Profiting from Customers’ False Beliefs

Is it ethical for a business to profit from its customers’ false beliefs? Or, more to the point, is it ethical to profit from your customers’ beliefs when you think those beliefs are false? What if you encourage those beliefs?

Case in point: a number of businesses have sprung up to take advantage of the fact that a number of fundamentalist Christians believe that May 21, 2011 (i.e., tomorrow) is the day on which “The Rapture” will happen, which will involve the return to earth of Jesus Christ, the rescue of believers, and the start of a process culminating in the destruction of the world in October. Enter the profit-seeking atheists. Eternal Earth-Bound Pets, for example, will guarantee (for just $135) to come to a believer’s house, post-rapture, to rescue their pets. Salvation, after all, is for human believers only, so the faithful “know” that atheists and animals will be left behind. (For more details, and more examples, see this item from ABC News: May 21, 2011: Profiting on Doomsday?)

Profiting from this particular set of false (i.e., unsupported) beliefs seems, frankly, pretty innocuous. Those who hold such beliefs are few, and are liable to be mocked by the vast majority of Christians, who scoff at the idea that the exact date of the Rapture can be determined so precisely. When the Rapture ends up not happening (and I realize I’m going out on a limb, there) those who ponied up for the “service” offered by Eternal Earth-Bound Pets will be out $135, but other than that they’ll be no worse for wear. But what about other examples?

Let’s start with a fictional example to test our intuitions. What if I find out that you believe, for whatever reason, and despite the fact that you live far from any indigenous populations of elephants, that your rose garden is in imminent danger of being trampled by elephants. And let’s say you also believe (for whatever reason) that elephants are deterred by he sound of the revving of a Porsche engine. Am I justified in selling you a Porsche that you do not otherwise need, and that perhaps you cannot truly afford? Would that be predatory? Your belief, here, is clearly a crazy belief, and my profiting from your delusion seems not-quite-right. But then, as far as you’re concerned, I’m genuinely helping you. On the other hand, what if the reason you have that delusional belief in the first place is that I’ve convinced you of it?

Next, let’s get back to real-life examples. But let’s look at one that doesn’t revolve around a single event, like Rapture insurance does. What about, for example, selling homeopathy? Now, it’s one thing for a homeopath to prescribe and sell homeopathic treatments. After all, the homeopath presumably believes that such remedies work, in spite of the lack of evidence for that belief. Now, that belief itself might be culpable — if you’re going to sell a product, then ethically you ought to do what you can to make sure it really works — but at least the homeopath is selling in good (if misguided) faith. What about when licensed Pharmacists, people with the training to know perfectly well that homeopathic treatments cannot possibly work, sell them? That happens all the time. Shoppers Drug Mart, for example — Canada’s largest pharmacy chain — sells homeopathic treatments, and all the franchisees of that chain are required to be licensed Pharmacists. That is, they are people whose scientific training tells them that such remedies have zero scientific credibility. So they, too, are profiting from their customers’ false* beliefs — beliefs that they, the sellers, know to be false. Of course, the difference between selling homeopathy and selling Rapture insurance is that in the case of homeopathy, people’s lives really might be at stake.

Information is crucial to the efficient operation of a free market. Asymmetries of information constitute an entire category of situations in which economists will tell you market failures are liable to occur. Knowledge, alas, can never be perfect. So what we instead insist on is that transactions at least be made in good faith. It’s clear that that means the consumer needs to have enough information to know that the product she is about to buy will satisfy her desires; what’s less clear is whether the consumer must also know enough to know whether the product will satisfy her needs.

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*Note: some of you may want to quibble with my use of the word “false” to refer to beliefs in either a) the Rapture or b) homeopathy. You may point out that saying that there’s a lack of evidence for a particular belief isn’t the same as saying that that belief is false. That’s technically true. But when a belief is implausible on the face of it, is unsupported by evidence, and conflicts with a great number of beliefs that are well-supported by evidence, it is entirely reasonable to call it “false.” At least until the Rapture.

