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The economics of hate

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The Economics of Hate


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The Economics of
Hate
Samuel Cameron
Professor of Economics, University of Bradford, UK

Edward Elgar
Cheltenham, UK • Northampton, MA, USA


© Samuel Cameron 2009
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or transmitted in any form or by any means, electronic,

mechanical or photocopying, recording, or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA

A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2008943095

ISBN 978 1 84720 047 1
Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

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Contents
List of figures and tables
Preface
Acknowledgements
1
2
3
4
5
6
7
8
9

vi


vii
viii

Towards the economics of hate
The quiet and peaceful world of microeconomics (QPWM)
Why is hate like raspberry jam? Hatred in conventional
microeconomics
Widening the economic approach to hate
Applied hate in the material world at the individual level
Hate in the air: the economics of psychic possession
Phobias, -isms and schisms: group hate
Is conflict resolution theory relevant?
Is there a policy conclusion?

References
Index

1
12
38
58
80
100
120
140
154
167
183

v


Figures and tables
FIGURES
2.1
2.2
2.3
2.4
3.1
3.2
4.1
5.1
6.1
7.1
8.1

Income and substitution effects for hate as a
consumption good
Income and substitution effects for hate as a full-time
means of support
Backward-bending supply curve for hate
Edgeworth–Bowley box diagram
Hate code market
Hate code market: alternative equilibria
The hate nexus
Dyadic hate functions
Psychic production function
Hate club membership function
Conflict resolution production function

18
20
22
27
55
56
63
89
107
127
141

TABLES
1.1
4.1
4.2

Definitions of hatred and malice
Hatred-relevant emotions and actions
Hating self and hating others options

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64
69


Preface
There is little literature which directly links economics with hate. Some
literature on hate mentions economic factors but it is not usually an economic analysis; rather some factor such as unemployment is brought in on
an ad hoc basis when other explanations are found wanting. Paradoxically
there is a strong economic basis to many discussions about hate. Hate is
treated as a commodity with a price that can be controlled by measures that
effectively increase this price, whether these be longer prison sentences or
tighter security measures at airports to impede terrorist bombers. In this
book, I seek to explore the dimensions of hate as a commodity from a wider
economic perspective which draws critically on research in other subjects.

vii


Acknowledgements
I would like to thank Matt Pitman at Edward Elgar for encouraging me to
write this book. Also colleagues in many institutions who are too numerous to mention for providing relevant material.
I have used some small parts of my previous publications, ‘Wiccanomics’
(Review of Social Economy, 2005a), the chapter on suicide in Bowmaker
(2005) and The Economics of Sin (2002b).

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1.

Towards the economics of hate

It might not be obvious what economics has to do with hate. Let us begin
that discourse by looking at the deliberations in the inner circle of the Nazi
Party two days after Kristallnacht. As part of the discussion, Goebbels suggested that Jews might be excluded from sleeping cars (on trains) that contained Germans. He proposed that they might then be forced to sleep in the
corridor. The following discussion is then reported to have taken place:
Goering: In that case, I think it would make sense to give them separate
compartments.
Goebbels: Not if the train is overcrowded?
Goering: Just a moment. There’ll be only one Jewish coach. If that is filled up
the other Jews will have to stay home.
Goebbels: Suppose, there won’t be many Jews going on the express to Munich,
suppose there will be two Jews in the train and the other compartment will be
overcrowded. These two Jews would then have a compartment all to themselves.
Therefore, Jews may claim a seat only after all Germans have secured a seat.
Goering: I’d give the Jews one coach or one compartment. And should a case
like you mention arise and the train be overcrowded, believe me, we don’t need
a law. We’ll kick him out and he’ll have to sit alone on the toilet all the way.
Goebbels: I don’t agree, I don’t believe in this. There ought to be a law. Further
there ought to be a decree barring Jews from beaches and resorts.
(Quoted in Fischer, 1998, p. 285)

This leads on to an even more surreal discussion about trying to prevent
Germans coming into contact with Jews while wandering through the
forest. The allocation of sleeping car slots between two differently privileged groups where one group is thought to incur costs from contact with
the other is an economic problem. Interestingly there is no record of
anyone proposing higher prices for Jewish consumers, notwithstanding
the hefty sequestration of Jewish assets by Nazis during this period. The
lack of such a suggestion may perhaps give us an important insight into
the essential nature of hate.
Here are six statements about hatred:
1.
2.

Hatred is the most extreme emotion (if it is an emotion).
Expression of hatred is more likely to provoke extreme social disapproval than expression of other emotions.
1


2

3.
4.
5.

