High prices and moral outrage, by Elias, Lacetera, and Macis

 Is Uber-style surge pricing immoral, or efficient?  How about price rises during a pandemic? Does discussion of the economic consequences change the assessments of morality? Here's a new NBER paper:

Is the Price Right? The Role of Morals, Ideology, and Tradeoff Thinking in Explaining Reactions to Price Surges  by Julio J. Elias, Nicola Lacetera & Mario Macis, NBER WORKING PAPER 29963, DOI 10.3386/w29963, April 2022

Abstract: "Price surges often generate social disapproval and requests for regulation and price controls, but these interventions may cause inefficiencies and shortages. To study how individuals perceive and reason about sudden price increases for different products under different policy regimes, we conduct a survey experiment with Canadian and U.S. residents. Econometric and textual analyses indicate that prices are not seen just as signals of scarcity; they cause widespread opposition and strong and polarized moral reactions. However, acceptance of unregulated prices is higher when potential economic tradeoffs between unregulated and controlled prices are salient and when higher production costs contribute to the price increases. The salience of tradeoffs also reduces the polarization of moral judgments between supporters and opponents of unregulated pricing. In part, the acceptance of free price adjustments is driven by people’s overall attitudes about the function of markets and the government in society. These findings are corroborated by a donation experiment, and they suggest that awareness of the causes and potential consequences of price increases may induce less extreme views about the role of market institutions in governing the economy."

From the conclusions:

"Our findings support the claim that people do not perceive prices as only signals of relative scarcity, but they attribute moral valence to them. Consistent with prior studies, price spikes in response to demand increases receive widespread opposition and generates moral aversion, mainly out of concerns for fairness toward and exploitation of consumers. Moreover, underlying ideological positions about the role of the market (and the government) in society significantly affect the perceptions and acceptance of price surges. However, when made explicit, economic or tradeoff considerations substantially increase the public’s acceptance of price increases in response to demand surges. The reaction to these economic considerations also concerns moral judgments; tradeoff salience increases people’s acceptance of price surges and changes their moral reactions to these increases. When individuals are prompted to consider the economic consequences of freely adjusting prices versus price controls, their moral judgments are less radical and less different from one another. 

...

"Despite the large positive impact of explicit cost-benefit considerations on the acceptance of the free price mechanism to organize markets, most respondents, even when assigned to scenarios with salient tradeoffs, did not support a “laissez faire” solution to price surges. This suggests that this opposition is rooted in strong beliefs and norms whose violation could represent a cost to society. Policy choices and organizational practices that reduce the likelihood of price spikes may therefore be supported by the public."