14 comments so far

  1. Maija Haavisto on

    Well, there are people with a training in natural sciences who do believe that homeopathy works. I personally know one believer who is a biologist and a teacher… She doesn’t have anythinmg to do with homeopathy as a business, so saying she believes in it doesn’t present any potential secondary gain issues.

    I think many doctors involved with homeopathy probably do believe in it. However, that doesn’t mean it’s acceptable. All kinds of crimes are committed for irrational, delusional reasons. Sometimes those people can plead insanity, but usually they still bear at least some criminal responsibility.

  2. Gabriela on

    Fascinating topic. I’m inclined to think that the two examples are somewhat different.
    For instance, you mention that information asymmetry is bad for the market. However, in the Rapture case, buyers and sellers have access to the same information – it’s their beliefs that are different. Furthermore, in your example the buyers presumably know that the seller is an unbeliever, so where is the information asymmetry?
    On the other hand, in the homeopathy case, there is a better case to be made regarding information asymmetry. The pharmacist, as you said, is a scientist with specialized training that gives her greater access to the relevant information.
    In either case, I have concerns about the seller acting in such a way so as to protect the consumer from their own desires. I understand that allowing such transactions means that the consumer might be financially harmed, but I don’t see (the relatively small financial harm) financial harm in this case as equivalent to physical harm. In the latter case, I am more inclined to think the transaction is unethical if both parties do not have the same information. However, if we take the financial-harm-paternalism argument far enough, then it might prohibit transactions that we generally see as ethically acceptable. For instance, it might prohibit producers of cosmetics products (say, lipstick, foundation, etc.) from selling to their customers. After all, the consumer might think it will make them feel better about themselves, but the sellers ought to know that the bump in self-esteem is only temporarily since the products don’t fix the source of the consumers’ angst and the consumer is now out a few bucks. Of course, if there are examples where the financial harm is large enough, I might think otherwise about their moral status.
    In any case, thanks for a thought-provoking post!

  3. Jim Gaa on

    Chris —

    Having looked briefly at the website to which you provide a lin, I can’t help thinking this is a hoax — or at least a joke that the purveyors think might actually have a payoff.

    Taking it at face value: Although the website you have a link to does say that this business is run by atheists, you might have made clear (as your third paragraph suggests) that there is little reason to believe that atheists are any more likely than any other group to fleece Rapturists. For one thing, we don’t really know whether these people are atheists. And it’s unclear to me why a Rapturist would want an atheist to do the job. For one thing, only a certain kind of Christian will be elevated to Heaven; everyone else is doomed to Hell. Why not at least hire a Christian? But even so, although the site you refer claims that they are so burdened with email that they will only deal with messages that include payment, it’s not clear why Rapturists would want pet care: won’t the pets be fried or drowned (or whatever) in the near future anyway?

    I only bring this up to point out that a significant part of North American society believes that atheists are unethical, because they lack the appropriate religious beliefs that (according to them) are necessary to ensure ethical behavior.

    It’s important not to let such beliefs go unchallenged, or even leave an opening for them. For example, is there any reason to believe that atheists are any more likely to engage in the kind of behavior — selling but not in good faith (so to speak (:-) )?

    (I want to make it clear that while I don’t know your religious beliefs (or lack of them), I’m not suppposing that you believe this nasty prejudice.)

    • Chris MacDonald on

      Jim:

      Good point! No, none of this is supposed to be a critique of atheists. Like pretty much all philosophers, I do teach my classes that ethics absolutely need not be grounded in religion, and that in fact grounding it that way is entirely dodgy. All sane ethical theories are ones in which religion plays no substantial role. And even many theists believe that ethics has to be grounded in reason, rather than in faith.

      This is merely a case where atheists have made a claim to being particularly helpful.

      Chris.

