How Moral Panic Creates Black Markets

Today’s guest is Nobel Prize-winning economist Alvin E. Roth, the author of Moral Economics: From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work.

He talks with Nick Gillespie about why some voluntary transactions provoke moral outrage even when no one is being directly harmed. Roth explains why black markets often emerge when governments try to ban activities with persistent demand, why both markets and prohibitions require social support to function, and how unintended consequences can make moralistic policies backfire. They discuss the war on drugs, prostitution, surrogacy, same-sex marriage, price gouging, and why Iran remains the only country in the world with a legal market for kidney donors.

They also explore Roth’s work designing kidney exchange networks and school choice systems, how digital technology and private transactions make certain bans harder to enforce, and why harm reduction may work better than prohibition in areas ranging from drug policy to sex work.

0:00—Repugnant transactions and organ sales

9:30—Blood plasma, coercion, and class bias

16:46—School choice reform

22:59—Same-sex marriage, abortion, and contraception

29:59—The war on drugs and moral economics

38:55—Roth’s theoretical origin story

43:45—Uber, AI, and technological efficiencies

51:26—Price gouging and consumer resentment

54:27—Pornography, prostitution, and privacy

1:05:21—Has America become more economically moral?

1:12:15—Biden’s economic agenda and Trump’s tariffs

1:17:04—Winning a Nobel Prize

Producer: Paul Alexander

Audio Mixer: Ian Keyser