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A post on (former Denver mayoral candidate and current Denver Hispanic Chamber of Commerce President) James Mejia’s Facebook page about a drunk driver totaling his parked car reminded me of my similar experience about nine and a half years ago, and the lesson I learned from it about the moral and ethical deficiency that comes from the commodification of responsibility.

This essay forms a counterbalance to my essay on Political Market Instruments, which was more favorable toward another form of commodification of responsibility: the commodification of collective or shared responsibilities that serves the purpose of addressing the collective action problems involved. The potential benefits of some degree of commodification of shared responsibilities is that it converts the burden of meeting them into a monetarily lucrative one, and allocates that burden according to who can best bear it, transforming the value of meeting it into a tradable commodity. The commodification of personal responsibility, conversely, serves to insulate the individual from the moral or ethical dimensions of their obligation, reducing it to a market transaction in which an undue burden can fall on an innocent victim of another’s error.

When my wife and I moved to Colorado, we stayed with friends in Lakewood while looking for an apartment, our car parked on a quiet residential street. In the wee hours of the morning we all heard a commotion, and discovered a drunk driver had totaled my old but reliable Plymouth. State Farm, the young drunk driver’s father’s insurance company, tried to low-ball me (not considering the value of work done in Mexico for which I had no receipts, for instance, and offering me a settlement of about $1000, which was insufficient to buy a running car to replace the one I had), it being inherent to their business plan to try to pay the least possible, despite the fact that, morally and ethically, when a drunk driver totals your parked car, they really have a pretty unambiguous responsibility to make sure they make it completely right.

To the father’s enormous credit, when I wrote him a nice note about my predicament, he kicked in an extra $1000! So, in this particular instance, the outcome was a model of an individual taking personal responsibility despite the commodification of that responsibility insulating him from it. But it’s clear that that is exceptional, that the norm is to let the insurance company handle it, and that voluntarily assuming the moral responsibility which the insurance company insures people against is a rare occurrence. (In fact, the father mentioned in his reply to me that virtually everyone he knew counseled him to let the insurance company handle it.)

The system could certainly be tweaked to diminish this defect, without either eliminating the indispensible service of insurance or making its cost exorbitant. One way to diminish it, for instance, would be, in circumstances of absolute responsibility by one party for a harm suffered by another, a requirement that insurance companies accept the highest independent estimate of the value of the property destroyed (with perhaps some government certification of the those qualified to make such assessments, to prevent collusion between victims and those doing the assessments), since the injured party, morally and ethically, should get “the benefit of the doubt.” In general, when one person has an unambiguous moral responsibility to make another whole after inflicting some injury on them, their insurance company covering such liability must be held to the same moral standard that society would hold the individual. That is not currently the case.

Of course, we do have a recourse in place to ensure this result: Legal action. Unfortunately, legal action comes at a a cost to all involved, in time, stress, risk, and just general imposition. It is expensive, a form of transaction costs which get in the way of arriving at optimal solutions by making the process of arriving at them more costly than the benefits of arriving at them. There is also, in this case, grossly unequal institutional power between the insurance company and the individual challenging it, with the resources the insurance company has at its disposal to defend against legal action far outstripping the resources the individual has at his or her disposal (not to mention that accessing legal counsel may impose a cost on that individual that that individual should not have to bear.) Therefore, whenever possible, we, as a society, should prefer, whenever possible, to implement more seamless, costless mechanisms to arrive at optimal outcomes.

The commodification of responsibility, whether of the collective responsibility commodified by Political Market Instruments, or of the personal responsibility commodified by liability insurance, is not necessarily a bad thing. We only need to be careful that we are not erasing, or insulating the individual or collective from, any portion of that responsibility in the process.

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