      • Bart Centre on

        Chris,
        it’s been almost a year since this excellent article, but the timing is right.
        I am Bart Centre, the creator of Eternal Earth-Bound Pets. You may be interested to know I have just exposed the spoof of my post rapture pet rescue.
        It was never real, never had a single client. My ethics would never allow it. The site was simply a poke in the eye at the religiously afflicted, and a vehicle to publicize my book. Here’s the whole confession on my blog, if you’re interested in doing a follow up: atheistcamel.blogspot.com

        regards,
        Bart
        AKA The Atheist Camel

  4. Tim Ragan on

    Chris — a very interesting topic. It seems to me that a vast portion of the whole consumer society (and the businesses promoting their consumption)is built around building up and pandering to “false beliefs”. For example:
    — this beer will improve your attractiveness to the ladies and enhance your evening;
    — this diet supplement will melt away the pounds effortlessly;
    — this exercise gizmo will give you solid abs in 6 minutes…

    This is the whole nature of our advertising industry and is systematically studied, mastered, and “exploited” by the modern corporation. I believe this is why “caveat emptor” is such a strong underlying foundational philosophy to our modern consumer society.

    Your opening paragraph:
    “Is it ethical for a business to profit from its customers’ false beliefs? Or, more to the point, is it ethical to profit from your customers’ beliefs when you think those beliefs are false? What if you encourage those beliefs?”

    Well, I’m not sure if it is ethical, but it certainly is a keystone of modern society…!

    • Chris MacDonald on

      Tim:

      You’ve got a point, though I think you overstate it. Not all advertising is centrally aimed at creating false beliefs. When ads foster false beliefs, they are rightly subject to legal scrutiny. What they more often do is foster unjustified feelings, and that is much harder to regulate and otherwise guard against.

      And anyway, we should be cautious not to let such practices — however common — count as a reason to throw up our hands and give up all hope of honesty in the marketplace.

      Chris.

  5. Chris MacDonald on

    Here’s a related question:

    Is it still a “scam” (i.e., something unethical) if the person running the “scam” isn’t responsible for the buyer’s false beliefs?

    Chris.

  6. Kevin T. Keith on

    I think Tim makes a good point, and I’m not sure your distinction between “beliefs” and “feelings” rebuts it. Clearly much of advertising and business is predicated on an implicit valorization of “caveat emptor” – that it is simply not the seller’s responsibility to look out for the interests of the buyer, particularly as regards the question whether their product objectively meets a buyer’s real need, or even works at all. (Note that the doctrine of “implied warranty” – the idea that a product is implied to be fit for its intended purpose when it is offered for sale – is controversial and, in the US at least, generally unenforceable. The idea that sellers have an obligation not to be useless parasites is *not* part of the traditional understanding of business.)

    As with your recent post on employers’ obligations to make “extra” accommodations for disabled employees with greater needs, you seem to be motivated here by a perspective on business – namely, that it is subject to some sort of obligation to promote social good, possibly of a utilitarian form – that is just not how business has traditionally operated, and in fact is further outside the mainstream than perhaps you expect. Enacting your intuition that businesses should not promote shoddy products would not require merely a revision to truth-in-advertising laws, but in fact a complete recasting of the adversarial nature of the free market. As with employer obligations to employees, a doctrine of seller obligations to buyers may be a very good idea, but it is far more radical than it may sound.

    You may be on firmer ground if you restrict the issue to transactions in which there is a recognized fiduciary relationship between the seller and buyer. In the case of most consumer goods or services – likely including post-Rapture pet care, for instance – the buyer is not relying on the seller’s expertise or oversight for the satisfaction of their own needs; the seller thus violates no recognized obligation to serve those needs altruistically. In fiduciary relationship – most commonly in the case of professional services – the buyer relies on the seller’s greater knowledge, and explicitly predicates their buying decision at least partly on the seller’s recommendations, which are made under terms of the seller’s promise to act for the buyer’s interests alone. Selling a shoddy product under these circumstances is a violation of that trust. Notice that neither of these circumstances requires that the buyer have *true or false beliefs* – the issue is whether they allow their own judgment to depend on that of the seller in cases in which they do not or cannot come to their own informed conclusions, and the seller warrants to offer such conclusions altruistically. In fiduciary relationships, you can easily claim that taking advantage of the buyer is not allowed – a position that current consensus and practice already supports. But under that same consensus, “caveat emptor” still obtains for non-fiduciary transactions.

