A reader asks: Write about emotions with emotions. Let’s do it. Basically, emotions are complex and face a “levels” issue that forces me to be coasean. In other words, emotions manifest on two levels or scales: the micro-level and the macro-level. There is so much depth and complexity at each level that I have no choice but to view it in coasean terms. Before I proceed here are the main tenets of Coasean solutions to externalities.
There has to be well-defined property rights.
The efficient solution does not require that a specific party bears the defined property rights. Said another way, give the property rights to either party, and you get the same result.
On a micro level, I believe all emotions in public, e.g., public display of affections, unless properly ordered, should be socially taxed (i.e. a non-governmental, public pressure type of tax) *cue the kid yelling “GROSS!” Largely because my response (good or bad, mostly bad) is a direct result of your improperly ordered emotions. This also applies to emotions like shyness, timidity, non-committal attitude, improper aggression, and other ornery dispositions. Basically, it is your moral responsibility to be ambivalent or happy (or at least act like you are). Internalize your externality!
For private emotions, I don’t have any hard and fast rules because it is highly context-dependent. My worldview here is, in some sense, your emotions are a complement of my emotions, and, as a result, we should both be as honest as possible (even when you’re indifferent.) This runs both ways. In other words, to my mind, emotions in close personal relationships are rarely negative externalities. They are products of a genuine effort at the fundamental human proclivity towards companionship. Thus, emotions like grief, pain, joy, longing, etc., are all fair game in personal relationships.
On the macro-level, my coaseanism is in full bloom because my main quibble with macro-level emotions is that it is subject to all the criticisms of coaseanism.
First of all, the assignment problem. It is unclear to me who is to blame for issues that move or create emotions at scale. Doing this on a micro-level is actually quite difficult. Don’t believe me? Ask parents with more than one kid *cue the “HE STARTED IT” “NO, HE STARTED IT” loop. This is where my confusion with the current cultural issues comes from. The assignment problem is rampant, and there are no properly defined emotional property rights (EPR’s) on which everyone agrees. Alas, I’m getting ahead of myself.
The second criticism is the holdout problem. Suppose a group of people is rightly affected, and they agree to resolve their issues by apology or a material equivalent. In that case, the last person to show up automatically has almost all the power. Why? Suppose both parties agree to move on from a situation after everyone involved has been well-compensated. In that case, the resolution can’t move on until the last person acknowledges that they have been well-compensated. This places the person in a powerful position and can thus demand more from the offending party. There is also a cultural analog here, but that is beyond the scope of this piece.
Thirdly, there is the free-rider problem. The best way to understand this is to imagine a group of four individuals. Imagine this group offends another group of individuals. If the apology of three of the four individuals in group 1 is enough to surmount the offense to group 2, the last person does not have to apologize (or compensate for the lost or damaged EPR). Actually, this individual would be rational in this decision.
Finally, all of this assumes that we can get a large group of offended people to agree on the size of the offense or the remedy to be meted out. The costs of transactions and negotiating problems are almost insurmountable.
Overall, what does all of this mean? Well, three things:
When you see a tattle-tale, let them be because they are trying to get an adult to properly define the EPR for their playground issue. (Please ignore this lesson, because no one likes a tattle-tale.)
There is a helpful nugget here of conflict resolution on a small scale. A well-defined EPR and an agreement on the level of compensation or apology necessary for an equilibrium level of relative peace are critical.
Pure ambivalence on macro-level emotional issues is almost always the efficient outcome.
Certainty rating: 90%