Lecture Notes for Ethics & Economics Draft of Spring, 2019 Contents 1 Introduction to Ethics and Ethical Reasoning 4 1.1 Normative and Descriptive Claims . 4 1.2 Foci of Ethical Evaluation . 5 1.3 Ethical Theories . 6 1.4 Consequentialism & Non-consequentialism . 7 1.4.1 Versions of Consequentialism . 7 2 Utilitarianism & Kant’s Moral Theory 8 2.1 Utilitarianism . 8 2.1.1 Welfare and Welfarism . 8 2.1.2 Utilitarianism . 9 2.2 Kant’s Moral Theory . 11 3 Rationality 13 3.1 Expected Utility Theory . 13 3.2 Ordinal versus Cardinal Utility . 16 3.3 Interpreting Utilities . 18 4 Rationality, day 2 23 4.1 Evaluating Expected Utility Theory . 23 4.1.1 The Allais Problem . 23 4.1.2 The Ellsberg Problem . 24 4.1.3 Act-State Dependence . 25 5 Theories of Welfare and the Pareto Principle 28 5.1 Preview: the Ethical Theory of Welfare Economics . 28 5.2 Welfare.................................................. 29 5.2.1 The Goal of a Philosophical Theory of Welfare . 29 5.2.2 Philosophical Theories of Welfare . 29 5.3 Preferentist Welfarism . 33 5.3.1 Aggregate Utility? . 34 5.3.2 The Pareto Principle . 35 5.4 The Fundamental Theorems of Welfare Economics . 37 1 6 Beyond the Pareto Principle 39 6.1 Social Welfare Functions . 39 6.2 Preferentism and Interpersonal Comparisons . 40 6.2.1 Ordinal Utility Comparisons . 41 6.2.2 Ordinal Comparisons via Extended Preferences? . 42 6.2.3 Cardinal Utility Comparisons . 43 6.3 Extending the Pareto Principle . 44 6.3.1 the Kaldor-Hicks Principle . 45 6.3.2 The Scitovsky Principle . 48 7 Wrongful Exploitation 51 7.1 Welfare Economics and the Market . 51 7.2 Higher Values, the Market, and Degradation . 52 7.3 Price Gouging and Sweatshop Labor . 55 7.4 Theories of Wrongful Exploitation . 57 8 Distributive Justice: Libertarianism & Egalitarianism 62 8.1 Justice . 62 8.2 Libertarianism and Rights . 62 8.2.1 On Liberty . 63 8.2.2 Rights . 65 8.2.3 Justice as Respecting Rights . 66 8.3 Egalitarianism . 67 8.3.1 Luck Egalitarianism . 68 8.3.2 Democratic Egalitarianism . 69 9 Introduction to Social Welfare Functions 71 9.1 Voting Rules . 72 9.1.1 Plurality Method . 73 9.1.2 The Condorcet Paradox . 75 9.1.3 Instant Runoff Method . 76 9.1.4 Copeland’s Method . 78 9.1.5 Caveats.............................................. 81 9.2 Arrow’s Impossibility Result . 81 10 Social Welfare Functions: Liberté et Égalité 83 10.1 Liberté ................................................... 83 10.1.1 The Impossibility of a Paretian Liberal . 85 10.1.2 The Impossibility of a Liberal? . 86 10.1.3 The Impossibility of a Paretian Liberal, take 2 ....................... 87 10.2 Égalité ................................................... 89 10.2.1 Harsanyi’s Theorem . 89 10.2.2 Prioritarian Social Welfare Functions . 91 10.2.3 The ‘Leveling Down’ Objection . 93 2 11 Valuing Lives 95 11.1 Valuing Life . 95 11.1.1 Kaldor Hicks and Valuing Life . 97 11.1.2 The ‘Net Output’ Method of Valuing Life . 97 11.1.3 The ‘Willingness to Pay’ Method of Valuing Life . 98 11.2 The Non-Identity Problem . 98 11.3 The Repugnant Conclusion . 99 3 Chapter 1 Introduction to Ethics and Ethical Reasoning Explain the normative concepts of goodness, rightness, welfare, and rationality, as we are using those terms in this class. What kinds of things are evaluable as good? What kinds of things are evaluable as right? What kinds of things are evaluable as good for you? And what kinds of things are evaluable as rational? What is an ethical theory? (Provide some examples.) What makes an ethical theory consequentialist or non-consequentialist? (Provide an example of each.) 1.1 Normative and Descriptive Claims 1. Descriptive claims say something about the way that the world is. They do not make any judgment about whether the way the world is is the way that it ought to be, or whether the way that the world is is a good way for it to be. For instance: (a) The Braves won the World Series in 1995. (b) It is always sunny in Philadelphia. (c) Even the poorest of the poor would have more wealth if we abolished the capital gains tax. (d) Johann believes that we should abolish the capital gains tax. Note that (b)—and maybe (c), though it’s controversial—is false. So a claim need not be true in order to be descriptive. And note that, even though it concerns how the world ought to be, (c) still just describes a belief that Johann has; it doesn’t endorse that belief, so it is merely describing the way that the