Off the backs of the poor?

25th June, 2005

Dear Economist,

I entered the lottery for tickets to see the “Live8” concert and I was lucky enough to win. Unfortunately I won’t be able to make the concert. Is there any moral objection to my selling the tickets to someone else?

– Suzy Taylor, Cardiff

Dear Suzy,

Even though “Live8” is designed to raise awareness of African poverty, rather than cash, some have criticised the organisers for not charging market value for the tickets in the first place. This criticism is misplaced. The lottery, which you could enter as many times as you wanted for £1.50 a pop, was likely to be revenue-maximising for the charity since people are happy to enter lotteries at irrationally long odds. However, it would have been more attractive if multiple prizes could be won and resold.

Having won your prize, are you under any obligation not to dispose of it as you wish? By selling the tickets you will be better off, and whoever buys the tickets will also be better off. It is very hard to see how anyone else will be harmed by your transaction.

Those are the facts – what about the ethics? Economists rarely offer ethical advice, but there is one clear exception: Pareto improvements are a good thing. A Pareto improvement is any action that makes at least one person better off and harms nobody. You would think that the moral appeal of this is surely clear enough, even to a musician.

However, the organisers of “Live8” disagree. Spokesman Bob Geldof has attacked the reselling of tickets as “sick profiteering”. Perhaps his opposition to Pareto improvements stems from a belief that when the cause is grave (and there is no graver cause than extreme poverty) then nobody should benefit from an associated event. If so, make sure that if you watch a recording of the concert you take no pleasure from it.

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