Weighing Social Cost and Benefits

UNIT I
Weighing Social Cost and Benefits

Date: 16/12/21
Dr. Murtaza Hassan Itoo
Assistant Professor,
Postgraduate Department of Management Studies
Cluster University of Srinagar.
Utilitarianism: Weighing Social Costs and Benefits
• Utilitarianism (or consequentialism)

characterizes the moral approach taken by
Caltex’s management.
• Another example, Ford and its infamous
Pinto, demonstrates just how closely the
weighing of costs and benefits can be done
• Ford knew that the Pinto would explode when col
lided at only 20 mph, but they also knew
that it would cost $137 million to fix the problem.
• Since they would only have to pay $49
million in damages to injured victims and the fami
lies of those who died, they calculated that it
was not right to spend the money to
fix the cars when society set such a low price on th
e lives and health of the victims.
• The kind of analysis that Ford managers used in th
eir cost-benefit study is
a version of what has been traditionally called utili
tarianism.
• Utilitarianism is a
general term for any view that holds that actions and polici
es should be evaluated on the basis
of the benefits and costs they will impose on society.
• In any situation, the "right" action or
policy is the one that will produce the greatest net benefits
or the lowest net costs (when all
alternatives have only net costs).
• Many businesses rely on such utilitarian cost-
benefit analyses, and maintain that the socially responsible
course to take
is the utilitarian one with the lowest net costs.
• Jeremy Bentham founded traditional utilitarianism.
• For Bentham:
• "An action is right from an ethical point of view if
and only if the sum total of utilities produced by that act is
greater than the sum total of utilities produced by
any other act the agent could have performed in its place."
• Also,
• It
is important to note that only one action can have the lowe
st net costs and greatest net benefits.
• To determine what the moral thing to do
on any particular occasion might be, there are three
considerations to follow:
• You must determine what alternative actions are available.
• You must estimate the direct and indirect costs and benefits th
e action would produce
for all involved in the foreseeable future.
• You must choose the alternative that produces the greatest sum
total of utility.
• Utilitarianism isalso the basis of the techniques of economi
c costbenefit analysis.
• This typeof analysis is used to determine the desirability of
investing in a project (such as a dam, factory,
or public park) by figuring whether its present
and future economic benefits outweigh its present
and future economic costs.
• To calculate these costs and benefits, discounted monetary
prices are estimated for all the effects the project will have
on the present and future environment and on present
and future populations.
• Some benefits and costs are impossible to
measure. How much is a human life worth, for example?
• The potential benefits and costs of
an action cannot always be reliably predicted, so
they are also not adequately measurable.
• It is unclear exactly what counts as a benefit or
a cost. People see these things in different ways.
• Utilitarian measurement implies that all goods can be
traded for equivalents of each other.
• However, not everything has a monetary equivalent.
Rights and Duties
• In general, a right is
a person's entitlement to something; one has a right to somethi
ng when one is entitled to act a certain way or
to have others act in a certain way towards oneself.
• An entitlement is called a legal right.
• Rights can come from laws or moral standards; the
latter are called moral rights or human rights.
• They specify, in general, that all humans are permitted to
do something or are entitled to have something done for them.
• Rights are moral claims of individuals recognized by
society.
• Duties are moral debts or obligations of individuals
recognized by society.
• Bosanquet says, “Rights are claims recognized by society
acting as ultimate authority, to the maintenance of
conditions favourable to the best life”.
• Rights reside in some individuals; they have rights to
certain things which are necessary for their self-
realization.
• Duties are moral obligations, on the part of other individuals,
to respect those rights.
• The individuals also having certain rights are under moral
obligation to use them well for the common good.
• Rights and duties are ultimately based upon the same moral
laws and relations.
• The society grants certain rights to its individual members for
their own good and the good of the society.
•A man has no right to anything by himself. The society
concedes certain rights to him, which are conducive to the
social good.
• Rights and duties are correlative to each other.
• Duties are moral obligations.
• Every right brings an obligation with it.
• When one man has a right, other men are under
moral obligation to respect it, and he himself is under
moral obligation to use it for the common good.
• Justice means giving each person what he or she deserves or,
in more traditional terms, giving each person his or her due.
• Justice and fairness are closely related terms that are often
today used interchangeably.
• There have, however, also been more distinct understandings
of the two terms.
• While justice usually has been used with reference to a
standard of rightness, fairness often has been used with regard
to an ability to judge without reference to one's feelings or
interests; fairness has also been used to refer to the ability to
make judgments that are not excessively general but that are
concrete and specific to a particular case.
• Principles of Justice
The most fundamental principle of justice—one that has been
widely accepted since it was first defined by Aristotle more
than two thousand years ago—is the principle that "equals
should be treated equally and unequals unequally."
• In its contemporary form, this principle is sometimes
expressed as follows: "Individuals should be treated the same,
unless they differ in ways that are relevant to the situation in
which they are involved."
• For example, if Jack and Jill both do the same work, and there
are no relevant differences between them or the work they are
doing, then in justice they should be paid the same wages. And
if Jack is paid more than Jill simply because he is a man, or
because he is white, then we have an injustice—a form of
discrimination—because race and sex are not relevant to
normal work situations.
• On the other hand, there are also criteria that we believe are
not justifiable grounds for giving people different treatment. In
the world of work, for example, we generally hold that it is
unjust to give individuals special treatment on the basis of age,
sex, race, or their religious preferences.
• If the judge's nephew receives a suspended sentence for armed
robbery when another offender unrelated to the judge goes to
jail for the same crime, or the brother of the Director of Public
Works gets the million dollar contract to install sprinklers on
the municipal golf course despite lower bids from other
contractors, we say that it's unfair.
• We also believe it isn't fair when a person is punished for
something over which he or she had no control, or isn't
compensated for a harm he or she suffered.
• Justice, then, is a central part of ethics and should be given
due consideration in our moral lives.
• In evaluating any moral decision, we must ask whether our
actions treat all persons equally. If not, we must determine
whether the difference in treatment is justified: are the criteria
we are using relevant to the situation at hand? But justice is
not the only principle to consider in making ethical decisions.
• Sometimes principles of justice may need to be overridden in
favor of other kinds of moral claims such as rights or society's
welfare.
• Nevertheless, justice is an expression of our mutual
recognition of each other's basic dignity, and an
acknowledgement that if we are to live together in an
interdependent community we must treat each other as equals.

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UNIT I

Weighing Social Cost and Benefits

• Utilitarianism (or consequentialism)

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