6.

The economics of hate

Displays of hatred exhibit more irrationality than displays of other
emotions.
(2) is due not so much to (3) as to fear of the consequences of the action
of a hateful individual.
With respect to (2) and (4) people are generally less likely to dismiss
displays of hatred as temporary aberrations that will settle down than
they are other emotions such as anger.
Once formed, hatred is not easily diffused or deflected into ‘safety
valve’ outlets.

Now you have read these you might like to consider the extent to which
you agree with them as it provides a frame of reference for what follows.
We will return to debate these propositions when we get to Chapter 4. For
the moment, let me briefly expound on each.
1.

2.

3.

The claim that hatred is the most extreme emotion is founded on the
virulence of its expression in terms of both intention and actions such
as murder, mutilation and other forms of ruining or devastation of
lives. It might be claimed that love shares this status. However, whichever of the regular five concepts of love (see Cameron and Collins,
2000, pp. 5–6) we adopt, they do not lead to very extreme outcomes
unless, by being thwarted, they morph into hatred.
We must immediately qualify this by saying that, where hatred is
shared in a group (Chapter 7) towards a common goal then it can
bring strong approval. Examples of this are attribution of heroic status
towards extreme acts of hatred in the form of murder of the hated individuals. Where a specifically focused hatred is deemed non-acceptable
it invites more censure than other forms of behaviour. To some extent
this is a tautological remark as we define (see Table 1.1 below) hatred
as something more than other forms of disliking or non-acceptance of
others.
As this is a short introduction, I will defer any in-depth discussion
of rationality and stick to the idea that non-rational behaviour is
that which may be self-defeating. If we want to be blunt about it we
could simply call this ‘stupid’. Some would claim, with reference to
statement 1, that love inspires extreme displays of irrationality. This
is disputed further in Cameron and Collins (2000, Chapter 3) where
many apparently strange customs and activities are explained in terms
of rational utility-maximizing behaviour. That is not to say that some
love-inspired choices might reasonably be deemed irrational. It is
difficult to establish objectively, in any empirical way, that hate generates a more substantial volume of self-defeating activity than love but

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Towards the economics of hate

4.

5.

6.

3

we can appeal to the casual evidence, such as the fact that love does not
promote riots and wars. Returning to the love–hate nexus discussed
with respect to statement 1, hate inspired by love may be a potent
source of irrationality – for example the jealous lover who murders
the person involved with the object of their affection. Economists such
as Glaeser (2005) will, of course, claim that hatred is susceptible to
rational choice analysis.
Fear of the consequences of hate can be explained in terms of rational
behaviour. The individual involved in animal-using industries who
finds paint daubed on their house by protesters may reasonably take
this as a proxy for escalation of behaviour which may lead ultimately
to extreme physical violence. Society, collectively, has reason to
condemn displays of hatred due to the cost potential of the implied
threats. Hence, we have the situation of rolling waves of legislation (see
Chapter 9) to protect various groups from the consequence of hate.
Some of this is economically based, as expressions of hatred can take
forms which are extremely disruptive to trade.
To some extent, the issue of the sustainability of expressions of hatred
takes us into the distinction between hatred and anger (see Barad,
2004; Zizzo, 2004) which will be discussed later. An expression of anger
which is not accompanied by force or credible threats of force might
be dismissed as temporary. That is, people will say the person will
calm down once they have expressed their feelings. However, what we
would normally consider to be hatred we would expect not to abate, as
by definition it implies something sustained. The prolongation could
be because a person, or group, can not obtain satisfaction by altering
the circumstances underpinning the hatred. For example, those suffering under the rule of fascist dictatorship have no reason to stop hating
the dictator. If the hatred is embedded as a form of capital in the hater
then the hatred may sustain long after the dictator is removed or the
individual has removed themselves by migrating.
Diffusion of states of emotion into ‘safety valve’ outlets again takes
us into the anger/hate interface. The concept of ‘safety valves’ is easily
understood. Let us imagine a son has had a vehement disagreement
with his father. The father may storm off into a public house and vent
his rage verbally with friends in similar situations whilst the son repairs
to his bedroom and plays some corporate US rock music of the ‘I hate
my parents’ variety. Neither of them goes on to poison, maim or covertly electrocute the other. This might be attributed to the beneficial
effects of their safety valves which might thus be deemed to have added
to the welfare of society. But of course, we could say this only happened because they were angry and did not really ‘hate’ each other. If


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The economics of hate

they ‘really’ hated each other would any safety valve style commercial
product or social institution have worked?

