The Economics of NOPE

What if I told you that today you'll leave this blog different?

ngl i’d actually watch the gordy’s home tv show

The question of markets is really a question about how we want to live together. Do we want a society where everything is up for sale? Or are there certain moral and civic goods that markets do not honour and money cannot buy?

Michael Sandel, “What Money Can’t Buy: The Moral Limits of Markets” (2012)

The Oscars are coming up, and instead of talking about a movie that got nominated, I’ll talk about one that didn’t: Jordan Peele’s latest movie, NOPE. It is very good, and so far it’s turned out to be one of my favorite movies of 2022 and probably my favorite of Peele’s so far. But can it say something about economics?

SPOILER WARNING: this post discusses major plot elements and themes of NOPE.

All my apes gone

I will cast abominable filth upon you, make you vile, and make you a spectacle.

Nahum 3:6

Jordan Peele’s NOPE is both a very straightforward, and a very dense movie. The central premise is that there is an alien presence in Agua Dulce, California. The film has, overall, two main plotlines: the main one is about the Haywood siblings dealing with the alien presence on their horse ranch - which they try to monetize, as obtaining the first hard proof of an alien presence would be a once in a lifetime opportunity. The Haywood’s neighbor, Ricky Park, tries to monetize the alien as well - by having his theme park, Jupiter’s Claim, host a “Star Lasso Experience”, where paying viewers can directly observe the UFO abducting horses. It… does not go well, as Park, his family, and the entire audience are abducted (and killed) by the aliens.

Jordan Peele @JordanPeele

The secondary storyline is tangentially related, with its main “story” purpose being providing backstory on Park, a former child actor. This plotline deals with Gordy’s Home, a fictional 90s sitcom about a family that adopts a chimpanzee named Gordy. The successful show’s run ended tragically in 1998, after a series of unfortunate events set Gordy off and resulted in the ape mauling three of the four main cast members, killing two of them and horribly disfiguring and paralyzing a third - Park was unscathed, fortuitously, since he didn’t make eye contact with Gordy.

Besides the plot elements, what seems to be the point of this seemingly bizarre ape-related story? It’s clearly thematic. And while the movie is layered and many themes can be drawn out of it (man’s limited mastery over nature, the dangers of spectacle, surveillance and vision, the power of cinema, race and entertainment, etc), a major connection between the two seems to be the idea that some things should not be produced, bought and/or sold: a commercial starring one of the Haywoods’ horses ends badly, a documentarian disapproves of the Haywood’s idea of recording the aliens, a TMZ-esque reporter that arrives at the ranch is treated with contempt, Park’s attempt to turn the aliens into a literal spectacle ends horribly, and of course the entirety of the Gordy’s Home incident.

Skin in the game

The Economics of Bioshock

To start, what’s a market? Well, it’s this nebulous abstract construction, of course. But normally, when we talk about a market, we talk about the spontaneous, disorganized interactions between people who buy and people who sell. Why and how they exist is a whole other thing, though.

In a market, people have things they want to sell, or money, and they exchange them. But of course, multiple people might want the same thing - I might want to buy a plot of land to build a house and live in it, but another buyer could want to turn it into an apartment building for renting, and another into a golf course - and, by definition, only one can have their way. The mechanism to solve this conflict, in a marketplace, is of course competition - everyone makes an offer under equal conditions and whoever has the most appealing one wins. Obviously sometimes people don’t have equal conditions, and obviously there’s an issue that “whoever has the most money” might not actually have a better idea of what to do with the property, or the market might not work correctly because of differences in information, or costs to third parties.

In principle, when a market works like this, there’s also a transfer of information via prices - land with higher prices has more demand than land with lower prices, and that’s useful to other people for a number of reasons. People just look at prices and make educated guesses through rules of thumb to make money off them, and normally it works out and you get really complicated combinations of actions, like supply chains, without anyone actually putting them together - everyone is just following the money.

