The Ethicist strikes again

Geoffrey Manne —  22 February 2006

One of my students brought to my attention this pearl of wisdom from (what appears to be this week’s forthcoming) The Ethicist column in the NYT:

I am a 13-year-old boy. My school has a monthly pizza sale. Parents buy pies from a pizzeria and sell them to us for $1 a slice. I bought a whole pie at the pizzeria and offered slices for $2 to kids at the end of the long line. A school counselor stopped me. She said that I was unethical and was “taking advantage of people.” I thought I was providing a service to people based on the principle that “time is money.” Who is right? Ben Gammage, San Diego

Time may be money, but how much, really, for an eighth grader, who is not paid to attend school? And do we really want all our interactions based on the variable-pricing airline-seat model? Were pizza a necessity of life (as many teenagers regard it) and in short supply, you would have been been guilty of profiteering, as your counselor charged. But there was plenty of pizza, so you didn’t exploit anyone. And pizza does remain a luxury, so nobody was compelled to buy your pricier slices. (Were they? I assume there was no gunplay.) Thus your actions were not unethical, but they were poor social policy — if that’s not too fancy a way to describe undermining a pizza party.

Your counselor’s concern was valid, if poorly expressed. The dollar-a-slice deal made possible a schoolwide pizza party, affordable fun for everyone. Judging by the long line, it’s something people enjoy.

You turned it into a two-tiered system — kids with money don’t wait; kids without money do — shifting it from a we’re-all-in-it-together event to something less communitarian (if more profitable).

The errors here need no pointing out in this forum, I presume. I am glad that he stopped short of condemning the kid outright (unlike the kid’s school counselor), but I’m surprised, given the extent of the truly fundamental flaws in his analysis. Maybe this will turn out to be just a rough draft and the published version will look different. But I doubt it.

This isn’t Randy Cohen’s (he’s the Ethicist) first outing on TOTM. It surely won’t be his last.

Geoffrey Manne


President & Founder, International Center for Law & Economics

6 responses to The Ethicist strikes again


    To add to Joe Leahy’s comment on why it’s poor social policy:

    If a parent were to do the same thing as the young opportunist, the same impropriety would be more pronounced.

    The introduction of “commerce” or profit oriented market activity into an economic system designed to finance social activity for the presumed purpose of building student morale and no more seems to corrupt and undermine the social and group dynamic purposes designed into the event.

    The commercial “intrusion” seems likely to somewhat undermine morale and sense of purpose, incuraging cynicism among participants. These costs, though difficult to measure are real and show up in unexamined assumptions formed that day and carried throughout a lifetime by each participant who witnesses the transactions.

    If officials allow commercial intrusion by young entrepreneaurs into “school social events” without comment, the class system’s development would be accellerated. In a controlled environment with the majority complying with event plans, personal enrichment motivations takes advantage of others who are complying with the non-market intention of the event.


    I think that Randy Cohen is correct, and allowing the kid to sell pizza for $2 per slice is poor social policy — but Cohen’s analysis fails adequately to explain why.

    The problem is that allowing the kid to pizza at the end of the line for $2 (which I presume is substantially the same pizza as the parents are selling at the front of the line for $1) is unfair to the parents — who are required to sell the pizza at (what I think we all assume to be) cost — and therefore, are unable to make a profit from it, as the kid can. (If the parents were able to sell pizza for more than cost at the end of the line, presumably they would do so, and they would compete with the kid, lowering his profits.)

    So, as I see it, the the school has set up an imperfect marke in order to incent parents to sell pizza to the kids and hold a pizza party — and the problem with the kid selling pizza for $2 is that it will dissincent parents from selling their pizza at cost, as they may become upset about their inability to sell pizza at market price like the kid can.

    As a result, the social good of the pizza party — parents and kids enjoying themselves together — is undermined. (Indeed, I could see this leading to a situation where parents refuse to sell pizza for cost when a kid can sell at a profit, thereby destroying the pizza party — and eliminating the market imperfection that led to the kid’s profits in the first place.)


    The only possible way Cohen’s argument can hold water is if the school was selling pizza as a fundraiser of some kind. That is, that the school was receiving some kind of unique and discreet benefit from selling the pizza that was being undermined by the private initiative. If the school was selling the pizza “at cost”, then Josh’s analysis in his first paragraph above is correct.


    The notion that these activities “undermine” the event suggest that the purpose of the event was not to eat pizza and socialize, but rather, to wait in line. This cant be right, can it? If the essence of the event, whatever that means, was to eat pizza and socialize — didn’t the kid further that purpose?

    One more point. Hanno Kaiser makes the more general point that the fact that a good is for sale does not mean that the normative reason should be solely economic. Fair enough. But I have never found this sort of “non-market transactions means economic analysis is irrelevant” point to be very persuasive. Gary Becker’s work is an excellent example of economic analysis informing choices that are traditionally considered somehow “different” than “market transactions.” The quotes around those terms, I suppose, are my endorsement of Geoff’s point that it should be clear that these labels do not suspend economic forces any more than calling my office a “gravity free zone” allows me to float.

    Isn’t the real question whether (as Geoff points out) economic analysis informs the normative debate at all? Surely it does. For one, it tells us that waiting in line is a cost. Perhaps there are other considerations that outweigh these at the end of the day. I dont know what they are. But it doesnt seem right to argue that economic reasoning should not enter the normative analysis simply on the grounds that we have imagined certain transactions are (or should be) immune from economic forces.


    I guess . . . except that the school already made it a market transaction (albeit a constrained one). Do you think that by under-pricing the pizza but nevertheless forcing participants to stand in line and pay by the slice at the time of consumption the school somehow created a non-market environment?

    I don’t suggest that proper economic reasoning is required simply because money changed hands here; economic reasoning is appropriate because it actually provides coherent analysis.

    The kid’s actions didn’t prevent anyone from participating in the event — in fact, by reducing the cost of waiting in line it actually made it cheaper for everyone to participate. No matter how much the school (and Randy Cohen) might wish that waiting in line were not exactly as real a cost as the cash required to buy the pizza, it is. The “rules” of this game cannot, unfortunately, suspend reality.

    I would be more sympathetic with Randy (although I have no sympathy for the idiot counselor who tells the entrepreneurial kid he is “taking advantage of people”) had he realized there was scarcity and it was going to be rationed somehow and had he then explained why queuing is a more “communitarian” system of rationing than price. But I don’t really know why that should be, and he doesn’t tell us.


    I think Geoff joins the kid re-selling pizza slices in missing the point of the social event at the school. I agree that Randy Cohen’s economic analysis is flawed. But any economic analysis of the event is misplaced: Just because money changed hands, a transaction is not an economic one. Hanno Kaiser, over at Law & Society makes the point that regarding the social mixer for kids and parents as a market transaction undermines the event. Applying economic analysis (even correct economic analysis) to the “sale” of pizza at the school scoial, misses the point of the event. You often see a similar mistake, by the way, when it is assumed that economic analysis is inappropriate because money doesn’t change hands. Many economic transactions don’t involve money.