OBJECTIVES OF THIS BOOK
This book begins with the idea of studying hate in a general way. We then
move to the concept of studying it from an economic point of view. Aside
from the work of Glaeser (2005), there is no work in economics with the
word ‘hate’ directly in the title although numerous works, which will be
discussed in the following chapters, have some more indirect bearing on the
topic. Perhaps more surprisingly the study of hate has not been established
as a direct concern in other disciplines such as social psychology, sociology
or politics.
Only in the last five years or so have attempts been made to establish
hate as a field of study. During this time two independent networks of
scholars have sprung forth – the Wickedness Network and the Hate Studies
group. Possibly the events of 9/11 in 2001 have inspired these formations.
The formation of the Hate Studies group (centred at Gonzaga University
in Washington State) which publishes the Journal of Hate Studies claims
a more direct inspiration from the conscious decision of white supremacist groups to settle in areas of the USA where there were few ethnically
despised populations. Both of these groups are interdisciplinary in nature.
The Hate Studies group explicitly mentions economists in its website
introduction although the papers published in its journal seem to come
primarily from social psychologists, people of a religious persuasion and
some people who would fit comfortably into the longer established field of
‘Peace Studies’, such as scholars on conflict resolution. The Wickedness
group seems mainly to consist of people interested in literature, philosophy
and religion.
Other specialist social science niches of relevance are beginning to spring
up such as the area of disgustology and the field of Humiliation Studies
as shown in the Journal of Human Dignity and Humiliation Studies, and
research groups on Forgiveness – we might note that the 63-page bibliography of articles on Forgiveness by Scherer et al. (2004) has only one item
with hate in the title, by Baures (1996).
The two areas of concentrated scholarship most relevant to hate as a
general topic are the bodies of work on the introduction of the category of
‘hate crime’1 (discussed in more detail in Chapters 7 and 9) and on modern
warfare and terrorism. Discussions in the warfare and terrorism areas do
tussle with the relevance of economics to behaviour. For example, a recent
textbook on terrorism (Weinberg, 2005) discusses, in Chapter 2, the history

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of terrorism in terms of there being three waves. The third wave in which
we currently live is depicted as largely arising from non-economic factors,
in that it is not inspired by resource conflicts but by primarily religious
factors. This issue is pursued further in the highly celebrated work of
Stuart J. Kaufman (2001, 2006) who explicitly rejects both rational choice
explanations of ethnic warfare and the ‘ancient hatreds’ view, which is
said to have influenced Bill Clinton into thinking nothing could be done
to ameliorate the problem. Kaufman argues for a shift in focus on to the
central importance of myths and symbols. This is a position in keeping with
the approach developed in Chapter 4 of this book. The element of ‘conventional’ rationality is still present, however, when we come to Chapter
7 where the issue of entrepreneurial management of myths and symbols is
considered.
Although Stern (2003–4), in the Journal of Hate Studies, calls for an
interdisciplinary approach to the study of hate, there is no sign of such a
thing flowering around us. Instead, the main publishing action in the field
seems to be on hate crimes. One possible justification for an economic
approach of the ‘wider’ economics type taken in this work is that it may
provide the bedrock for an interdisciplinary approach.
In exploring the contours of an economic approach in this work, I shall
at points be drawn into critical reflection on some aspects of the work
within the above-mentioned interdisciplinary umbrella groups. First, we
need to be clear what we mean by economics. The key elements in economics are the notions of utility-maximizing individuals who are subject
to constraints on the basis of resource scarcities which give rise to the idea
of costs. Thus the statement above that mainstream economists would
find most controversial is number 3, as economics disposes us to think
of all behaviour (including rape, abortion, murder, drug addiction) (see
Bowmaker, 2005) as rational. The majority of this book is devoted then to
exploring the relevance of rational choice economics to the study of hate. I
am not claiming that the discipline of economics provides an all-embracing
universal theory of hate. It is clearly necessary at times that we engage in
cross-disciplinary activity, particularly with respect to psychology.
Apart from the determinants of the supply of hate, economics may also
bring light to bear on the appraisal of the costs of hatred. An obvious
illustration of this is the studies appearing on the monetary costs of 9/11
(for example Bram, Orr and Rapaport, 2002; Bram, Haughwout and Orr,
2002) but there have been studies of other areas such as the Basque region
(Abadie and Gardeazabal, 2001). Studies of the costs of war and terrorism
will implicitly include economic estimates of the costs of hate although this
is likely to be underestimated if the psychological suffering of living under
war and terrorist epochs is omitted (see Frey et al., 2007). In everyday


