Cost-benefit Analysis of Human Life. THE FORD PINTO CASE: THE VALUATION OF LIFE AS IT APPLIES TO THE NEGLIGENCE-EFFICIENCY ARGUMENT Christopher Leggett Law & Valuation Professor Palmiter Spring, 1999 Abstract The cases involving the explosion of Ford Pinto's due to a defective fuel system design led to the debate of many issues, most centering around the use by Ford of a cost-benefit analysis and the ethics surrounding its . This estimate assumed that each death which could be avoided would be worth $200,000 . "The Ford Pinto case is mentioned in most Business Ethics texts as an example of Cost-Benefit analysis, yet in those formats any appreciation of the complexity surrounding the issues of such decisions is overly simplified. To summarize, Ford's design of the Pinto's fuel tank was defective, causing fires if the Pinto was involved in even minor rear-end collisions. Bringing together the basic documents needed for researching an informed judgement on Ford's behavior in the case, it discusses the use by Ford of a cost-benefit analysis and the ethics surrounding its decision not to upgrade the fuel system . So when the Pinto problem began to get widespread, Ford did a cost-benefit analysis and decided that facing a lawsuit and making settlements was cheaper than to recall the Pintos out there and begin to fix the problem. The problem that arose in the Ford Pinto is that human and emotional circumstances behind the numbers which are not factored in the risk/benefit analysis. The case of Pinto in Ford Company gives a situation where the company failed to observe its moral obligation of ensuring that the products being released to the customers are safe. In this case the value of human life is weighed agains the cost of improving ford gas tanks. Though perhaps the most well known example of an ethically-troubling corporate cost/benefit analysis, the Ford Pinto analysis was certainly not the first or last of its kind. None Case Questions: 8. 1. A cost-benefit analysis prepared by Ford concluded that it was not cost-effecient to add an $11 per car cost in order to correct the flaws. THE FORD PINTO, SAFETY DOES NOT SELL: "The Ford Pinto case is mentioned in most Business Ethics texts as an example of Cost-Benefit analysis, yet in those formats any appreciation of the complexity surrounding the issues of such decisions is overly simplified.
EddieInCA says: Tuesday, 2 . The example of cost-benefit analysis given in the case study doesn't provide a comprehensive approach that leads to a morally right action. Evaluate from a moral perspective the "cost/benefit" analysis conducted by Ford.
This is an example of Cost-Benefit analysis. Cost-benefit Analysis and Ford. . Additionally, the faulty cost-benefit analysis played a role as well. We will write a. custom essay. In 1968, Ford Motor Company had a decision to make as to whether it would compete in the subcompact automotive market. What is the most important thing Ford must consider for the future? 6. The example of cost-benefit analysis given in the case study doesn't provide a comprehensive approach that leads to a morally right action. additional safety features in the Pinto. Therefore, they produced Pinto as a reasonable car for people who want to enjoy luxury at the same time with reasonable price. Did you know that Ford Motor Co. in 1973 circulated a memo amongst senior management concluding in a cost-benefit analysis that it would be less expensive to alter production of autos known to be susceptible to firey explosions from leaking gas tanks than to pay victims for catastrophic burn injuries or deaths resulting from the defect? the right thing to do." Cost-benefit analysis doesn't really help with that. The rule by which utilitarian classifies an action as moral if it produces more good than bad, and immoral if it produces more bad than good. CASE STUDY: Ford Pinto Case, utilitarianism and Cost Benefit Analysis: This is an extract from a longer article, by Annie Lundy. Ford's cost benefit-analysis favoring shareholder wealth The model simply evaluates costs and benefits of a certain decision which enables the organization to choose the "right . The case of Ford's Pinto has been called "a manifestation of broad legal, social-structural, and ideological changes leading to an increasing intolerance of white collar crime." It is a perfect example of white collar crime where profit is prioritized over ethical concerns. Make sure you evaluate both sides of the argument when discussing. 7. Ford knew about the risk, yet it paid millions to settle damages suits out of court and spent millions more lobbying against safety standards. 4. People wanted small, cheap cars, and the Pinto was a small, cheap car. It gives the people what they want. What are the ethical issues in the case? Libraries.
