Repugnant markets and prohibited transactions

Jan Zilinsky
2 min readAug 22, 2014

In his lecture on unpopular, repugnant, and often illegal transactions, Al Roth raised provocative questions about markets and transactions that make us feel uncomfortable.

When economists see long lines, they view them as a symptom of demand exceeding supply. The question that automatically comes to mind is: why are prices so low? Would it not be better to raise prices to encourage greater supply of a scarce resource?

In his Journal of Economic Perspectives review, Roth has argued that economists need to engage more with the phenomenon of repugnant transactions, and he continued this argument in Lindau lecture.

Efficiency vs. dignity?

The price of a kidney, by law, must be a zero. But gifts tend to be allowed (in Germany, kidney donations are allowed, but only to relatives).

Roth asked a room of nearly 500 economists whether they would be “willing to contemplate carefully regulated” sales of kidneys. Only 50–60% of hands went up (from where I was sitting, so this is a noisy estimate — still, this reluctant support was telling).

Roth emphasized that some things used to be repugnant in the past and are not viewed as problematic anymore (example: lending money for interest). In other cases, the “evolution” went in the opposite direction. What used to be seen as normal is now viewed as repugnant, even immoral (slavery).

When can we classify a market as repugnant? Roth did not tie his definition to an emotional reaction but suggested instead that a transaction is repugnant if some people want to engage in it, but others believe that trade should not be allowed. The goods that most people do not want to see traded include cultural property (imaging removing landmarks from their “right place”) or endangered species. The transactions that are often opposed include:

Some types of sports (Dwarf tossing) Interestingly, the Ontario Dwarf Tossing Ban Act of 2003 is not framed as a health and safety law. When bans on dwarf tossing were upheld in France in 1995, the UN said that the ban “was necessary in order to protect public order” and human dignity. (On the other hand, most people see wife-carrying repugnant acceptable.)

International fertility tourism / surrogate motherhood (it is legal to pay for surrogacy in California, not in New York)

Buying horse meat for consumption

Indentured servitude

Roth also explained that the arguments of market critics often revolve around three types of potential social risks (objectification, exploitation, and the slippery slope).

The lecture concluded with a reminder of what Gary Becker used to say: voluntary transactions between adults are welfare-enhancing. But then, Roth asked, why do we see laws banning some transactions everywhere?

Indeed, why do we often insist that the only acceptable price is zero? It is a fascinating and open question.



Jan Zilinsky

political science & economics (sometimes with 19th century methods)