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The economics of hate

commerce we also have such figures as the estimated 19–40 million working
days lost in the UK due to bullying (House of Commons, 2003) as some
kind of index of the magnitude of hate.
The principal objective of this book is to provide input to thinking on a
very hot contemporary policy problem – the increasing volume of anti-hate
legislation being passed to protect vulnerable and/or outraged groups. This
is very wide-ranging, from protection of people persecuted on the grounds
of gender, race and religion, and those business or academic activities
that lead them to be targets for organized hate groups. Recently there has
been considerable debate about the protection of people’s identities from
mockery and comedy. Like the combating of pollution, policies towards
the regulation of hate are themselves additional costs of the primary activity. One is entitled to question whether any package of hate regulation
measures is efficient. In the extreme situation, hate regulation policy might
be counter-productive – that is, it could inspire or provoke more hatred
towards the protected group. Consideration of this possibility and the
general issue of the overall efficiency of hate regulation policies needs to be
informed by thought about the underlying nature of hating emotions.

HATE AND ECONOMICS, ECONOMICS AND HATE
So far we have not defined hate, choosing instead to proceed on the
assumption that everyone knows what we mean. It is time to remedy this.
Table 1.1 gives a very brief and selective list of definitions, with the definition of malice (where given) as comparison point. The first definition is
from an economist, and the rest are from general reference works.
We will refer back to this table later but for the moment it is worth
noting that Glaeser and Bierce appear to be defining emotional states
other than hate. In the former case, malice and, in the latter case, jealousy/
envy. Dictionary definitions do not distinguish between hate and hatred,
instead giving hatred as part of the definition of hate. There is a tendency
to represent malice as active, and hatred as potentially only passive, that is
not represented in actions towards the disliked entities. The origins of the
use of the word ‘malice’ in English are from the word ‘bad’, whilst hate is
supposedly from an Old English word ‘hett’ of Germanic origins.
For the purposes of this book, we will use a wider definition of hate
than that used by Glaeser. That is, we will take hate/hatred to include
both the willingness to incur costs to harm others and the expression
of violent dislike towards others. In the modern world, the Internet has
spawned many virulent expressions of hatred which are not directly consummated. The best example of fully formed non-consummated hatred is

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Table 1.1 Definitions of hatred and malice
Source

Term

Definition

Glaeser

Hate

OED
OED
Cassells
Cassells

Hate
Malice
Hate
Malice

Devil’s Dictionary
(Ambrose Bierce)

Hate

‘willingness to sacrifice personally to harm
others’
‘willingness to pay personal costs to harm
others’
‘extreme dislike or aversion, hatred’
‘active ill will’
‘extreme dislike or aversion, hatred’
‘the desire to harm others deliberately, active
malevolence’
‘a sentiment appropriate to the occasion of
another’s superiority’

the ‘idle’ death threat, that is one which is not followed up with any action
whatsoever. There are individuals who have received many thousand
death threats by email (such as Mike Berry, the English ‘scambaiter’ who
exposes Nigerian email conmen by conning them into posing for ludicrous
pictures to be posted on the Internet), without the senders making any
attempts to do anything which might lead to the death of the person in
question.
Is economic analysis relevant to any of the manifestations of hate? Let
us consider further the non-consummated death threats, via email, experience. A rational choice model of economics would predict that the provision of widespread Internet facilities should lead to an increase in the
number of death threats. One could argue that the threatening individuals
conform to even the narrowest definitions of rationality as they are likely
to be conducting the rest of their lives in an entirely ‘normal’ manner. We
can make this same point about many racists, homophobes and suicide
bombers. Issuing threats brings them utility in feelings of revenge and the
satisfaction of scaring others. The harm to others does then fall within the
Glaeser/dictionary definitions. However, the very limited personal cost
involved in sending an email in a situation where there are very few likely
cost risks (the police are not that likely to seek out and arrest individuals
involved in serial hate email campaigns) means that the serious personal
sacrifice element is not present. So, we may accept, under our definition of
hate, that serial hate campaign emailers are indeed exhibiting hate and not
some lesser status negative emotion such as anger. Given this, the prediction of increased non-consummated hate is largely driven by falling
costs of production of hate. It is easier to find email addresses of individuals


The economics of hate

8

in order to reach them than it would be to send letters. It is less physically
and monetarily costly to send an email than it is to send a letter. There are
further economies of scale in blanket threatening of a collective of individuals – for example all members of an animal-using corporation or all
the known abortion doctors. The wider economic issue is whether the
culture created by non-consummated hatred ranging all the way from
death threats down to vehement condemnation of celebrities, on websites
such as amiannoying.org, creates a form of negative social capital which
may breed an increased propensity for consummated hatred in general,
that is not just towards those regularly vilified in typical non-consummated
hate forums.

