Tuesday, December 22, 2009

Personifying "the market"

Here's an odd sentence from the current NYT headline story:
In an early indication that the Copenhagen accord failed to satisfy the market, the price of permits to emit greenhouse gases tumbled on Monday.

Can anyone think of what it might mean to "satisfy the market" (in this context), and why lower prices for a particular commodity should be taken to indicate any such general "dissatisfaction"?

I gather that the underlying economic fact they're reporting on is something like the following: the falling price of emission permits indicates that the Copenhagen accord did not reduce the legal cap or 'supply' of GHG emissions as much as investors expected. But what justifies glossing this as "failing to satisfy the market"? (Does 'the market' here just mean 'people who invested in greenhouse gas permits'?) It sounds suspiciously like empty rhetoric. Am I missing something?


  1. It's a wrong personification. What it should say is:

    "People were expecting that the cost of permits would rise once they were capped by a possible plan in Copenhagen. When this failed to happen, people sold their permits, showing a lack of trust that a deal will be reached/whatever came out of Copenhagen is of any substance."

    They take that "market expectations" (ie people who were buying permits) were that prices would rise due to a deal. Reality failed to go as far as the people expected it to go, so prices dropped.

  2. Maybe "convince" would have been better than "satisfy", but I think it's going a bit far to call it empty rhetoric. Everyone knows "the market" isn't a person, but "the market wasn't satisfied" is just much more comprehensible than "investors tended to behave so as to lower the price". Just like "he was struck by lightning" is easier than "electrons tended to behave so as to electrocute him".

  3. Teddy - my worry is that while "he was struck by lightning" gives a perfectly accurate impression of what occurred, to say that "the market wasn't satisfied" struck me as misleading. At least to my ear, it seemed to suggest a kind of normative judgment: that this was bad for the economy, or some such. (Perhaps this is because the main other contexts where I've heard such a phrase used is in response to stimulus bills, policies meant to restore broader investor confidence, etc. Big macroeconomics stuff, in other words.)

    So my worry isn't just the banal one that the market isn't a person, but that even speaking metaphorically it seems misleading to describe the price of a single commodity as reflecting anything about "the market" as a whole. Sloppy personification just makes it a lot easier for journalists to do this sort of thing, and so insert implicit normative judgments without having to actually defend them.

    (The Copenhagen accord may indeed be disappointing in various respects, but this -- the price of GHG permits -- surely isn't an intrinsically relevant reason either way.)

    On the other hand, it may just be an awkwardness of the wording. I probably wouldn't have been so struck if it had merely said that the Copenhagen accord failed to satisfy market expectations. (Context would make clear that these expectations were specifically about the supply and demand for GHG permits, and didn't necessarily have broader implications.) Again, my worry is just that their actual choice of words -- 'the market' -- misleadingly suggests something of broader significance. Maybe that's just an idiosyncratic reading on my part. But if others find this phrasing to have similar connotations, then it would be misleading rhetoric.


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