Because of this cost - benefit analysis, Ford made a costly decision not only in terms of money but also human life, pain and suffering for victims and . The Pinto Memo wasn't used or consulted internally by Ford, but rather was attached to a letter written to NHTSA about proposed regulation. But there are two other principles to satisfy! In the end, these cars proved to be one of the most dangerous ever produced because of their extreme . In 1977, Mark Dowie wrote an expos for Mother Jones claiming that Ford knew about the Pinto's problems, but declined to recall the cars and install an $11 plastic part because "cost-benefit" analysis showed settling burn victims' lawsuits would save the company more than $70 million. Cost Benefit Analysis : The Ford Pinto Case 1666 Words | 7 Pages. It is product liability and precaution cost, Ford might have been considered the so called ordinary care standard to which there is a certain degree of care in evaluating a decision.
One may ask what do we need ethics in business for? If Ford is interested, primarily, in creating greater profits for their stockholders, then producing the Pinto is one way to do this. CHEN 4090 Senior Seminar The Ford Pinto Case Naif Alotaibi Mohammed Alkhoraimi April 18, 2016 Cost Benefit Analysis The Cost benefit analysis is a financial model where companies or government establishments implement on their decision making. In order to lower costs of production, Ford managers chose not to install a hull to the gas tank of the Pinto model that would have prevented leakages of fuel during crashes. The decision was made to put it onto the market for less than 2000$ in 1970, which was a very affordable price at the moment. The Pinto went into production in 1970 without the . References Ford Motor Company. Next Dr. Sandel discusses a cost-benefit analysis conducted by Ford on the Pinto: "Some cost benefit analyses incorporate a measure for the value of life. The use of cost - benefit analysis to determine if the flaw in Ford Pinto automobiles is worth the financial risk in comparison to the value of human life is unconscionable and indefensible. . INTRODUCTION Demand for sub-compact cars Designed in May of 1968 by the vice-president of Ford Motor Company, Lee Iacocca Weighed 2000 pounds, cost $2000 and manufactured in 2 years 2. 4. Cost-benefit analysis : an ethical critique; Steven Kelman; Defending cost-benefit analysis : replies to Steven Kelman; James V. Delong [and others] Product safety, cost-benefit analysis, and the Ford Pinto case; Pinto madness; Douglas Birsch; Fatalities associated with crash-induced fuel leakage and fires; E.S. In 1970, Ford used $200,000 as the cost of a life. I worked on this animation project to visually explain the case of the infamous Ford Pinto .
The Ford Pinto case is a well-known case that is often discussed in the context of business ethics. Grimshaw was awarded $2,516,000 compensatory damages and $125 million punitive damages; the Grays [119 Cal.App.3d 772] were awarded $559,680 in compensatory damages. There were various ways of making the Pinto's gas tank safer. Practically, the calculated social costs of the potential car accidents were not outweighed by the costs of waiting for the release and making improvements.
Some of these policies include the risk/benefits analysis that guides on the cost a company should incur depending on the possible risks the business has on society.
Ford was not willing to add an $11 component to the Pinto to make it safer, but was rather willing to have people die or receive serious burns because it was more beneficial to . . Using solid ethical reasoning, analyze Ford's cost-benefit analysis from the perspective of virtue ethics, and make comparisons with analyses . Ford paid punitive damages to victims. Commerce (COMM 101) Case 2.3 (The Ford Pinto) Week 4 1. What moral issues does the Pinto case raise? 308 certified writers online. Hardcover, 338 pages.