METHODOLOGY
Mainstream economic methodology has been identified with logical positivism following Milton Friedman’s 1953 essay which diluted and simplified the doctrines of Karl Popper for a wider audience. It is fair to say this
is still the dominant core methodology, notwithstanding assaults from an
ideologically wide range of alternatives such as Austrian, post-Keynesian
(critical realist), Marxist (old style), Institutionalism, social economics,
autistic economics and feminist economics. The key to understanding
the Friedman version of logical positivism is the role of empirical testing.
Empirical testing matters because economics is seen as a science, not a subdiscipline of history or of moral philosophy as it was considered at various
times and places long ago. Testing is of course challenged in philosophy of
science but the bread and butter methodology of economics persists with
the old-fashioned notion of ‘hard’ laboratory science. An empirical test is
not to be a mere test of association between variables as that would render
it mere statistics and not economics. It would be dismissed as ‘measurement without theory’.
Rather, testing in economics is meant to be based on theories or, more
usually, theoretical models. Thus we are testing some kind of hypothesis. For example, we have just discussed informally the hypothesis that
increased Internet provision will lead to a bigger reservoir and expression
of hate in the world. Testing this hypothesis properly requires data. Once
the hypothesis has been tested, we look at the results, which are usually
based on a number of strong (untested) assumptions about the properties of the data-generating process. The scientific research community
then comes to some kind of agreement about how strong support for the
hypothesis is based on tests of statistical significance and judgements about
the adequacy of the data.

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In the worst-case scenario the hypothesis has to be deemed to be rejected
in favour of the null of no relationship between the variables suggested by
the theoretical model. Friedman’s argument is that we should not reject the
theory because of one such instance nor should we accept the theory if the
opposite occurs numerous times. The approach is not one of verification or
seeking ‘proof’ but rather of seeking out the absence of falsification. In an
ideal world this should really involve improvement of the testing apparatus to rule out possibly contaminating factors and improved experimental
design.
Economists have long been noted for not coming anywhere near this
ideal. If we wanted to be cynical we could say they have frequently engaged
in data-mining – that is, repeated exploration of the same sort of data in
the same sort of way with a deliberate intent to produce supposedly statistically ‘good’ results in order to enhance chances of publication.
Despite attempts to improve the validity of data exploration, the discipline of economics still features quite a cavalier attitude to the quality
of data. The major break with data analysis tradition in recent times
has been the emergence of ‘experimental economics’ where subjects are
usually paid and play games subject to instructions given to them by the
researchers. Economists have not extended this approach to the study of
hate although there are substantial precedents in the ‘laboratory’ style
approach in social psychology experiments in the field, starting with the
work of Stanley Milgram (1963) (see Harrington, 2003–4 for a review of
such literature).
Experimental methodology encounters some of the pitfalls in traditional
positivist psychology research, particularly the endless exploration of a
very limited sample of the population – to wit, students. In theory, research
on ultimatum games throws up some relevant issues pertaining to hatred,
but given that the study of hate is not the objective of these studies it is
inevitable that they do not shed much light on it.

EMPIRICAL EVIDENCE ON HATRED
How do we get evidence about hatred? Is this information of any use and
is it of any use to an economic study? If hate is to be treated as an emotion
then one can not reasonably expect there to be series of regular and reliable national statistics, as governments and agencies tend to measure
tangible items rather than emotions. Opinion polls, one-off surveys and
experimental studies can be used to provide some data on the hate emotion
although continuing surveys often only deal with disapproval or anger
and not full-blown hate. For example, 10 of the surveys that have taken


