies. But my argument might rule out other price increases on basic necessities: food, housing, pharmaceuticals, health care, predatory lending, even Uber surge pricing. These implications do not seem absurd to me, though, when the interests are significant. Laws against Uber surge pricing likely would not protect vital interests. But pharmaceutical price controls would, in many cases. There is, though, an additional reason for prohibiting price gouging which holds only in disaster situations. This is the consideration, raised by Sorell, of restoring order and rule of law. This consideration does not apply to private emergencies. Thus, while perhaps duties of easy rescue apply to providers of basic necessities more generally – providing reasons for curtailing pharmaceutical price hikes, for example – there is additional reason for such laws in disasters.

5. Real-world considerations

I close by returning to three points raised at the outset. State laws against price gouging vary in how they constrain price increases. Some make exceptions for increased cost, but not risk. On my account, sellers should not be required to make large sacrifices; hence the law should allow price increases to reflect the extra costs of labour and resources to the seller, including hazard pay – the additional pay workers or sellers require to take on personal risk (the amount could be legally stipulated).

Second, my account allows us to distinguish corporations from entrepreneurs who transport goods at personal risk. Recall the idealized assumption above, that sellers set the status quo at the point at which profit is sufficient to protect their significant interests. This assumption is implausible in many cases, particularly cases of large corporations whose CEOs earn large salaries; perhaps such businesses owe more during emergencies. In the case of small businesses, it is more plausible. And in the case of entrepreneurs who transport goods themselves, personally undergoing risk, their increased prices reflect hazard pay as well as time, effort and travel costs – they have set the price to protect these significant interests. The duty of easy rescue, of course, does not require would-be rescuers to endanger themselves or make sacrifices, and in the case of lone entrepreneurs the risks are much greater than costs to corporate profits. This allows us to satisfy both the competing intuitions discussed at the outset: this account can ground a legal prohibition on a corporation raising the price of necessities in a disaster, while allowing that individuals who undergo personal risk to bring goods into a disaster zone ought to be legally permitted to sell at increased prices. This permission also furthers the goal of increasing supply.

Finally, above I left open the best distributive principle for scarce goods, as secondary to the duty to rescue. But in most disasters, the worst-off are the most vulnerable and most likely to be victims (in the USA, such vulnerability also correlates with race). Thus, ensuring access for the worst-off will largely coincide with need-based considerations. A major driver for a real-world, justice-based rationing scheme must be considerations of racial and economic inequity – and laws against price gouging, by protecting access for the worse-off, best fit the bill.