THE FORD PINTO CASE STUDY GROUP 1(1702293-302) CLASS M5 2. But the Pinto case ended utilitarianism; as Chewning notes, "Utilitarianism as a defense against personal harm and injury promptly died, never to be argued again in the public domain" (2011, p. 28). The actual work to the car would just cost $11 in parts and man-hours, but the delay in launch coupled with the number of cars needing repair would cost Ford a staggering $113 million. This, more than likely, contributed to the business decision made by Ford management to produce, market, and sell the Ford Pinto. The $200,000 life-valuation figure used by Ford in its cost-benefit analysis was actually provided to Ford and other automakers by the National Highway Traffic Safety Administration (NHTSA). What is the most important thing Ford must consider for the future? In May 1968, the Ford Motor Company, based upon a recommendation by then vice-president Lee Iacocca, decided to produce the Ford Pinto model. Cost-benefit analysis is a legitimate tool, which determines the best course of action by comparing the costs and benefits generated through a particular situation. Clearly, Ford executives did not consider the damage to Ford's mage if and when the safety issues involved with the Ford Pinto were exposed. 4. Ford came to learn of the defect, but the company failed to correct it; [] The cost-benefit analysis demonstrated an abuse of utilitarian principles, and the engineers were fully aware of the flaws, yet the company continued to sell the car as it was, without safety modifications. Incredibly, the analysis put a price tag on human life$200,000 and then used that number to compare Ford's projected cost of settling burn-victim's lawsuits versus Ford . Cost-benefit analysis is a legitimate tool, which determines the best course of action by comparing the costs and benefits generated through a particular situation. Ford's cost-benefit analysis showed it was cheaper to endure lawsuits and settlements than to remedy the Pinto design. As seen in the Pinto Case, Ford came to a decision by using cost-benefit analysis in which a monetary value was put to human life. Ford Pinto Case One of the examples he used is the cost-benefit analysis in Ford Pinto case.According to Wikipedia,the Ford Pinto model became a focus of a major scandal when it was alleged that the car's design allowed its fuel tank to be easily damaged in the event of a rear-end collision which sometimes resulted in deadly fires and explosions.. 1 On Ford's motion for a new trial, Grimshaw was required to remit all but $3 1/2 million of the punitive award as a condition of denial of the motion. This can act as an example of how the Cost-Benefit is at a disadvantage when certain situations arise (the value of human life) . The Pinto case is widely However, in my estimation, Ford management endangers the integrity of its own safety practices for the small sake of profit. Discuss your argument in favor or against Ford's decision. AGENDA Summary Cost Benefit Analysis Ethical Issues Change Alternatives Recommendation 3. It was supposed to be the car that kept Ford abreast of the times. The visual direction was inspired by the cinematography from Quentin Tarantino`s movies and some 1970s Grindhouse B-class movies. Aims of this lesson Revise utilitarian ethics Link it to cost-benefit analysis used by businesses Consider the case of the Ford Pinto (1972) Evaluate whether utilitarian ethics is to blame - does the criticism hold good? Failure to fix the defect may well have satisfied the utilitarian principle. Discuss your argument in favor or against Ford's decision. The evidence suggests that Ford relied, at least in part, on cost-benefit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing something. Considered net expected utility, measured in monetary terms. The problem with large conglomerates is that in the end, human life is just a dollar value. Ford Pinto Case. Ford Pinto was designed in 1968 as a consequence of Ford's loss of U.S. market share against smaller and cheaper European cars. Ford came to learn of the defect, but the company failed to [] How would Ed Freeman (stakeholder) view it?
Cost-benefit analysis, the Pinto Memo. The Ford Pinto case is a well-known case that is often discussed in the context of business ethics. What's the other new big drama ? To summarize, Ford's design of the Pinto's fuel tank was defective, causing fires if the Pinto was involved in even minor rear-end collisions. Analyze the cost/benefit analysis Ford used in their decision making process concerning the safety of the Pinto. As a thorough study, this book provides material that enriches the entire idea of The Case of the Ford Pinto . CASE STUDY "FORD PINTO" 1. Case Analysis The Ford Pinto case is a well-known case that is often discussed in the context of business ethics. an informal approach to making decisions of any kind. the Pinto is not an isolated case of corporate malpractice in .
Ford has the choice between one design and another but the manufacturing and inventory planning costs of offering the safer one as an option would cost far more per car. And in the court case it turned out that Ford had long since known about the vulnerable fuel tank and had done a cost benefit analysis to determine whether it would be worth it to put in .