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The economics of hate

place between 1983 and 2000, in the British Social Attitudes Survey (see
Cameron et al., 2006), contained questions about the rights and wrongs of
sexual relations between those of the same sex but nothing stronger than
this on homophobia.
We could look instead at the manifestations of hate. The statistics on
these are, however, usually conditional on the hate activity acquiring the
status of a crime, otherwise it is usually the case that no one will bother
to record them. The most extreme recorded case of unidimensional hate
crime would be the statistics on witch trials and executions which have
produced estimates of many thousands of people (usually women) being
killed in Europe between 1500 and 1700, especially (pro rata) in Germany
and Scotland. The additional details about trials, methods of interrogation, and methods of execution from these records could be used to draw
comparisons about the differential hate intensity in different nations.
Extrapolating this notion, one could draw on the statistics of time engaged
in war, resources put into war and numbers of casualties in war as indicative of hatred. The obvious complication in war is that some of the activity
will be defensive, and therefore can be used to measure the costs of hate
but not the propensity to hate. Likewise, some individuals will be in a situation where they have little option but to engage in attempted murder of
xenophobic or religious origins. The obvious problem with ‘hate crime’
statistics if they are to be used in any serious statistical analysis, is the
differential selection rate over time and across areas. Further, there are
also differences in the degree to which law enforcement agencies filter out
attempts to report such activity or charge the suspected perpetrators. Even
within an area where there is official reporting like the case of homophobic
incidents in the USA, the statistics have been very problematic. Burroway
(2006) reports on the use of FBI statistics by anti-gay activists to claim
that gays are not very victimized at all, and goes on to show how malleable
these statistics are to manipulation, most notably because of the differing
requirements on reporting in different states. One might just want to pause
as preparation for Chapter 7 to reflect on the paradox of groups against
something using the claim that it is not much of a problem as a rhetorical
strategy to deal with it!
Given all this, probably the most reliable source of data on hate is the
court records of murders that have been attributed to hate origins, the most
conspicuous volume of these being in the area of racial murder.
Notwithstanding the various reservations just made about the use of
data in this area we will at various times find ourselves discussing data and
analyses of it (usually econometric). I do not, however, propose to provide
large numbers of tables of incidents of hatred nor the detailed numerical
results of other people’s statistical work. Engagement with empirical work

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will be in the nature of critical reflection rather than attempting to make
any use of parameter estimates that have been produced.

CONCLUSION
This chapter has introduced the idea of studying hate in a general way and
put forward the concept of studying it from an economic point of view.
This is a big leap. Economics is not a subject concerned with hate. In order
to explore how hate may be situated within it, we consider, in the next
chapter, what kind of world view is implied by the discipline of Economics.
As the book progresses, more in-depth discussions of the debates opened
up above will be provided. The practicalities of perpetuating hate as a lone
individual and as a coordinated organization will be explored with respect
to such topics as animal liberation, homophobia, terrorism, workplace
bullying and witchcraft. Ultimately, in Chapter 9, an analysis will be given
of the recent trend, in developed economies, to pass a ‘patchwork quilt’ of
specific issue hate legislation.

NOTE
1. What I mean by this is that the crime could not possibly be attributed to some other cause
such as random physical violence or monetary crimes which might be attributed to hate
because of the identity of the individuals involved.


2.

The quiet and peaceful world of
microeconomics (QPWM)

THE CONCEPTUAL IDEAL OF THE QPWM
This chapter is a trip into the heartlands of the QPWM – the Quiet and
Peaceful World of Microeconomics. It will quickly become clear why we
call it peaceful. Quiet is often associated with peace. Quiet is a word which
might be given different meanings with respect to the core of microeconomic theory. Quiet is the opposite of noise. Some economists like to use
noise as a technical-sounding term borrowed from engineers. They might
talk about the share price for stocks in emerging countries being noisy.
That is, in the sense of the ratio of ‘signal to noise’ which would be quoted
as showing the degree of perfection of an audio system or an information
spreading system. Markets send signals, economists like to say, in the form
of prices. A sudden rise in the price of oil sends a signal that oil is becoming
scarce. If it rises too much too often, or falls too much too often, then the
signals are becoming noisy as the amount of incorrect information is too
large. Quiet and peace are also words that might be associated with the
concept of equilibrium as used in economics. Equilibrium is a state of rest
in which there is no force for change unless an exogenous (from outside the
system) shock occurs. It is fair to say that economists seem to be almost
obsessed with equilibrium. In recent decades as the focus has shifted away
from general equilibrium theory and competition, the field of game theory
still shows a preoccupation with discovering equilibria that might be puzzling to the lay person. An economist might respond that there has been
a lot of work on disequilibrium also but one could counter that this too
shows an obsession with equilibrium.
On the face of it there seems no reason as to why we might not then
proceed to discuss the equilibrium level of hate. In the elementary textbooks of economic theory it is fair to say that one can get through the many
hundred pages without finding any reference to anyone hating anyone
or for that matter anyone loving anyone (bar the deleted book by David
Friedman (1997) which has a chapter on romantic love, and the microeconomics text by Robert Frank (Frank and Bernanke, 2003) which has a
chapter on altruism and thus might be said to be engaging with love). The
12

