$s for Lives: Ethical Considerations in the Use of Cost/Benefit Analysis by For-Profit Firms

Cost/benefit analysis is often an imprecise tool because of assumptions that must be made about matters that are difficult to quantify. The problems become especially acute when lives or serious bodily injuries are at stake because of the serious nature of that which is being risked. Furthermore, the literature on cost/benefit analysis focuses on public decision-making situations and decisions by individuals. This paper examines the distinctiveness of the use of cost/benefit analysis involving putting dollar values on human life by for-profit firms. The argument developed in the paper is that the lack of participation by the affected party (or government representative) in balancing costs and benefits raises special ethical concerns. A formula that was developed by the Ford Motor Company concerning accidents involving fuel leakage and fire with resultant loss of life and serious burn injuries is used as an example of both the imprecision of the method and the distinctive factors of the decision process that raise special ethical considerations. The paper examines why the for-profit-decision is distinct, what the special ethical considerations are, and concludes with a discussion of several alternative procedures to monitor the use of cost/benefit analysis so that it would be an effective business tool while at the same time the individual is provided maximum protection.