2. Saunby A utilitarian approach will be used to evaluate the case - the cost-benefit analysis is assumed to be of secondary value to the overall utilitarian analysis. 3. Pinto Case Cost Benefit Analysis - YouTube This volume discusses the case of the explosion of Ford Pintos due to a defective fuel system design. Analyze the cost/benefit analysis Ford used in their decision making process concerning the safety of the Pinto. Management at Ford has adopted the method of conducting cost benefit analysis to decide whether to invest in making changes in the fuel tank. They . 7. A production of WGBH Boston in association with Harvard and Michael Sandel. The evidence suggests that Ford relied, at least in part, on cost-benefit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing something. The Ford Pinto case was a major scandal during the 1970s. Ford's decision was based on the results of a cost-benefit analysis contained in the notorious "Pinto Memo," written by Ford engineers to guide design decisions. Michael J Sandel teaches Justice and political philosophy at Harvard. Protecting the lives of human beings and protecting the company's image should have been considered by the Ford executives, overruling any cost-benefit analysis. During this time Ford continued to product Pinto.
The Ford Pinto case is based upon act utilitarianism's approach to making a decision using a cost benefit analysis and whether that action makes the best ethical outcome for all involved. 3 teenagers burnt to death after their 1973 Ford Pinto was hit from behind. Make sure you evaluate both sides of the argument when discussing. Critics argued that the vehicle's lack of a . In sum, the cost of recalling the Pinto would have been $121 million, whereas paying off the victims would only have cost Ford $50 million. Ford Pinto Ford pinto full details and analysis report with references. It is this great appetite for profit that makes companies apply policies that bring ethical issues as was the case of Ford Pinto.
What explains Ford's decision? The Pinto was a car with a mission. Not just company cost. Ethical dimensions of ?cost/benefit" analysis. 079142233X (ISBN13: 9780791422335) The Ford Pinto is a prime example of product liability and how cost benefit analysis led to the decisions that endangered the lives of the people driving the Ford Pinto. The common process of car design is around 43 months but, as Ford Pinto urged to be . It rushed from its inception to its actual production. Under both definitions the process involves, whether explicitly or implicitly, weighing the total expected costs . for only $16.05 $11/page. Moral issues that Ford Pinto case raises included producing dangerous products which are not safe to use it without informing the dangerous of the products to the public. The Gioia article from the Journal of Business Ethics provides the very personal perspective of someone intimately involved in the decision-making process.
Original Title. Ford Pinto Cost/Benefit Memo . Click here to view the Ford Pinto Cost/Benefit Memo Ford Removes Safety from Service Bulletin; Ford Delays Safety Upgrade Until Required By Law .
The purpose of the choice was clear. Cost-benefit analysis is a term that refers both to: helping to appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and. Cost Benefit Analysis : The Ford Pinto Case - 1666 Words Ford Pinto Case Study (Professional Ethics and Code of Conduct) 1. What's the end of the Ford case ? The Ford Pinto Case Naif Alotaibi Mohammed Alkhoraimi April 18, 2016 Cost Benefit Analysis The Cost benefit analysis is a financial model where companies or government establishments implement on their decision making. Returning to the Pinto Case | Business Ethics Grush, C.S. (2010). Indeed, it is very likely that many other companies have conducted similar analysis to determine whether or not it is preferable to remedy a problem, or rather settle the . Ford Pinto Case Flashcards | Quizlet "The Ford Pinto case is mentioned in most Business Ethics texts as an example of Cost-Benefit analysis, yet in those formats any appreciation of the complexity surrounding the issues of such decisions is overly simplified. Business Ethics: Ford Pinto's Case - 1774 Words | Essay With the rising popularity of imported Japanese and German vehicles, which were often smaller and more fuel efficient, beginning to push into the dominance of American automakers' share of the market, Ford designed the Pinto as a viable alternative. To summarize, Ford's design of the Pinto's fuel tank was defective, causing fires if the Pinto was involved in even minor rear-end collisions. Discussion and Analysis In 1970s and before that, the CEO of Ford motor company wanted to have an immediate boom in the industry of automobile through introducing the erotic models. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features Press Copyright Contact us Creators . .
