by Dwight R. Lee
Cato Institute
April 09, 2014
Economists have long criticized anti-price-gauging laws by arguing that market prices are the most effective means for people to communicate their need for help after a major disaster. Yet, this criticism is unpopular and ineffective. For most people, price gouging is primarily a moral issue, not an economic one. For most people, morality is more about intending to achieve desirable outcomes than actually achieving them. Anti-price-gouging laws seem to many an effective deterrent to those who would seek to profit from others’ misfortune. Economists’ best hope for making an effective case against anti-price-gouging laws requires considering two moralities—one intention-based, the other outcome-based—that work together to improve human behavior when each is applied within its proper sphere of human activity. Unfortunately, the intention-based morality creates strong support for anti-price-gouging laws that render both moralities less effective at motivating help for disaster victims.

Heritage FoundationInsiderOnline is a product of The Heritage Foundation.
214 Massachusetts Avenue NE | Washington DC 20002-4999
ph 202.546.4400 | fax 202.546.8328
© 1995 - 2014 The Heritage Foundation