Abominable filth

Unfair. Undignified. Inappropriate, unprofessional, distasteful—and most of all, repugnant.

Martha Lagace “Repugnant Markets and How They Get That Way”, interview with Nobel Laureate Alvin Roth, Harvard Business School, 2007

When should the government intervene in a market? Most economists agree it should do so when the equilibrium outcomes are not socially optimal. Basically, this means that the free buying and selling of things would end up with an outcome (prices, quantities, or some other thing) that people would not like - for example, if left unregulated, factories would pollute rivers too much. The classic cases are externalities (i.e. when people who are neither the buyer or seller have to endure costs from the transaction), and public goods (things that everyone can use without paying for them), plus a variety of issues arising from different amounts of information on the buyer’s or the seller’s side (the clearest example is life insurance - each person knows how likely they are to die better than the insurance company, and after getting a policy their behavior might become less responsible). The jist of it is that, when a market functions badly, the government should (in theory, at least) be able to step in and change the rules in some way to incentivize more “socially optimal” behaviors.

But there are many regulations that very clearly do not seem to fulfill these criteria. Buying and selling organs is banned in basically all countries, and most blood and plasma donors are not remunerated. Slavery and the slave trade have been illegal in most countries for at least a century, if not more. Many places heavily restrict the purchase of contraceptives and ban all transactions associated with same-sex weddings, in a way. Casu marzu, a Sardinian cheese produced by letting maggots eat raw milk, is banned outside of its home market. And the meat of many animals, like dogs or horses, is generally illegal to sell, even when properly prepared and advertised. Dwarf tossing is illegal in many countries. And while some arguments concerning economic efficiency might be posed for some of these markets, they do share a common trait - repugnance.

A market is said to be repugnant when the transactions involved, either by their nature or the nature of the good being bought or sold, are heavily frowned upon by some large social group. A repugnant market, or transaction, doesn’t necessarily imply that the market is efficient, or socially desirable - for instance, the debate on the proper regulation of drugs points to how the two may intertwine. And the line between intervening for repugnance reasons and for traditional “efficiency” reasons is not clear: the high taxes on cigarettes, alcohol, soda, sugar, or meat that some societies might consider or have implemented could be defended on both a moral, paternalistic reason, and also for the traditional externality reasons.

Whether a transaction is repugnant is not universal or time-invariant: interracial marriage wasn’t legal in all of the United States until 1961, and didn’t reach wide approval until the 90s; gay marriage wasn’t legal nor popular until 2015, and many issues such as contraception, and divorce were once fraught but are generally considered settled. Similarly, some countries ban medical procedures such as abortion, and others do not; some countries allow for remunerated surrogacy of pregnancy; and some countries ban completely the sale of food derived from genetically modified organisms (GMOs).

The most common kind of repugnant transactions, however, is the introduction of cash to previously non-monetized transactions: surrogacy, prostitution, the (medieval and Islamic) prohibition on interest, the sale of sperm or eggs, and the sale of organs and blood - some of which are acceptable as unremunerated favors. More mundane examples include the differing standards to gift cards and cash gifts, or the fact that asking dinner guests to bring wine or dessert is socially acceptable, but charging them for the meal is not.

In general, repugnance is motivated by three justifications, with example for each:

• Objectification: the transaction being introduced would “degrade” the social value of the good or service. A good example would be a market for children up for adoption - it’s clearly got a yikes factor underlying it.

• Coercion: the people participating in the transaction might result in people, especially poor people, acting against their self interest. The natural examples are the sale of organs, prostitution, or surrogacy.

• Slippery slope: monetizing relatively “harmless” transactions would result in later allowing for monetizing actually repugnant ones. There are seemingly valid examples, as with recreational drugs (what separates marihuana and heroin?), and less valid ones - like gay marriage being followed up by a legalization of bestiality or toaster weddings or whatever.

• Other sources of repugnance: specific transactions might carry implications that aren’t covered - like how abortion is viewed by some to be murder.

