Member-only story
The ethics of voluntary economic transactions
Can voluntary transactions raise ethical questions? Yes, they can!
It has just gone midnight and you are walking home from the station, down a dark and deserted street. Suddenly, a figure jumps in front of you from the shadows, wielding a knife under your face, threatening to use it, unless you hand over your wallet and your phone. What to decide? Even aside from the emotions involved, which might give you tunnel vision — your only concern survival at all cost — the economic case for complying with the demands of the robber seems compelling. Your safety is worth more than your smartphone and the contents of your wallet.
Nonetheless, the mugger’s proposal does not imply a voluntary transaction, and that makes it ethically highly questionable. But are voluntary transactions always ethically OK?
Discounted job offer
This question occurred to me as I came across an article suggesting that many people facing redundancy at work would accept a pay cut of 25% to keep their job. It refers to a paper by two economists, Steven Davis of the university of Chicago and Pawel Krolikowski of the Federal Reserve Bank of Cleveland, Sticky Wages on the Layoff Margin. They find that there is almost no negotiation about wage and benefits when layoffs…
