Economic Analysis, Moral Philosophy And Public Policy

by Daniel M. Hausman , Michael S. McPherson

• ISBN13: 9780521846295
• ISBN10: 0521846293
• Edition: 2nd
• Format: Hardcover
• Copyright: 2006-03-20
• Publisher: Cambridge University Press

Summary

This book shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores rationality and its connections to morality. It argues that in defending their model of rationality, mainstream economists implicitly espouse contestable moral principles. Part II concerns welfare, utilitarianism and standard welfare economics, while Part III considers important moral notions that are left out of standard welfare economics, such as freedom, rights, equality, and justice. Part III also emphasizes the variety of moral considerations that are relevant to evaluating policies. Part IV then introduces technical work in social choice theory and game theory that is guided by ethical concepts and relevant to moral theorizing. Chapters include recommended readings and the book includes a glossary of relevant terms.

Table of Contents

Preface	1	(1)
Introduction	1	(2)
Ethics and Economics?	3	(9)
What Are Moral Questions and How Can They Be Answered?	4	(4)
How Is Moral Philosophy Relevant to Economics?	8	(2)
Organization	10	(2)
Ethics in Welfare Economics: Two Examples	12	(18)
A Shocking Memorandum	12	(1)
Eight Distinctive Features of Welfare Economics	13	(3)
The Economic Benefits of Exporting Pollution to LDCs	16	(1)
Summers's Argument and a Further Feature of Welfare Economics	17	(3)
Is Summers Right? Should the World Bank Encourage Migration of Dirty Industries to LDCs?	20	(3)
School Vouchers	23	(6)
Conclusions	29	(1)
Ethics in Positive Economics: Two Examples	30	(13)
Is Unemployment Involuntary?	31	(7)
Overlapping Generations	38	(3)
Conclusions	41	(2)
I RATIONALITY AND MORALITY	43	(54)
Rationality	45	(15)
Certainty and Ordinal Utility Theory	46	(5)
Expected Utility Theory	51	(4)
Questions about Utility Theory	55	(5)
Rationality in Positive and Normative Economics	60	(18)
Rationality and Positive Economics	60	(4)
Preference Satisfaction and Pareto Efficiency	64	(3)
Rationality and Ethics in Positive Economics	67	(5)
Self-Interest and Moral Motivation	72	(4)
Conclusions	76	(2)
Rationality, Norms, and Morality	78	(19)
Rationality and Self-interest	79	(1)
The Influence of Moral Norms on Economic Behavior	80	(5)
How Do Norms Motivate and What Sustains Them?	85	(4)
Philosophical Implications	89	(2)
Morality and Utility Theory	91	(3)
Conclusion: On the Rationality of Morality	94	(3)
II WELFARE AND CONSEQUENCES	97	(60)
Utilitarianism and Consequentialism	99	(19)
Clarifying Utilitarianism	100	(4)
Interpersonal Comparisons of Well-Being	104	(3)
Justifying Utilitarianism	107	(2)
Contemporary Consequentialism	109	(3)
Is Utilitarianism Plausible?	112	(1)
Consequentialism and Deontology	113	(3)
Conclusion: Should Economists Embrace Utilitarianism?	116	(2)
Welfare	118	(17)
Theories of Well-Being	119	(1)
Is the Standard View of Welfare Plausible?	120	(2)
Equating Well-Being and Preference Satisfaction	122	(6)
Changing and Conflicting Preferences and Preferences Based on False Beliefs	123	(2)
Assessing Preferences	125	(3)
Modifying the Preference Satisfaction View	128	(1)
Alternative Theories of Welfare	129	(4)
Conclusions	133	(2)
Efficiency	135	(22)