world happens to be—it happens to be such that Johann believes that we should abolish the capital gains tax. 2. Normative claims say something about the way that the world ought to be, or something about which things are good, or which actions are right, or rational. They don’t merely describe the world; they additionally evaluate the world. For instance: (a) We should abolish the capital gains tax. (b) We shouldn’t abolish the capital gains tax. 4 (c) We have a moral obligation to ameliorate the suffering of the global poor. (d) Johann shouldn’t think that we should abolish the capital gains tax. (e) If you want to steal a candy bar, you should go to the bodega on 5th avenue. (f) Voting is irrational. Note that either (a) or (b) is false; so a claim need not be true in order to be normative. Note also that a normative claim needn’t be a claim about what’s moral. At first blush, (e) gives an example of a normative claim which merely concerns what is prudentially rational, as opposed to what is moral—it says what you should do, in light of your desire to steal a candy bar; it doesn’t say anything about what’s morally best. Also, on the intended reading, (f) is not explicitly a claim about what’s moral, but rather a claim about what’s prudentially rational. 3. As we’ll be understanding the term here, ethics is the systematic study of which normative claims are true and which are false. (a) Descriptive claims may nevertheless be relevant to normative claims. For instance, if it’s true that even the poorest of the poor would have more weath if we abolished the capital gains tax, this is surely relevant to the question of whether we should abolish the capital gains tax. However, ethics is not primarily concerned with descriptive questions. It’s goal is to answer normative questions. (b) Wait...what if normative claims aren’t true or false? You caught me. I am presupposing a substantive view in the field of philosophy known as metaethics. (Metaethics is, roughly, the study of what normative claims mean, or what it is to accept a particular normative judgment.) In particular, I am presupposing a position known as cognitivism. The cognitivist says that normative propositions can be true or false. In fact, the majority of metaethicists nowadays are cognitivists, so this isn’t all that controversial of a presupposition to make. In this class, we’ll be assuming throughout that normative propositions can be true or false. That is, we’ll assume that it makes sense to wonder whether claims like “we should abolish the capital gains tax”, or “The more of your preferences are satisfied, the better things are going for you” are true. 1.2 Foci of Ethical Evaluation 1. When we evaluate things morally, we may evaluate: (a) States of Affairs as good or bad (or, in the comparative: better or worse). i. For instance, we might ask whether one distribution of goods amongst citizens is better or worse than another. (b) Actions as right or wrong i. For instance, we might ask whether it’s wrong to institute a regressive tax policy, or whether capital punishment is right. 2. It is possible for your moral evaluations of states of affairs and actions to come apart. (a) Suppose that I kill one person to save the lives of five. You could think that a) the state of affairs of 1 person being killed and 5 people living is better than the state of affairs of 1 person living and 5 people dying, even while thinking that b) it was wrong to kill the one person. 5 3. However, your moral evaluations of states of affairs and actions needn’t come apart in these ways. 4. When we evaluate things prudentially, we may evaluate: (a) States of affairs as good or bad for a you (or, in the comparative: better or worse for you). i. For instance, we may ask whether one distribution of goods amongst citizens is better or worse for you than another is. (b) Actions as rational or irrational. i. For instance, we might ask whether voting (or tax withholding) is rational or irrational. 1.3 Ethical Theories 1. An ethical theory is a general theory of some normative domain. It is an account which tells you, e.g.: (a) for every given state of affairs, whether that state of affairs is good or bad; or, for any two states of affairs, which is better. (b) for any given action, whether that action is right or wrong; or, for any two acts, which is more right. (c) for any state of affairs, whether that state of affairs is good.