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most obvious reaction to this statement would be to say that this is not very
surprising, as love and hate are not what economics is all about. Rather, it
is all about interest rates, unemployment, prices, money, stocks and shares,
international trade and GNP. This response of course implies that these
things have nothing to do with love and hate. Since this is Chapter 2 of a
book about the economics of hate, it would seem the claim is being made
here that this is not true. To pursue this further, we need to delineate the
world view that economists put forward. Let us be clear at the outset that I
am to some extent in this chapter expounding a stereotypical or Weberian
‘ideal’ type for the purposes of situating hate in an economic model.
Theoretical works, within a social science discipline, say many things
by omission. The world view which is implied by the practitioners of the
discipline has to be gleaned not just in what they say but how they say it,
the context in which they say it and what they deliberately do not say in the
process of saying what they do say. For example, it has often been pointed
out that economists use words in a way which might appear to be innocuous but can be deemed to be laden with value judgements. Take the notion
of ‘perfect competition’. Why is it perfect? The innocuous answer is that it
is because it is a perfect state akin to the perfect vacuum – that is it is the
ideal of the logical idea of competition. The criticism of this, as ideology,
is that the word ‘perfect’ to the normal person means ideal or excellent in
a normative sense and thus the accumulated weight of repeated use of the
word gives credence to the superiority of the market form of economy.
So why would we say that the world of the core economics textbook
is one of quiet and peace despite the fact that it is depicting a universe of
materialistic striving for profit? As implied above, the quietness of the economics textbook is arrived at by omission rather than design. The bald fact
is that there are no emotions, in any shape or form, to be found in the economics textbook barring the very rare exceptions noted above. Even then,
we could claim that when economists have engaged with emotions, they are
not really doing so in a meaningful sense but just distorting emotions into
an unrecognizable form in order to make them fit into the QPWM.
In the QPWM, individuals interact in a narrow framework of markets
– their reciprocity is thus not social or emotional. It does not matter who
sells you your bread, meat or candlesticks. These are what we call goods or
commodities, depending on your point of view. To the person in the street,
these two ideas are probably equivalent. Most economists talk about goods
and might see the term ‘commodities’ as having the faint ring of Marxism,
given Karl Marx’s promulgation of the concept of ‘commodity fetishism’
as the driving factor in markets. Commodities also tend to be the word
used by people of an anthropological bent. It does not seem to have led to
any long-lasting repercussions, but the distinction was addressed forcefully


14

The economics of hate

in Gary Becker’s model of the allocation of the theory of time (Becker,
1965). Becker termed items which we buy in the market for a price, such as
wood and nails, as goods. If we combine these with our time effort inputs,
or those of other people in the family, then we have engaged in household
production which generates commodities. Although there is much literature on the economics of the family, and household production, no one
has been particularly excited about the use of the word commodities per se.
Anticipating Chapter 3, we may note that the basic port of entry for allowing hate into an economic model is to have it become a good or commodity.
A person engaged in hate production could buy everyday household goods
such as petrol and sugar and turn them into bomb-making equipment to
kill an abortion doctor, animal-using producer or politician and so on.
Likewise they could buy a video conveying violent racist or sexist content
and take the time to consume it. Although the literature of economics says
little about hate, it does not give any reason why these products would not
exist. Nor does it say that there is any mechanism in markets which should
tend to eliminate them. As implied, in the discussion in the last chapter,
economic analysis might lead us to expect that there have been increasing
volumes of hate displays in recent times.
The ultimate object of production, in economics, is to increase the utility
of an individual (or family or other group). Utility is a concept that economists first agreed to adopt as a general term, around 1890–1910, during the
‘marginal revolution’ in economics pioneered by William Stanley Jevons
(in England) and Leon Walras (in Switzerland). We will have cause to
explore utility more deeply, in the context of hate, in Chapters 3 and 4.
For the moment, let us state the basics. Utility is an index of the satisfaction or well-being or welfare that an individual derives from their basket
of goods/commodities. Originally, economists sought to measure utility in
the idiom of weight or temperature. That is, as a number capable of meaningful ratio measurement. This use of cardinal utility reached its zenith in
the Marshallian concept of consumer surplus where a money measure is
assigned to the gain people get from being able to buy all units of a good at a
constant price, rather than the maximum price they would be willing to pay.
If we go back to the hateful bomb-maker, then we could suggest that their
consumer surplus from petrol and sugar, both commodities being sold at a
fixed price per consumer, would be higher than that of an otherwise identical
person, as the value of the items is enhanced by the lethal potential unleashed
when subject to a suitable process of production. That is, the market prices
are determined by the marginal consumer who needs these products for fuel
and sweetening, not by the added value as bomb ingredients.
As economics became more mathematically formal, cardinal utility
was progressively dismissed as ‘unscientific’ and therefore unacceptable