    The question then becomes whether the given transaction is fiduciary or not. The homeopathy case is particularly aggravating because such “practitioners” make claims to professional status but promote practices that are clearly indefensible. (The fact that *they* believe their own claims – if they do – is irrelevant. A real doctor who propounded equally false claims, against equally well-known counterevidence, would be regarded as incompetent. Incompetent practice, whether intentional or misguided, is a violation of the fiduciary obligation, just as much as theft of money would be.) But the case of services to deluded Rapturites is, I think, clearer. Casting all financial transactions predicated upon religious beliefs as a case of violation of trust would essentially position religious believers as inherently mentally ill – that is, unable to make their own financial decisions *because* they are religious believers, and therefore requiring altruistic guidance in all their acts, because of an inherent vulnerability. There is good reason to take this view, but I think it is unlikely to be widely accepted!

    Again, I think you have a good intuition about the abusiveness of business transactions predicated upon people’s poor judgment or false beliefs. But such beliefs are very widespread, and the free market is grounded on the fundamentally anti-social notion of aggressive, and exclusive, self-interest. You’ll have a long uphill slog to change either of those factors.

  7. Chris MacDonald on

    Tim:

    Thanks for that. I don’t have a strong conclusion to reach in regard to the Rapture insurance. I just think it’s an interesting starting point for a discussion of the role of truth in commerce.

    And no, I don’t hold the utilitarian view you mention above. (In fact I’m deeply interested in the market as a specifically competitive domain — but that also implies that I’m interested in the question of what set of rules we need in order to make sure that that competitive domain stays socially useful.)

    But I do think that misinformation undermines the purpose of the market, and I think we need to work hard to figure out what the right social conventions are in that regard. I think the contrast you suggest with fiduciary relationships is instructive, but too narrow. There are lots of kinds of products that the average consumer cannot reasonably hope to understand. So “buyer beware” cannot be the end of the conversation.

    Cheers,
    Chris

    • Tim Ragan on

      Kevin — thanks for the support! In your response when you state “Incompetent practice, whether intentional or misguided, is a violation of the fiduciary obligation, just as much as theft of money would be” do you mean it is not a valid legal defense? We certainly see lots of examples of CEO’s using it as their main defense — notably Bernie Ebbers with his “aw shucks, I’m just an ol’ farm boy and didn’t know what they (his CFO) was up to…” in his Worldcom prosecution.

      I presume that if one could prove “incompetence” in some legal way that would release one from fiduciary responsibilities? Opinions?

      Thanks and regards,
      Tim Ragan
      (http://timragan.wordpress.com)

  8. […] posted a link to this, which I thought was relevant to the day — on the business ethics of ‘Profiting from Customer’s False Beliefs’, comparing ‘The Rapture’ to […]

  9. Randy Grein on

    Fascinating article Chris, and the discussion has been very good! I’m not sure I can add much to what has been said already, but regarding the ‘defense of rapture’ argument it occurs to me that, as a religious matter it would be difficult to say that the believers are incompetent without branding many, or all religious believers so. There is little solicitation, no coercion or deception involved, merely a contract to perform a service in the unlikely event. We could as easily argue publishers who provide children’s books for Sunday School are similarly involved in an unethical practice. (grin)

    Pharmacists supplying homeopathic remedies is a rather different question. Although many aspects of alternative medicine beliefs resemble religion medical professionals are held to standards that include ethics and competency. Homeopathy has failed many tests for the excellent reason that it is based on long discarded theories that are now considered magic rather than science. (Water ‘energized’ by association with tenuous contact with, but containing not a single molecule of the active agent follows no current scientific theories but rather a ‘contamination’ theory common in various magical disciplines.) Promoting a treatment without a recognizable success rate is unethical; it does active harm in that patients waste valuable time obtaining effective treatment, a delay that can prove fatal.

  10. […] Profiting from Customers’ False Beliefs May 20, 2011 […]


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