PROJECT REPORT

An Ethical Perspective on Risk-Benefit Analysis

Ram K Sharma
4/22/2013

Ram K Sharma

Table of Contents
I. II. III. IV. V. VI. ABSTRACT2 INTRODUCTION.3 PERSONAL INTEREST IN THE CASE3 RELEVANCE TO THE SOCIETY.4 METHODOLOGY4 ETHICAL ANALYSIS.5 Conceptual and application issues...5 Rights Perspective..6 Golden Rule Test6 Self-defeating Test.................................................................................................6 Cost-benefit Analysis.6 Utilitarianism..7 VII. RESULTS...7

VIII. CONCLUSION..8 IX. REFERENCES..9

Ram K Sharma

An Ethical Perspective on Risk-benefit Analysis

Abstract Risk-benefit analysis provides a systematic approach to compare the risk of a situation to its related benefits. Most situations require us to do risk-benefit analysis since it highly influences the decisions we make. For instance, we are more than willing to accept the risks involved in driving a car or working in a chemical plant since the related benefits outweigh the risks. The same approach is used by several companies involved in design, manufacturing, and policy making. Risk-benefit analysis emerged out of the development of product liability, where companies choose to take precaution if the expected harm exceeds the cost to take the precaution, whereas it is not required if the cost is liable. Although this analysis is an economically efficient method and it has been legally supported, it does not necessarily imply that it is always ethical. In this paper, I have used several ethical tools to determine if risk-benefit analysis should be used in situations where defects in design, manufacturing, and policy making could impose threat to human life or well-being such as in the Ford Pinto Case. This case involves the manufacture of a subcompact car called Pinto by the Ford Motor Company. Although the company was aware of the defective design in the car that could lead to the loss of human lives, it decided not to implement any newer designs based on risk-benefit analysis. I have analyzed this case based on rights perspective, self-defeating test, golden rule test, costbenefit analysis, and utilitarian principles. These tests led to a conclusion that it was not ethical for the Ford Motor to use risk-benefit analysis in this particular case. In general, risk-benefit analysis is unethical to use in situations that has human death or injury as possible risks since value of human life cannot be expressed in monetary terms.

Ram K Sharma

Introduction Wikipedia defines Risk-benefit analysis as the comparison of the risk of a situation to its related benefits. It is essential to accept a certain level of risk in order to achieve certain benefits. Risk-benefit analysis is an effective tool in a decision making process. The decisions that generate benefits which outweigh the associated risk are considered as the proper decision. This approach is commonly used by companies involved in design, manufacture, and policy making to make decisions regarding their products or services. A companys product has several potential risks attached to it and it has to take precautions before launching the product in the market. The precautions are taken only when the expected harm exceeds the cost to take the precaution. This analysis is commonly used by companies to justify their products like the Ford Motor Company did in Ford Pinto Case.

Ford Pinto Case In 1968, the Ford Motor Company introduced a subcompact car called Pinto in the market. Although the sales were great for the first few years, there were several cases of explosion of the model due to a defective fuel system design. The gas tank was likely to rupture when rear end collision occurred at an impact speed of 20 mph or greater leading to fire and explosion. The Ford motor knew about the problems and could have implemented a new design to prevent such incidents which it had access to. This newer design would have cost $11 per car. However, the company chose not to implement the design although it was aware of the fact that implementing the new design would result in 180 fewer deaths. The company argued that the monetary costs of implementing the new design were greater than the benefits. This argument is based on the grounds of risk/benefit analysis. According to the company, it would cost $137

Ram K Sharma

million to implement the new design to prevent the deaths, injuries, and damages worth $49.5 million and hence, the company was able to defend itself based on cost/benefit analysis which seemed to be legal. Although it was legal for the company to do so, it does not mean that it was ethically correct.

Personal Interest in the case As a chemical engineer, I will be responsible for designing several processes and manufacturing new chemical products. I will involve in designs that might have several safety issues attached with it. Thus, I have to use risk-benefit analysis frequently to make decisions regarding new processes and products. Since, I have to abide by the professional engineering code of ethics; my top concern should always be the safety, health, and welfare of the public. There are a lot of lessons a prospective engineer can learn from this case. I think that the design engineers involved in this case did not abide by the code of ethics since the safety of the public was not made the top concern. They should have avoided the faulty designs in the first place and even after the management decided to go with the faulty design they should have raised a concern against it. So, as a prospective engineer, I have a great interest in this case since there are a lot to learn from it.

Relevance to the Society There are several companies that are always trying to consider new designs and manufacture new products and their main concern is making a profit. Risk-benefit analysis is frequently utilized by them to gain an upper hand in the market. In doing so, it is likely that they might jeopardize the safety and welfare of the public. The Ford Pinto case clearly indicates that

Ram K Sharma

such situations are likely to occur in the current era of newer designs and technology. So, it is essential that the companies consider the ethical dimensions of their decisions in addition to meeting the legal criteria. One important lesson this case teaches us is that when there are situations where the new designs or products create a major threat to human life, then those designs or products should be considered to be faulty and should not be made available for public use even though the legal standards are met.