A counterargument might be that markets help prevent repugnance penalties for transactions that aren’t actually repugnant - corporations didn’t become “woke” to pander to activists, but rather, because they thought they could profit off of it. To quote Milton Friedman “no one who buys bread knows whether the wheat from which it is made was grown by a Communist or a Republican, by a constitutionalist or a Fascist”. And of course, many arguments about repugnance are just naked self interest - there are very few debtors who think the interest on their loans is not repugnant.

Up for sale?

Now, repugnance as a concept might work in terms of desiging a market - some people might not want you to sell something for reasons unrelated to “economic efficiency”. But naturally, there’s the question of whether the problem of repugnance is right or not, which is different than the practical implications of it.

The obvious reference here would be that there are normative concerns and positive concerns. Normative economics would refer to the “oughts” - what the world should be like. So most concerns about repugnance would come here - “does legalizing weed means we’ll destroy the work ethic and open the gate to children buying heroin”. Positive economics, on the other hand, would be on the “is” - describing what might happen. The weed question would be, for instance, “do people smoke more weed after it’s legalized”, or any number of concrete public health questions.

The general understanding in economics is that positive questions are the name of the game and normative concerns are for cringe loser crybabies who can’t handle real analysis. But the distinction isn’t super clear - for example, if you have to choose a social welfare function, it’s not especially clear which one has better predictive power, but it can be important to whether or not certain results hold - and nobody really expects people to just play nice and pick the losing side. For example, this paper finds that different choices of functional form affect the optimal tax rate - and obviously there isn’t any clearly contestable “objective” reason over why choosing certain types of functions is more accurate to reality than others.

Of course, the problem runs (in my opinion) more deeply. Economists are usually from a pure math background, at least in PhD programs, so there’s not that much of an interest in debating questions about which things should and shouldn’t be bought and sold, and even when there is, there normally isn’t any capacity to do so clearly and precisely. “Is the current distribution of wealth fair” is a central political question of the time, and one economists are wholly incapable of giving much of an answer to. This is a shame, because economists “as a class” (whatever that means) are very influential, and also for the self-interested take that economists are usually right on stuff, and being terrible at arguing for or against it in the real world and in policy contexts is bad.

Of course, the lack of intellectual interest in philosophy means that there’s not much to know besides whatever John Stuart Mill (an apologist for British imperialism) got up to - meaning that questions like “will inequalities of wealth result in inequalities of power so great that they threaten democracy” are completely outside the grasp of economics departments (of course, this is more a political science question, but economists take distinctions between fields of study pretty lightly). Arguing about economics is, to a great degree, also arguing about politics and power, and pretending that you can abstract those away from your analysis is not especially serious. Some questions are empirical, and others aren’t, and you need the toolkit to answer both if you want to be taken seriously outside of academia.

Conclusion

So are there moral limits to markets? Probably. But it’s a normative vs positive discussion, though the lines aren’t normally that clear - choices made for normative reasons can have positive implications, and vice versa. Ultimately, what should and shouldn’t be for sale is a complicated debate - and unfortunately economists never have much of a background in anything that isn’t math, so it’s not one that’s had a lot. “Healthcare should be free” might have technical issues, but at the end of the day it comes down as a question of values, and economists don’t really put much weight on being able to actually contest that - there’s been ethicists since John Stuart Mill (a defender of British imperialism, by the way).

Also, don’t try to photograph aliens, folks.

Sources

NOPE

Andrew Chow & Laura Zornosa “Breaking Down the Meaning of Jordan Peele’s Nope”, Time Magazine, 2022

The market

This one blog post of mine

Repugnance

Roth (2007), “Repugnance as a Constraint on Markets”

Martha Lagace “Repugnant Markets and How They Get That Way”, interview with Nobel Laureate Alvin Roth, Harvard Business School, 2007

Tom Palmer, “Book Review: What Money Can’t Buy”, Cato Institute, 2012

John Lanchester, “What Money Can't Buy – Review”, The Guardian, 2012