2. Ethics and Economics Flashcards
What are normative questions?
They are questions that ask what should be rather than what is (positive questions). (eg. how much pollution is too much?) Normative analysis requires clearly stating the underlying ethical assumptions.
What is the ethical foundation of economics?
Utilitarism - a philosophy in which environmental cleanup is important solely for the happiness (utility) that it brings to people alive today and in the future.
What is a biocentric view and how does this compare with a utilitarism view?
This view values nature for its own sake.
Express the ‘utility function’?
The Utility function assumes a fundamental trade-off between growth in consumption (consumption of market and non-market goods) and improvements in environmental quality. So U=U(X-P) where X is consumption, less the P pollution exposed.
to add up individual utility what do economists use?
A Social Welfare function eg: SW = Ua(Xa-Pa)+Ub(Xb-Pb)…
What do Utilitarians believe?
The greatest good for the greatest number and spend much time and effort calculating social welfare.
Do increases in individual consumption increase the overall welfare of society?
Not necessarily because:
- Increases in each person’s happiness receive equal weight
- Provides no special protection for the well being of future generations and
- Assumes that pollution victims have no special rights
The Social welfare function underlies which standard and why?
The Efficiency Standard, because it just seeks to maximise the net benefits from steps taken to protect the environment. It is done without reference to who bears the costs or gains of the benefit.
What is a way that the Social Welfare function could be improved?
Adding a weighting for fairness, ie to weight the consumption of poor people more heavily than rich people, so their happiness is higher as a result of the same gain and in the same way you could weight the happiness of victims higher than that of polluters, which would support the safety standard
What is the sustainability rule?
It says that social welfare does not rise if increases in consumption today come at the expense of the welfare of our children.
Is one form of social welfare function correct?
No, but their use helps clarify the underlying assumptions in normative debates over the right level of pollution
