How do we determine value?

Each summer, New York City public theater puts on free performances of Shakespeare (sometimes featuring famous actors) for the public in Central Park. Tickets are extremely limited and a long line of eager people can usually be seen around 1 pm, intent on snatching the city’s generous treat. After all, who wouldn’t want to see free Shakespeare?

But for some, waiting in line is not at all feasible. It is hot and humiliating and also a ton of work. An ingenious plan is then hatched by these lazy individuals, arrogant individuals (I’m clearly generalizing here). They will pay another person (sometimes up to $125) to stand in line for them and get the much coveted free ticket.

This is ticket scalping.

When the city found out about this scheme, it was outraged. A representative from the Public Theater lamented it was “not in the spirit of Shakespeare” and that the ticket scalpers were taking away the opportunity for other people. After all, the performances by the Public Theater was a gift from the city to its citizens. Free of charge. And to make a business out of it behind closed doors somehow felt wrong.

This is a real-life example Dr. Michael Sandel asks us to ponder in his book What Money Can’t Buy: The Moral Limit of Markets. Why is ticket scalping wrong in the situation presented above? After all, the economist would argue that scalping is actually an efficient way of distributing the good (the play) to those who value it most. If you are willing to pay $125 for a free ticket, then it follows you must really value seeing a Shakespeare performance. This increases net utility because both the scalper and the person who gets the ticket are happy. Win win. Not quite, says Sandel.

He asks the question: Is market logic right about how human beings should value goods? Is it right, in essence, to say the amount an individual will pay for a good is reflective of his/her value of that particular good?

Sandel argues this is not the case, because paying for a good assumes the individual is capable, not just willing. Consider another example. Several cities in California have what are referred to as Lexus Lanes in their highway system. If you are caught in traffic, you can simply pay a fee to take a quicker lane. The nickname for these lanes are ‘Lexus Lanes’ because you would seldom see a moderately priced car on these lanes – obviously because their owners are not capable of paying to get out of traffic.

There seems to be something inherently unfair about this system, a sour taste if you like, a certain perverted aroma. If you thought people cutting you off on the highway was infuriating, then how about rich people paying to cut you off legally.

But is it so different from the Public Theater example in New York? The economist would once again argue this is perfectly fine. Those who will pay more are doing so because they put a higher value for that good.

Again, I think Sandel has a profound point when he points out the faulty assumption of market logic. Paying for a good you value assumes you are able to pay for it.

But he goes deeper. Sandel insists we cannot measure value in just monetary terms. He gives the example of wealthy people who buy first class tickets to see baseball game, but show up late and leave early, or don’t wear the team jersey. Do they really value the game more than a young boy who knows every single player on his favorite team, but sits in the back because he cannot pay for a closer seat? Probably not. The same reasoning applies to the Shakespeare play. Would we really say that a person who had stood in line since morning for a ticket values the performance less than a rich individual throwing his $125 pocket change to a scalper? Of course not. Sandel argues for caution when it comes applying market logic to all questions of value. I for one, think he has the right of it.

While the economist insists that everything in this world has a price, and the amount we are willing to pay it determines its value, I disagree. There are certain things that money cannot buy and there are certain things – such as the free Shakespeare tickets meant for the public – that money should not buy.

This is the discussion we should be having in the modern age, when market logic has pervaded a perturbed society unable to deal with its complex questions and consequences.

If we begin this much needed conversation, we will be able to find the line between market logic and human morality.

Then, that poor man who had been standing in line to see a free performance will not be cheated out of his right by frigid, 21st century economics.

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