``Efficiency'' as Pareto Optimality	136	(4)
How Welfare Economics Narrows Normative Questions	140	(4)
Cost-Benefit Analysis	144	(3)
Objections to Cost-Benefit Analysis	147	(4)
Cost-Benefit Analysis as a Social Practice	151	(1)
Conclusion: Welfare Economics in Limbo	152	(5)
III LIBERTY, RIGHTS, EQUALITY, AND JUSTICE	157	(58)
Liberty, Rights, and Libertarianism	159	(15)
Freedom	160	(3)
What Are Rights?	163	(1)
The Importance of Rights	164	(2)
The Justification of Rights	166	(1)
Weighing Rights, Liberties, and Welfare	167	(1)
Libertarianism	168	(6)
Equality and Egalitarianism	174	(24)
Why Equalize?	177	(6)
Equality Is Intrinsically Good	178	(1)
Equality and Priority for the Worst-Off	179	(2)
Intrinsic Connections between Equality and Other Ends	181	(2)
Equality of What?	183	(9)
Equality of Welfare	184	(1)
Equality of Resources	185	(5)
Equality of Opportunity for Welfare	190	(1)
Equality of Capabilities	191	(1)
Complex Equality and Equality of Moral Status	192	(3)
The Measurement and Importance of Inequality	195	(3)
Justice and Contractualism	198	(17)
The Social Contract Idea	199	(2)
Justice as Reciprocity: Rawls's Theory of Justice	201	(8)
Contractualism and the Original Position	202	(1)
Rawls's Principles of Justice	203	(3)
Implications of Rawls's Principles	206	(1)
Justice and Pluralism	207	(2)
Justice as Mutual Advantage: David Gauthier	209	(2)
Other Contractualist Views	211	(1)
Conclusion: Social Contract Reasoning and Economics	212	(3)
IV MORAL MATHEMATICS	215	(42)
Social Choice Theory	217	(17)
The Social Welfare Function and Arrow's Theorem	217	(3)
The Interpretation of Arrow's Theorem	220	(2)
Social Choice Theory and Moral Philosophy	222	(3)
The Paradox of the Paretian Liberal	225	(3)
The Range of Social Choice Theory	228	(4)
The Logical Coherence of Social Judgments	228	(1)
Formal Representations of Freedom and i Opportunity	228	(2)
Should Egalitarians Aim to Equalize Welfare?	230	(2)
Conclusions	232	(2)
Game Theory	234	(23)
What Is a Game?	234	(5)
Moral Philosophy and Some Simple Games	239	(4)
Cooperation and Justice	243	(2)
Paradoxes and Difficulties	245	(6)
Bargaining Theory and the Social Contract	251	(6)
CONCLUSIONS	257	(34)
Pollution Transfers and School Vouchers: Normative Economics Reconsidered	259	(15)
Do Vouchers and Pollution Transfers Make People Better-Off?	261	(4)
A Utilitarian Perspective on Pollution Transfers	265	(2)
Other Ways of Evaluating Vouchers and Pollution Transfers	267	(5)
Rights, Freedoms, Pollution, and Vouchers	267	(1)
Equality, Pollution, and Vouchers	268	(1)
Justice, Pollution, and Vouchers	269	(3)
Conclusions	272	(2)
Economics and Ethics, Hand in Hand	274	(17)
Involuntary Unemployment and Moral Baselines	274	(4)
The Overlapping Generations Example	278	(1)
Pressing Problems	279	(10)
Ethnic and Religious Conflict	281	(2)
Global Inequalities	283	(2)
Environmental Protection and Global Warming	285	(4)
Conclusions	289	(2)
Appendix: How Could Ethics Matter to Economics?	291	(18)
Objection 1: Economists as Engineers	292	(3)
Objection 2: Positive Economics Is Value Free	295	(2)
Positive and Normative Economics	296	(1)
On the Independence of Ethics and Economics	297	(1)
The Rationality of Normative Inquiry	297	(2)
How Knowing Ethics Contributes to Positive Economics	299	(7)
Conclusions	306	(3)
Glossary	309	(6)
References	315	(20)
Index	335