Mechanical Turk Market, Ethics and Milton Friedman

Disclaimer: unlike what it may seem like, I am not a conservative. I am just another liberal researcher from Berkeley who values and celebrates weed and women

As an experimental economist I found the mechanical turk marketplace a very interesting example of macro economy. Yes, I know it is a zoo. But at the same time people get interesting results out of this market. Apparently Zappos is using it to correct the grammar and wording of the reviews on their website and Professor Franklin’s team has been building a database engine that can use the crowd to fill the missing values in their database. In some sense you can really get Shakespeare’s work out of this crowd of people who just tap on their keyboards. No complain on my part though, many turkers are honest workers and use it to get a legitimate salary but many (including myself) are just there for fun and they won’t blink if they can screw over your work.

Those researcher who piss me off the most are the ones who claim that they have found a groundbreaking theory on mechanical turk, I keep seeing people who claim they have observed a “new behavior” in the crowd while what they are really seeing is just another validation for old economics theories.

One of the issues that keeps coming up is “Is it ethical that there is no minimum wage for mechanical turk?” This is the question that was answered 60 years ago not on this stupid mechanical turk market but on large labour markets by our old friend, professor Milton Friedman (he has some other crazy ideas including geting rid of IRS and FDA but those are a little crazier than what I can really explain here 🙂 )

In essence, Friedman claims that when you set a minimum wage for people’s work, you are just causing part of your society to be out of work. It affects minorities, women and teenagers dramatically, increases unemployment and in these years it highly encourages businesses to hire people offshore. Watch Friedman’s video here. Or Google his books on Google books.

So an answer to those of my friends who question the ethics of having these labor markets like Mechanical Turk, here is my answer:

Not only it is ethical not to have a minimum wage in mechanical turk but it is also unethical to have a minimum wage in the US. In some scene mechanical turk was formed due to some nonsense minimum wage regulations in the US labor market.  If business owners could hire people in the US to clean up their messy databases for $3.00 they wouldn’t need to go on mechanical turk to hire the same person for $1.50 an hour.

I am interested in knowing what you think especially counter arguments are highly appreciated.


~ by marksalen on April 7, 2011.

6 Responses to “Mechanical Turk Market, Ethics and Milton Friedman”

  1. “If business owners could hire people in the US to clean up their messy databases for $3.00 they wouldn’t need to go on mechanical turk to hire the same person for $1.50 an hour.”

    Isn’t the answer to why we need a minimum wage right there in your own words? They are hiring _the same person_ for $1.50 an hour that they would have hired for $3.00.

    If they would have hired the person at $3.00, why are they hiring _the same person_ on MTurk for $1.50? Why not hire the same person for $3.00 instead of $1.50?

    Because they can. People will, and they do. They prey on others’ desperation. If they’re desperate enough to work for $3.00, they offer $1.50. And there’s always someone around desperate enough to work for $1.50. Then desperation is increased.

  2. Good article and you’re right. There’s still the old saying “You get what you pay for”. I would definitely NOT let some guy screw around with my files for $ 1.50 an hour. But thats *my* choice, not some bureaucrat’s.
    Where I live we use to have a coffeelady bringing around coffee, cleaning the kitchen and stuff. Then they introduced the minimum wage. Guess what? Lady get’s fired and we get a coffee machine. Same thing for the girls picking up the phone. Gone, computer does it now. These were people that were retired and worked because they liked to. Now they’re just home and watching TV.

  3. People like and believe academic arguments like the ones Friedman makes. The problem is they do not match reality. It is very easy to come up with incorrect plausible-sounding theories, but in science, there is an objective truth. In the past 30 years, US unemployment has not gone above 11%, regardless of level of outsourcing, of minimum wage, or of a swarm of other factors. The natural level of unemployment is 5-6%, and for most of that time, it has been at the natural level or below. The number of people in that class who are looking for minimum wage jobs is not huge — the majority of that figure is in a much higher income bracket. Except in recessions, we have not really had a problem with unemployment, so the minimum wage can’t be doing too much harm.

    Underemployment is a much greater problem. We are losing tens of percent of our GDP to underemployment. Minimum wage helps reduce the level of underemployment. If I can hire someone for $1.50 per hour, I’ll hire them to do tasks that are comparatively unproductive. If they cost $10/hour, I’ll be forced to buy a robot to automate those same tasks, and only hire people when they contribute more than $10/hour in value. So in a somewhat circuitous way, minimum wage helps keep worker productivity up. It causes us to have close to 0% of employed workers contributing less than $14,500 per year to the GDP. If we were to bring it up, our productivity would rise more.

  4. AFAIK most of the arguments against minimum wages is that without one people would be exploited. when the job supplier knows you someone willing to supply labour at a lower rate they will lower wages. This will result in hardship for the worker who is doing a job that provides at least minimum wage levels of gains to the job supplier. This inflicted hardship goes to give extra profit to the job supplier is believed to be unethical.

    Other such as Russ Roberts from econtalk say that minimum wage laws discourage training and unemployment more then they prevent exploitation,

  5. Asymmetric information and power relations. Workers in MT cannot organize, negotiate collectively, etc. whereas for employers its much easier to form cartels and monopolies. All the usual arguments against 19th century style laissez-faire markets apply.

  6. Instead, why not ask the question “Is it ethical to use the threat of government violence to prevent people whose labor is worth less than the minimum wage from working?”

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