According to Sandel, "cost benefit analysis tries to bring rationalityto complex social choices by translating all costs and benefits into monetary termsand then comparing them"(Sandel, p. 41). In 1968, Ford Motor Company had a decision to make as to whether it would compete in the subcompact automotive market. The Ford Pinto Case: A Study in Applied Ethics, Business, and Society (Suny Series Case Studies in Applied Ethics, Technology and Society) ISBN. Put yourself in the role of the Recall Coordinator for Ford Motor Company in the Pinto Case study; (a) What is cost-benefit analysis and is it appropriate where human life is part of the cost calculation?
Pinto was a best-selling subcompact. A Utilitarian Argument in the Ford Pinto Case. We start by viewing a Youtube clip on the Ford Pinto.
(b) How would Milton Friedman (profit maximization) view cost-benefit analysis in this situation? Utilitarian Evaluation of Ford Pinto Case Utilitarian approach is based on simple cost-benefit analysis of each individual issue. When Ford Motor Company performed a cost-benefit analysis to determine the benefits and cost relating to the fuel leakage associated with static rollover tests portion of the FMVSS 208, it failed to make conservative accounting estimates of the worst-case scenario. Practically, the calculated social costs of the potential car accidents were not outweighed by the costs of waiting for the release and making improvements. The utilitarianism is the framework that Ford's analysts relied on while conducting a cost-benefit analysis of the release of the Pinto cars (Poel & Royakkers, 2011). There were various ways of making the Pinto's gas tank safer.
I am actually surprised that the case discussed about how Ford made the cost benefit analysis and placed a dollar value on a human life - $200,000 per human life. Should cost/benefit analysis determine the possibilitiy of hundreds of fatalities? This lobbying has resulted in delayed approval and implementation of the safety guidelines. The Ford Pinto case is based upon act utilitarianism's approach to making a decision using a cost benefit analysis and whether that action makes the best ethical outcome for all involved. Ford came to learn of the defect, but the company failed to correct it; Ford then predicted, based on a cost-benefit analysis, that it would cost more to . 1. Ford won the case but the conduct of manufacturing business was altered forever and ceased production of Pinto. The case is presented here as a study for critically discussing the role cost-benefit analysis plays in ethical . To answer this question, we need to know what ethics is, as well as, what impact it has on businesses, people and relations.
What are three key facts you can find? Ford did a cost-benefit analysis to determine how much it would actually cost to repair the Pinto's gas tank. In 1973, Ford's Environmental and Safety Engineering division developed a cost-benefit analysis entitled Fatalities Associated with Crash Induced Fuel Leakage and Fires for submission to the NHTSA in support of Ford's objection to proposed stronger fuel system regulation. The Ford Pinto was Ford Motor Company's entrance into the subcompact car market in the 1970s. Benefits derived from spending this amount of money were esteimated to be $49.5 million. How does something like the Pinto case happen? The cost-benefit analysis was a legitimate utilitarian calculation.
In 1971 Ford Motor Company decided they wanted to create a compact car that could compete with the other Japanese manufactured cars. The utilitarianism is the framework that Ford's analysts relied on while conducting a cost-benefit analysis of the release of the Pinto cars (Poel & Royakkers, 2011). This cost-benefit analysis argued that Ford should not make an $11-per-car improvement that would prevent 180 fiery deaths a year. Published October 28th 1994 by State University of New York Press (first published January 1st 1994) More Details. a cost benefit analysis, demonstrating that there was a conscious decision to place profit over the value of human life, and that by awarding punitive damages the jury could "send a message" to GM and other manufacturers.2 But there is special merit in revisiting the Pinto case. None Case Questions: 8.
specifically for you. by a van. 6. Handling the lawsuits from Pinto owners, however . The figures above gives us the breakdown of the cost of a burn death, which Ford used in their calculations.
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