Ethics, Economics and the Value of Safety

  • William D. Schulze
Part of the General Motors Research Laboratories book series (RLSS)

Abstract

Economists view private risk as a commodity — riskier jobs receive higher wages to compensate workers for voluntarily accepting job related risks of death. In the economist’s view, it is then a simple task to determine a money-risk trade-off derived from the job market and apply this trade-off in making decisions on social or public risks (as opposed to private risks). However, whereas private risks are typically compensated (payment is made a priori to accept risk), social or public risks are typically uncompensated. This distinction, compensated versus uncompensated risks, has long been observed, but in terms of a parallel terminology, voluntary versus involuntary risks. Society seems much more averse to the latter as opposed to the former. Economics as a behavioral science does not provide any clues as to this distinction. However, ethics, or rather the study of ethical systems, does provide a rationale for distinguishing between compensated and uncompensated risks. In this paper, four ethical systems — Utilitarian, Nietzschean, Rawlsian, and Libertarian — are examined as they apply to the question of the right or wrong of imposing or accepting risks. The conclusion of this analysis is that all of the four ethical systems examined accept compensated risks but reject uncompensated risks under at least some circumstances. The technical implication for economic analysis is that if any of these four ethical systems are used to construct a social welfare function, that function may imply lexicographic social preferences between public and private safety.

Keywords

Marginal Utility Public Safety Social Welfare Function Safety Program Ethical System 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 1980

Authors and Affiliations

  • William D. Schulze
    • 1
  1. 1.University of WyomingLaramieUSA

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