You should read the law review article. It really is interesting. But in any event, the decision of where to install the Pinto gas tank was not primarily driven by a narrow goal of profitablity, but by a strategic goal of producing a car that was less than 2000 pounds and $2000 dollars. The placement of the tank was primarily driven by the fact that any alternative would have excessively reduced the trunk space in a car of that size. Ford was aware that the placement of the gas tank created special risks, but the placement of the gas tank anywhere would have created special risks (which is also inherent in producing any smaller/less expensive car). Ford did prepare cost-benefit analysis for certain changes to the tank (which valued a human life at $200,000), but the analysis was not for internal decision-making but for the NHSTA, which was considering a rule change for all automobiles, not simply the Pinto, and Ford wanted to show the cost for millions of cars vs. the expected life savings (the $200k number was used by the NHSTA). The analysis did not take into consideration any possibility that the tank placement would be deemed a defect and there would be jury awards. Ford never thought the car was unsafe or had a design defect. At the end of the day, while the Pinto had special risks, it was no worse than other comparable cars produced at the time.
The Pinto case is instructive because it shows the uneasy interaction between cost/benefit analysis and a tort system. In the US fault-based tort system, cost/benefit analysis in inherent in the very concepts of "negligence," "design defect," "product liabillity, etc.," and the case law is explicit that cost/benefit analysis is necessary in order to determine whether a product is negligent, defective, etc. However, when you end up in front of a jury acting in hindsight, and you have a "fault-free" victim sitting in the courtroom, it is all but impossible for the judicial system to tell the victim that precisely because the injury was predictable but outweighed by theoretical benefit, he should receive nothing. David Shemano --- Original Message--- To: "David B. Shemano" <[email protected]>, Progressive Economics <[email protected]> From: Jim Devine <[email protected]> Sent: 1/25/2010 1:37PM Subject: Re: Re: Re: [Pen-l] The Hypocrisy of Corporate Personhood >> David B. Shemano wrote: >> >I think every sentence in your paragraph is factually wrong.< >> >> Please explain, with some details. I never claimed to know the law >> (I'm sorry to brag!), but I do know how corporations behave. >> >> > ... as we have discussed before in other contexts, while it is easy to >> > emotionally >> attack cost-benefit analysis depending on specific context and circumstance, >> cost-benefit (including life valuation) is an inherent part of >> decision-making as a >> general matter, and will be true no matter what the economic system. < >> >> I, for one, did not attack cost-benefit analysis (at least not here). >> Rather, I attacked the narrow scope of the cost-benefit analysis that >> I presumed that Ford applied. >> >> > The fact that we don't require car passengers, as opposed to motorcycle >> > riders, to >> wear helmets, even through we know for certainty that people will die as a >> result, is >> ultimately a cost/benefit decision. < >> >> This says something about how "we" value human life. It says nothing >> about how _Ford_ valued life when they made the Pinto decision. >> >> > I just don't understand Michael's out of hand dismissal of cost-benefit >> >analysis. >> There can certainly be disagreement on how to input and value the costs and >> benefits, but without cost-benefit analysis, how do you measure the benefits >> of a rule? >> How do you choose a rule? How do you argue a rule is better or worse? How >> do you >> compare a proposed rule to alternatives?< >> >> The problem with cost/benefit analysis (for me) is that in many cases, >> costs and benefits cannot be aggregated. We can list the effects of a >> decision that may be beneficial and those that may be costly (with >> some necessarily subjective idea of the probability that these >> benefits and costs will be realized) but then the usual way to add >> them up is to use market prices. But as serious economists know, those >> prices do not correspond to true opportunity costs. Alternatively, we >> could use shadow prices calculated on the basis of the maximization of >> a specific number measuring our goals. But no democratic society could >> quantify its goals as a single number to be maximized. There is no >> "social welfare function." >> >> So we are left with _vectors_ of costs and benefits. Then, it's up to >> each individual to attach his or her own weights to these vectors. >> Then, these views can be aggregated by democratic vote. In a large >> society where some sort of representative or delegative democracy >> prevails, we can think of first-approximation methods to try to get as >> close as possible to the truly democratic approach. One method that >> could be used is to do alternative cost/benefit analyses with >> different weighting schemes. Different groups in society could propose >> different weights. >> >> With one parenthetical qualification added, Shane is right when he >> says that > In practice [in our society,] cost-benefit is nothing but >> a mathematical-sounding disguise for arbitrariness.< In a democratic >> society, a qualitative cost-benefit analysis (without arbitrary >> aggregation) might work, as sketched above, as long as no-one pretends >> that it's scientific or objective. >> -- >> Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own >> way and let people talk.) -- Karl, paraphrasing Dante. >> >> _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
