Philosophy 20: Ethics

Pierce College

Department of History, Philosophy, & Sociology

Lecture Notes for Kelman's "Cost-Benefit Analysis: An Ethical Critique"

Cost-benefit analysis claims:

1) We ought not do something if the costs outweigh the benefits.

2) To determine if we ought to do something we should "express all benefits and costs in a common scale or denominator, so that they can be compared with each other."

3) Policy-makers need to know the costs and benefits and this justifies the costs needed to gather the relevant data.

Kelman's conclusion:

1) There may be situations where something is right despite the costs.

2) Not everything can be quantified in the cost-benefit calculus.

3) The expense of collecting data for cost-benefits analyses is not always justified.

Those who invoke cost-benefit analyses usually fail to recognize that such analyses rest on problematic, Utilitarian foundations.

"It is amazing that economists can proceed in unanimous endorsement of cost-benefit analysis as if unaware that their conceptual framework is highly controversial in the discipline from which it arose–moral philosophy."

(Important: The pains and pleasures associated with doing what is morally good or morally bad cannot figure into the calculation. Calculations that use such pains and pleasures to determine the morality of an action beg the question.)

Problem #1 / Man in Nazi Germany

"Imagine the case of an old man in Nazi Germany who is hostile to the regime."

"He is wondering whether he should speak out against Hitler."

"If he speaks out, he will lose his pension."

"And his action will have done nothing to increase the chances that the Nazi regime will be overthrown: he is regarded as somewhat eccentric by those around him, and nobody has ever consulted his views on political questions."

"Recall that one cannot add to the benefits of speaking out any satisfaction from doing 'the right thing,' because the purpose of the exercise is to determine whether speaking out is the right thing."

"How would the utilitarian calculation go?"

"The benefits of the old man's speaking out would, as the example is presented, be nil, while the costs would be his loss of his pension."

"So the costs of the action would out-weigh the benefits."

"By the utilitarians' cost-benefit calculation, it would be morally wrong for the man to speak out."

Problem #2 / Frozen Man's Promise

"Another example: two very close friends are on an Arctic expedition together."

"One of them falls very sick in the snow and bitter cold, and sinks quickly before anything can be done to help him."

"As he is dying, he asks his friend one thing, 'Please, make me a solemn promise that ten years from today you will come back to this spot and place a lighted candle here to remember me.'"

"The friend solemnly promises to do so, but does not tell a soul."

"Now, ten years later, the friend must decide whether to keep his promise."

"It would be inconvenient for him to make the long trip."

"Since he told nobody, his failure to go will not affect the general social faith in promise-keeping."

"And the incident was unique enough so that it is safe to assume that his failure to go will not encourage him to break other promises."

"Again, the costs of the act outweigh the benefits."

"A utilitarian would need to believe that it would be morally wrong to travel to the Arctic to light the candle."

Duties and Rights / "conscious deliberation"

For Kelman, there is a place for cost-benefit analyses, outside of issues having to do with "freedom of speech or trial by jury."

"The notion of human rights involves the idea that people may make certain claims to be allowed to act in certain ways or to be treated in certain ways, even if the sum of benefits achieved thereby does not outweigh the sum of costs."

"If duties or rights do conflict, a moral judgment, based on conscious deliberation, must be made."

Example

"When officials are deciding what level of pollution will harm certain vulnerable people–such as asthmatics or the elderly–while not harming others, one issue involved may be the right of those people not to be sacrificed on the altar of somewhat higher living standards for the rest of us."

"But more broadly than this, many environmentalists fear that subjecting decisions about clean air or water to the cost-benefit tests that determine the general run of decisions removes those matters from the realm of specially valued things."

Common measures are needed if one is to compare costs to benefits.

But we usually squirm when assigning monetary value to things like "human life itself," and "peace and quiet, fresh-smelling air, swimmable rivers, spectacular vistas [etc.] ... ."

But people do seem willing to put prices on many of those things, economists point out.

When you buy a house, something that can have a monetary value, it comes bundled with things that don't have direct market value, like views etc.

"[F]resh air is not marketed, but houses in different parts of Los Angeles that are similar except for the degree of smog are."

Some value quiet more than others.

