In the first chapter of SuperFreakonomics, we write at some length about the economics of prostitution, both among street prostitutes and a high-end call girls.
One of the most interesting aspects of prostitution is that it involves a good or service (or whatever you want to call it) — sex — which, when undertaken for free by consenting adults is legal but which becomes illegal when money changes hands.
Can you think of other goods and services that share this trait? Let’s also consider examples where money doesn’t necessarily make the practice illegal, but at the very least taboo or socially repugnant.
I will put a few more examples below the fold, so as not to ruin the guessing game, but I am hoping you all can collectively expand this list many times over.
A few other goods and services that come to mind: human organs; children (you can put your baby up for adoption but cannot sell it); and — my favorite, suggested by a smart fellow I met recently — political favors.
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Perhaps gambling? It is perfectly legal for an office to have a casino night for a holiday party and give out prizes at the end of the night based on participants’ luck during the party, but in most places it is illegal to wager actual money on the same games of chance.
A promise not to reveal embarrassing information (blackmail).
IP addresses.
The impending exhaustion of IP addresses (there can only be about 4 billion total in IPv4) has been in the news recently, with the assumed fix being to move to IPv6, which would allow for a virtually unlimited supply.
But the truth is that 4 billion IP addresses is plenty. Most of us don’t really need our own IP address; many large corporations have thousands of people sharing a single address just fine (using NAT technology). If there were a market where those of us who don’t need an IP address could sell to those who do, it seems there would be no exhaustion after all.
But the Internet Assigned Numbers Authority does not allow for that kind of trading…
Giving gifts–it’s still considered socially awkward to give money as a gift while giving an item wouldn’t be. (I know a lot of young married couple that would have more use for some $$$ than a waffle maker. So why not just give money?)
Political favors in government certainly, but there are many kinds of politics. Money ought not change hands for school admissions, the granting of honors or the publication of news/opinion/research.
Exchanging money transforms these relationships – and perhaps more importantly, the goods themselves – from sacrosanct to merely commercial. It also follows that commercial relationships and goods are commodities – and these supposed sacred things cannot be accepted by society as anything less.
giving a student a few extra points so that he or she may pass a course.
# 8 – “If the person pays money willingly for protection from mafia or underworld then it is legal” – it is still illegal. If you employ them as security guards, and they pay taxes on the money received and salary paid, then it is legal. Then they are not mafia, but security agencies. If you are paying because you want protection, but you have no record of the payment, then it is illegal. It is extortion.
Voting