A "Me-Too" Externality?
By Pierre Lemieux
Except if one strictly restricts the concept of externality to effects that trespass upon other people’s property, it encompasses so many phenomena that it is meaningless. This is not an unknown problem in economics. Welfare economist E.J. Mishan noted that technically, “an awareness of what is happening to others” is an externality (Introduction to Normative Economics, 1981, p. 135—emphasis in original). James Buchanan suggested a solution: the only effects that count as externalities are those that infringe on the individual rights defined by the constitutional (or social) contract (The Limits of Liberty, p. 124).
Trigger warning: What follows would be as valid if one replaced “man” with “woman” and vice-versa, or even used only “man” or only “woman,” but at the cost of some statistical relevance. My goal here is not to take a stance on any specific case, where circumstances and the nature of the alleged act matter. We do know instances–the famous Duke University lacrosse case was one–where false accusations were made. I am interested in the economics of false sexual accusations. From this viewpoint, at least three points are worth making.
If, in our externality story, we extend the concept of property to include somebody’s liberty or (more controversially) reputation, then a woman who falsely accuses a man of sexual interference produces a negative externality for all those who have really been raped. When false or opportunistic accusations are suspected or become known, the real victims are less likely to be believed.
When a woman falsely accuses a man of sexual interference, incentives may generate another sort of negative externality—this one against all men. If any man is fair game for a sexual interference accusation, then a deep-pocketed or government employer, especially when filling a publicly-visible job, has an incentive to hire a woman instead of a man.
It is true, on the other hand, that if a bona fide accusation is ignored, a negative externality is transferred to future real victims. The balancing of externalities was partly made by the legal principle that it is better to let a guilty person escape justice than to condemn an innocent. This principle incorporates a salutary fear of government power.