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as economics strove to attain scientific status. Economists have, however,
been reluctant to give up the notion of measurable utility despite the obvious
problem that it is very difficult to believe that, for example, my utility today
can be compared with my utility five years ago or that my utility can be
compared with yours or that of a peasant, with bubonic plague, many
hundred years ago. Attempts to measure utility keep rearing their heads. At
various times we have had (amongst other more esoteric efforts):





attempts to produce ordinal measures based on risk aversion (see
Alchian, 1953) inspired by the development of the theory of games;
the use of contingent valuation methods inspired by environmental
research in the 1980s onwards – basically asking people to nominate
losses and gains at different stated bundles of situations;
the current obsession with econometric work using surveys on
‘Happiness’ (see for example Ferrer-i-Carbonell and Frijters, 2004;
Frey and Stutzer, 2002, 2005) using data and methods that would
have been laughed at when economic theory was ‘going hard’ in the
1950s and when it went numerically ‘hard’ as econometric testing
swept the profession.

Notwithstanding the above, the usual textbook approach is to present
cardinal utility as a helpful heuristic to get across the derivation of the
individual demand curve. Then we get told about the cardinal vs. ordinal
utility distinction and are left with the impression that ordinal utility (as
demonstrated in the indifference curve diagrams to be found below) is the
more correct and scientific approach. Vital to this theoretical enterprise is
the introduction of the notion that marginal utility, as opposed to total or
average utility, is decisive in individual choice. Although utility is deemed
to be immeasurable, in the textbook universe, we are given the belief that
there is a law of diminishing marginal utility. There appears to be a contradiction here (but it does not really need to be faced) as no attempt is made
to empirically validate the law of diminishing marginal utility. Diminishing
returns run through the whole of economics. We find diminishing marginal
productivities of capital and labour, when we move to the theory of industrial production. If we extrapolate this central proposition, of diminishing
returns, then one thing we might expect in the field of economics of hate
is diminishing marginal utility of hate, that is, if we proceed to treat hate
as a conventional good/commodity and the hater as a rational consumer
like all the rest of us. We shall have cause to question this in the next few
chapters. For the moment, let us explain how it would be operational in
the QPWM. A person sits down, let us say, to listen to the CD they have
bought from a musical ensemble formed purely to promote extreme racist


The economics of hate

16

attitudes (such as the now defunct UK band ‘Dead Paki in the Gutter’).
Despite the fact that they approach this with great enthusiasm, they find
that each additional minute of the CD adds less to their total satisfaction
than the previous minute. This does not mean they will get fed up, toss
their racist CD in the bin, go into the next room, and watch Walt Disney
cartoons and never consume another racist item. This takes us to the next
section on the process of choice in the QPWM.

INDIVIDUAL CHOICE
In the real world, an individual faces a potentially bewildering array of
options meaning that their decision-making activity might be thought to
be very difficult to analyse clearly. The quickest way to cut through this
is to make drastic assumptions about knowledge. Specifically, those individuals have accurate knowledge of all relevant items including their own
tastes and changes in future prices and likely decisions of other individuals. This extreme simplification removes all issues of risk and uncertainty
from choice.
So let us visit the well-worn path of conceptualizing choice from an economics point of view. The basic model is that the agent (person, family,
manager of a firm, whatever) maximizes their utility subject to constraints.
Utility is, as argued above, not seen to be directly measurable in any kind
of units. The ‘utils’ of a mathematical economics textbook do not exist.
Notwithstanding this, and the textbook tales of diminishing marginal
utility, the agent is able to maximize their utility by making an optimum
arrangement amongst the options open to them. The dedicated racist thug
who has a job, which affords no opportunities for racism as such, will
face substitution effects against time spent in racist activities if their wage
goes up. This is an illustration of the notion of ‘opportunity cost’. Time
is money, and time spent at the weekend beating up the disliked group
is forgone earnings. Granted, an individual at a point in time may have
inflexible working hours, but over a period of time they could still exhibit
their substitution effect by switching to a job which provides more units
of ‘leisure’ to input into the hate production function. Substitution effects/
opportunity costs provide the rationale for anti-hate legislation. That is,
such legislation will generate the following ‘costs’ to the would-be hater:




direct costs such as fines, prison sentences or curfews;
indirect costs such as lost career opportunities;
indirect costs of bad reputation due to wider knowledge of the hate
attitude.

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