Jonathan B. Wight

Ethics in Economics (eBook, ePUB)

An Introduction to Moral Frameworks

• Format: ePub

Produktbeschreibung

In Ethics in Economics , Jonathan B. Wight provides an overview of the role that ethical considerations play in economic debates. Whereas much of the field tends to focus on welfare outcomes, Wight calls for a deeper examination of the origin and evolution of our moral norms. He argues that economic life relies on three interrelated ethical systems: outcome-based, duty- and rule-based, and virtue-based. Integrating contemporary theoretical and applied research on ethics within a historical framework, Wight provides a thorough and accessible outline of all three schools, explaining how they fit or contrast with the economic welfare model. The book then uses these conceptual underpinnings to examine a range of contemporary topics, such as the 2008 financial crisis, the moral limits to markets, the findings of experimental economics, and the nature of economic justice. Wight's analysis is guided by the innovative concept of ethical pluralism-the recognition that each system has appropriate applications, and that no one prevails. He makes the case that considering a wider moral framework, rather than concentrating on utility maximization, can lead to a richer understanding of human behavior and better policy decisions. An incisive overview in a blossoming area of interest within Economics, this book is ideal for undergraduates or uninitiated readers who seek an introduction to this topic.

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Produktdetails

• Verlag: Stanford University Press
• Seitenzahl: 296
• Erscheinungstermin: 22. April 2015
• Englisch
• ISBN-13: 9780804794565
• Artikelnr.: 48416360

Autorenporträt

Jonathan B. Wight is Professor of Economics at the University of Richmond. He is the author of Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue.

