Tuesday, August 07, 2007

King Banaian and the Ford Pinto

One more before turning in for the night, boys and girls. There was a little footnote in one of the professor's posts that Spot wanted to mention:

*-- more on this later as well; worth noting that such calculations can be used to determine the value of a life. See slides 12-13 of this presentation from MIT's course on regulation. I suspect this will make dogs bark.

Spot thinks the professor was saying, "Ha, ha, Spot, we economists can value a human life in economic terms, and there is nothing you can do about it!" Well, you've got Spot there, professor. You know professor, lawyers, and judges and juries calculate the value of human lives every day. It's generally after some human-caused mayhem, and it's a grisly task, professor. But you make it sound like a simple academic exercise. Perhaps to you it is.

There are a couple of things that the law considers in addition to the plain economic value of a life. One of these is pain and suffering: the anguish that a person has been put through, perhaps before their death. The little Somali girl and her mother, currently pinned under the bridge, don't you suppose they suffered before they died, perhaps for agonizing minutes or even longer as the water rose or their air supply was exhausted? The economic value of the lives of this young mother and her child were probably not great, but the loss is keenly felt by the husband and father. The law considers this, too, professor; it's called loss of society or consortium.

Spot will confess a bit of confusion about your argument, professor. He thought it was that the prospect of the bridge failure was unknowable. But then you go on to do describe a cost-benefit analysis. You can't really do a cost-benefit analysis for a bridge failure, even if you're inclined to do one, when you have no idea what the cost of the bridge failure will be, in economic terms, and certainly not in human terms as suggested above. And frankly, professor, you don't have any damned idea what the cost of this bridge failure is going to be. You don't have a clue. These are really the unknowns, not your silly-ass musings about probabilities of bridge collapse and what set a failure falls into. Outrageous.

Professor, you live in the same pitiable abstract world as the Ford executives and economists who concluded that the cost in human lives did not justify redesigning the Ford Pinto and relocating its gasoline tank so that it wouldn't explode if rear ended. Do you remember what happened to them, professor? When it learned about the admirable economic decision making of Ford, the jury assessed one of the largest punitive damage awards in American history, although it was reduced by an appeals court. Here's a little bit about the case:

Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, which would have cost $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths.  The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit.  Based on the numbers Ford used, the cost would have been $137 million versus the $49.5 million price tag put on the deaths, injuries, and car damages, and thus Ford felt justified not implementing the design change.  This risk/benefit analysis was created out of the development of product liability, culminating at Judge Learned Hand's BPL formula, where if the expected harm exceeded the cost to take the precaution, then the company must take the precaution, whereas if the cost was liable, then it did not have to.  However, the BPL formula focuses on a specific accident, while the risk/benefit analysis requires an examination of the costs, risks, and benefits through use of the product as a whole.  Based on this analysis, Ford legally chose not to make the design changes which would have made the Pinto safer.  However, just because it was legal doesn't necessarily mean that it was ethical.  It is difficult to understand how a price can be put on saving a human life.

There are several reasons why such a strictly economic theory should not be used.  First, 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.  Second, the analysis does not take into all the consequences, such as the negative publicity that Ford received and the judgments and settlements resulting from the lawsuits. Also, some things just can't be measured in terms of dollars, and that includes human life.  However, there are arguments in favor of the risk/benefit analysis.  First, it is well developed through existing case law.  Second, it encourages companies to take precautions against creating risks that result in large accident costs. Next, it can be argued that all things must have some common measure.  Finally, it provides a bright line which companies can follow.

In the present situation, the public and the voters are going to function as the jury. Go ahead and make you summation to them on the basis of a cost-benefit analysis. Good luck, professor.

[update] When you conclude ahead of time that a certain number of deaths is acceptable, it is, to paraphrase somebody that Spot recently heard, mathematical human sacrifice. [/update]

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