Problem

"[T]o use the property value discount of homes near airports as a measure of people's willingness to pay for quiet means to accept as a proxy for the rest of us the behavior of":

1] "those least sensitive to noise,"

2] "airport employees (who value the convenience of a near-airport location)" or

3] "others who are susceptible to an agent's assurances that 'it's not so bad.'"

Pre / Post Valuations

"[T]he attempts of economists to measure people's willingness to pay for non-marketed things assume that there is no difference between the price a person would require for giving up something to which he has a preexisting right and the price he would pay to gain something to which he enjoys no right."

"[M]ost people would insist on being paid far more to assent to a worsening of their situation than they would be willing to pay to improve their situation."

Private v Public

"Those who use figures garnered from ["private"] analysis to provide guidance for public decisions assume no difference between how people value certain things in private individual transactions and how they would wish those same things to be valued in public collective decisions."

"[W]e show [it is argued] by our daily risk-taking behavior that we do not value life infinitely, and therefore our public decisions should not reflect the high value of life that proponents of strict regulation propose."

"[P]ublic, social decisions provide an opportunity to give certain things a higher valuation than we choose, for one reason or another, to given them in our private activities."

"Precisely because we fail, for whatever reasons, to give life-saving the value in everyday personal decisions that we in some general terms believe we should give it, we may wish our social decisions to provide us the occasion to display the reverence for life that we espouse but do not always show."

Valuing

"[T]he very act of [assigning a cost to something] will reduce the thing's perceived value."

"To place a price on the benefit may, in other words, reduce the value of that benefit."

"Cost-benefit analysis thus may be like the thermometer that, when placed in a liquid to be measured, itself changes the liquid's temperature."

"The first reason that pricing something decreases its perceived value is that, in many circumstances, non-market exchange is associated with the production of certain values not associated with market exchange."

"The willingness to pay for sex bought from a prostitute is less than the perceived value of the sex consummating love."

"(Imagine the reaction if a practitioner of cost-benefit analysis computed the benefits of sex based on the price of prostitute services.)"

"The second way in which placing a market price on a thing decreases its perceived value is by removing the possibility of proclaiming that the thing is 'not for sale,' since things on the market by definition are for sale."

"To state that something is not for sale is thus also a source of value for that thing, since if a thing's value is easy to affirm or protect, it will be worth more than an otherwise similar thing without such attributes."

"If we proclaim that something is not for sale, we make a once-and-for-all judgment of its special value."

Some things NFS are extra-special: they are "priceless," or have "infinite value."

"Such expressions are reserved for a subset of things not for sale, such as life or health."

"Economists tend to scoff at talk of pricelessness."

"For them, saying that something is priceless is to state a willingness to trade off an infinite quantity of all other goods for one unit of the priceless good, a situation that empirically appears highly unlikely."

"Its value-affirming and value-protecting functions cannot be bestowed on expressions that merely denote a determinate, albeit high, valuation."

But we do assign values to human lives.

The objection goes like this: we value human life "in effect," so we might as well be straightforward and explicit about it.

"If government regulators promulgate a regulation that saves 100 lives at a cost of $1 billion, they are 'in effect' valuing a life at (a minimum of) $10 million, whether or not they say that they are willing to place a dollar value on a human life."

Kelman's response:

"This argument misconstrues the real difference in the reasoning processes involved."

"In cost-benefit analysis, equivalencies are established in advance as one of the raw materials for the calculation."

"One determines costs and benefits, one determines equivalencies (to be able to put various costs and benefits into a common measure), and then one sets to toting things up—waiting, as it were, with bated breath for the results of the calculation to come out."

"The outcome is determined by the arithmetic; if the outcome is a close call or if one is not good at long division, one does not know how it will turn out until the calculation is finished."

"In the kind of deliberative judgment that is performed without a common measure, no establishment of equivalencies occurs in advance."

"Equivalencies are not aids to the decision process."

"In fact, the decision-maker might not even be aware of what the 'in effect' equivalencies were, at least before they are revealed to him afterwards by someone pointing out what he had 'in effect' done."

"The decision-maker would see himself as simply having made a deliberate judgment; the 'in effect' equivalency number did not play a causal role in the decision but at most merely reflects it."

"Given this, the argument against making the process explicit is the one discussed earlier in the discussion of problems with putting specific quantified values on things that are not normally quantified–that the very act of doing so may serve to reduce the value of those things."