Inhaltsangabe

Contents and Abstracts
1Why Ethics Matters
chapter abstract
Moral norms arising from virtue and duty ethics complement the standard
economic welfare model in helping explain economic outcomes and the
operation of economic institutions. Both positive and normative economics
are enhanced by a pluralist understanding of ethics as a part of critical
thinking. Economic solutions usually involve tradeoffs not only between
competing normative values but also between competing ethical frameworks of
analysis. The Chevy Malibu exploding gas tank case illustrates a case of
asymmetric information and moral hazard. In this circumstance, blindly
following economic logic, with poorly understood ethical frameworks, can
lead to disastrous outcomes. A pluralist approach provides a
three-dimensional viewpoint, and better aligns with Adam Smith's moral
sentiments model.
2 Outcomes
chapter abstract
This chapter explores the idea that ethics means producing the best
outcomes. Individuals in society desire numerous outcomes, including
freedom, justice, economic growth, and so on. Various consequentialist
theories are examined including ethical egoism, Act and Rule
Utilitarianism, neoclassical welfare analysis, and others. The chapter
investigates the problems of value and aggregation that are present when
using this framework. Jeremy Bentham is a founder of classical
Utilitarianism, which seeks to evaluate outcomes using the hedonistic
calculus of pleasures and pains. John Stuart Mill elaborates a refined
version of this approach. The chapter proceeds develops ideas in historical
context and explores their evolution. A critique of these approaches leads
to the need for complementary ethical frameworks.
3Duties, Rules, and Virtues
chapter abstract
Is winning the only thing that values? Non-consequentialist ethical
frameworks arise from principles and virtues that direct behavior yet are
not motivated by expected outcomes. These moral frameworks are
complementary with outcome based ethics and needed for a good society. For
example, the Utilitarian approach provides no protection for individual
rights. This chapter explores Kantian ethics, natural rights, and other
rule-based systems such as the Ten Commandments. It then explores the
difficulties with these approaches and concludes with a discussion of
virtue-based ethics in various forms: Aristotle, Confucius, Adam Smith, and
Deirdre McCloskey.
4Welfare and Efficiency
chapter abstract
Maximizing the economic surplus is the normative outcome that is said to be
desirable for the economy to be "efficient." Supply/demand curves are
explained to show how they can be used in normative analysis to demonstrate
a Pareto optimal market outcome under ideal conditions. The chapter is
designed to draw readers inside the graphs to understand how real people
are affected by market prices, whether through the consumer or producer
surpluses. The normative economic approach to scarcity is shown to be a
powerful philosophical idea, yet readers should not forget that efficiency
is an ethically laden concept. This chapter is optional for readers with
advanced training in economics.
5Pareto Efficiency and Cost-Benefit Analysis
chapter abstract
The standard welfare and efficiency approach is sometimes portrayed as
uncontroversial and purely scientific. By contrast, this chapter shows that
ethical precepts lie at the heart of these topics. Economists have
abandoned the notion that voluntary trades are the only basis for reaching
efficiency. Cost-benefit calculations rely on the Kaldor/Hicks formulation
of potential Pareto improvements and therefore rely on compulsion. As a
result, the Buchanan critique is that costs estimates are always somewhat
arbitrary. The Kelo eminent domain case and the Three River Gorges dam in
China show that the ethical justification for efficiency relies on moral
norms and institutions. Economics cannot be a universal science when
background circumstances of institutional frameworks (human rights, free
press, free exit, and impartial judiciary) are critical for determining the
ethical suitability of cost/benefit analysis.
6Critiques of Welfare as Preference Satisfaction
chapter abstract
Instrumental views of human welfare conflict with substantive views,
particularly in economic development. This chapter explores criticisms of
the preference satisfaction approach arising from false beliefs, "polluted"
or endogenous preferences, and other factors. If preference satisfaction is
a limited measure of human welfare, this leads to different accounting
measures of success such as the capabilities approach and the Human
Development Index (HDI) of Amartya Sen. It also could imply a role for
paternalism in government policies designed to improve substantive measures
of well being (e.g., life-expectancy or happiness). The chapter concludes
with an appeal for pluralism in evaluating economic outcomes and processes.
7Moral Limits to Markets
chapter abstract
Why do societies restrict or ban particular market transactions? In earlier
times, "just price" doctrine regulated market activity. Moral limits today
arise for at least two distinct reasons (see Michael Sandel): a repugnance
at selling particular kinds of goods and services that embody beliefs
relating to intrinsic values; and a rejection of market price as an
allocation mechanism in particular background circumstances of trade. If
intrinsic motivations are important, market prices might crowd out
altruistic supply. Considerations of intrinsic value, background
circumstances, fairness, duty, and character arise in considering the
commodification of bodily organs and other practices, and in arguments for
policies such as a living wage, laws against discrimination, and Kantian
ethics. Markets are also found to enhance virtues in particular
circumstance.
8The Science Behind Adam Smith's Ethics
chapter abstract
Adam Smith had a profound interest in human sociability. A market economy
relies upon self-interested actors, yet economic actors are linked by moral
norms that produce self-restraint and trust. This chapter explores the
experimental and laboratory evidence for Adam Smith's model. The "Ultimatum
game" shows that people routinely incur costs in order to punish others who
fail to abide by moral norms. Vernon Smith's "Trust game" shows that moral
motive is important in addition to outcomes. Neuroscientists have
discovered a mirror-neuron network that mimics fellow-feeling. Paul Zak
shows that oxytocin is hormonal basis for social bonding that creates trust
and fellow-feeling. Smith's model can be used to explore how and why humans
develop a moral conscience, and how moral norms develop and evolve.
9Ethics and the Financial Crisis of 2008
chapter abstract
A financial panic originating on Wall Street led to the worldwide Great
Recession of 2008. The roots of this severe contraction can be found in
views promoting ethical individualism, particularly the notion that greed
is good for self and society. The chapter traces these ideas back to
Bernard Mandeville in the 18th century, and in the 20th century to Ayn Rand
and others, including many financial regulators and legislators. Adam Smith
denounced Mandeville, and showed that for the invisible hand to work for
society's interests, there must be appropriate institutions to channel
self-interest in socially beneficial ways. This is particularly true in
financial markets, according to Smith. The ethics of Keynesian economics
are also examined, as well as the presence of moral hazard arising from
private and government incentives.
10Economic Justice: Process versus Outcomes
chapter abstract
Justice can be analyzed in different ways, such as through a fair process
(procedural justice) or though fair outcomes (distributive justice). Adam
Smith was mostly concerned with a fair process, provided by competitive
markets. At the same time, he endorsed some measures of distributive
justice, such as educational subsidies. When an economic system generates
very different outcomes (measured by the gini coefficient), inequality can
be a contentious issue. Some inequality is an inevitable or desirable
outcome of normal economic behavior. This chapter explores why standard
economics moved away from a concern for justice, and instead focused on
efficiency. The hypothesis that workers are paid the value of their
marginal products continues to hold sway, despite the weakness of its
theoretical and empirical foundations.
11Economic Justice: Equal Opportunity
chapter abstract
Procedural justice may ensure equal treatment of adults who compete on the
basis of effort and skill. However, effort and skill both depend upon the
foundational capabilities developed early in life and on genetics. Factors
beyond someone's control, such as parental achievement or sex, influence
the limits of education. Distributive justice might suggest that a focus on
equality of opportunity for children is a minimum right of citizenship.
John Rawls' arguments of justice as fairness are explored along with its
critics. Amartya Sen and Martha Nussbaum's capabilities approach builds on
Rawls by exploring the distribution of primary goods, but argues that
individual differences must be considered in the matter of opportunity. The
chapter concludes with a brief introduction to sustainability and
intergenerational justice.
12Ethical Pluralism in Economics
chapter abstract
Pluralism is the recognition that multiple ethical frameworks can help
explain the world and inform decision makers. Pluralism has two aspects:
the divergence of theories across domains (vertical pluralism) and the
divergence of theories within domains (horizontal pluralism). Ethical
pluralism guides the conduct of economic research, in which potential
market failures exist because of asymmetric information and free rider
problems. Moral hazards are in part addressed by moral norms that rely on
duty and virtue ethics. A second case explores how Milton Friedman's
injunction for corporate managers to maximize profits for the benefit of
shareholders relies on the non-consequentialist moral frameworks of duty
and virtue. A pluralistic approach to economics develops stronger critical
thinking skills to prepare students for careers of leadership.