Methodology The Ford Pinto Case sheds light in the moral dilemma of applying risk-benefit analysis. To determine whether the Ford Motors use of risk-benefit analysis to avoid implementing the newer design was ethical, I considered using utilitarian approach and respect for persons approach. According to utilitarian approach, harm to an individual can be justified by a larger benefit overall whereas respect for persons approach is based on the idea that there are some things that could not be done to individuals, regardless of the overall benefit. Golden rule test, self-defeating test, rights perspective, cost-benefit analysis, and act utilitarian are some ethical tools that I will be using to analyze this case. According to golden rule test, actions are morally impermissible if the actor would not be willing to be the recipient of the action. Self-defeating test is based on the idea that actions are morally impermissible if the universalization of that action makes it impossible to accomplish. According to rights test, individuals have certain inalienable rights that cannot be violated. Act utilitarianism considers the action with best consequences to be right. Cost-benefit analysis determines an action to be right if its benefits outweigh the costs. The act of using risk-benefit analysis will be ethically analyzed using these ethical tools.

Ram K Sharma

Ethical Analysis Conceptual and application issues Before performing an ethical analysis using the ethical tools from methodology above, one should be aware that there are several conceptual and application issues involved in this case. Some of the key concepts that we should be aware are risk, benefit, and minimal risk. Risk is the probability of harm or injury (physical, psychological, social, or economic) occurring in a situation. Benefit is an advantage or profit gained. A risk is considered minimal if the probability and magnitude of harm are not greater than those generally encountered or accepted. The application issue in this case is determining how much a human life is worth and this is one of the reason risk-benefit analysis cannot be used as did by the Ford Motors since it seems unethical to allow people to die or get injured based on the reasoning that the cost to prevent the death or injury is too high. Rights Perspective Based on the rights perspective, life bodily integrity and mental integrity comes under the Tier 1 right that is it is the most basic right of an individual. If an individual has a right to life, then the Ford motor should respect that right of the individual in any circumstances. Although, it was aware of the faulty design present in the car that would cause loss of human lives, it decided not to make any changes. This indicates disrespect to an individuals rights and makes this act of the company unethical. In general, based on rights perspective it is unethical to use the riskbenefit analysis in situations that imposes danger to human life.

Ram K Sharma

Golden Rule Test Based on golden rule test, the personnel at Ford Motor who designed and introduced Ford pinto should be willing to be those people who have been severely injured or died due to the faulty design. I do not think that they would be willing to do so. Since no one is voluntary willing to die or get injured, it is unethical to create designs or products that would result in death or injury of an individual even if it is suggested by risk-benefit analysis. Self-defeating Test The Ford Motor wanted to gain a large market share by introducing a cheap Ford Pinto model and thus, it wanted to keep the cost of the car as low as possible even though that meant compromising the safety of the car. If all the car manufacturing companies decide to follow in the same footsteps of the Ford, then it would not be possible for the Ford Motor to gain the large market share. That is it would not be able to accomplish the goals behind their action. So, based on the self-defeating test, it is morally impermissible for the Ford Motor to gain benefit by compromising the safety of the public. Cost-benefit Analysis The Ford Motor defended itself on the grounds of cost-benefit analysis that the cost of implementing newer designs was too high compared to the risks associated to human life and property. Cost-benefit analysis is a common tool used by several companies to defend their designs or products ethically. However in situations where human life is involved, one major flaw in using this ethical tool is the monetary value associated with human life. Human life cannot be measured just in terms of dollars. So, the idea of trying to justify using risk-benefit analysis by assigning a monetary value to human life is flawed in itself.

Ram K Sharma

Utilitarianism Act utilitarianism looks at the consequences of the acts. In this case, the act would be the decision made by the Ford Motor to introduce unsafe car in the market. If we look at the harm it caused to the public, negative publicity it generated for the company, and huge amount lost in settling the lawsuit this particular action did not have the best consequences. Although it looks like a company gains an economic advantage by applying risk-benefit analysis in situations involving the safety and welfare of human-being, such an action cannot be defended based on the utilitarian principle since it is less likely that an action or decision generates greater consequences by causing death or injury to people.

Results After ethically analyzing the Ford Pinto case using several ethical tools, one can easily see that it was not ethical for the Ford Motor to use risk-benefit analysis to manufacture a car with faulty design that could cause damage to human lives. The main arguments here are that human life cannot be expressed in monetary terms and right to life bodily integrity and mental integrity are the most fundamental rights of an individual. The main objective of the products manufactured or services provided by a company should be promoting the safety and welfare of the public. Thus, it seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it. It is unethical for a company to create designs or products that would cause human death or injury and justify them based on risk-benefit analysis.

Ram K Sharma

Conclusion Risk-benefit analysis is an excellent and efficient tool used by several companies in making economic decisions regarding a design, product, or policy. However, looking at this matter from ethical view point, it is unethical for them to solely make decisions based on the cost-benefit analysis in situations that has human death or injury as possible risks. As shown by the ethical analysis of the Ford Pinto case, it is unethical for a company to assign a cost to human life and take human death or injury as an acceptable risk. As an engineer, I suggest that the safety, health, and welfare of the public should be the top concern of everyone and any actions that will jeopardize those aspects should be considered unethical.

Ram K Sharma

References Charles E. Harris, Michael S. Pritchard, and Michael J. Rabins.Engineering Ethics: Concepts and Cases, 4th ed. (Belmont,CA: Wadsworth, 2009) pp. 167-173. Lisa H. Newton, Maureen M Ford. Taking sides.Clashing views in business ethics and society. Dubuque, Iowa: McGraw-Hill, 2006. Douglas Birsch, John H. Fielder. The Ford Pinto case: a study in applied ethics, business, and technology. Albany, NY: State University of New York Press, 1994. Christopher Leggett. The Ford Pinto Case: The Valuation of life as it applies to the negligenceefficiency argument. Internet: http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/ Leggett-pinto.html, Spring, 1999 [March 20, 2013].

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