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. 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 few cases that arise in court. Below are some examples that show how a cost-benefit analysis may be used to save money while endangering the lives of consumers.
Ford at it Again
According to a 2001 article from the Albany Times Union, Ford Motor Company was facing a class-action lawsuit from defective ignition systems in nearly 20 million cars it had produced between 1983 and 1995. While Ford dismissed the charges claiming that the ignition systems were acceptable, their internal memos paint a different story. According to the article, “the company was concerned that the ignition design could make engines stall -- resulting in ``rapid catastrophic failure'' -- at high temperatures.” Furthermore, Ford seemingly used this faulty ignition system in order to save $2 per car in manufacturing cost. In a case in which 11 people have been killed, along with another 31 injured by 2001, the judge overseeing the case asserted that Ford full-well knew of the impending dangers of the ignition, and chose to conceal it. (Kravetz)
The Story
Thought Experiment: Pharmaceutical Responsibility
Consider a case where a pharmaceutical company released medication to treat depression. The medication is wildly effective, with nearly 85% of patients reporting a significant change in quality of life. However, in a few cases it has been shown to induce cardiac arrest so massive that it is nearly always fatal. Due to the benefits seen by the medication, the company has conducted a cost-benefit analysis and concluded that the amount that will be paid out annually to those harmed by the medication will be, on average, around 30 percent of the profit yielded. The issue in this case, like in the case of the Pinto, is whether or not it is ethical for the company to sell a product that will knowingly result in the death of some of its users.
Mother Jones Magazine
The October 1977 issue of Mother Jones was the first to officially spill the guts about Ford’s cost-benefit analysis in regards to the Pinto. You can read the original story from over thirty years ago here:
Mother Jones - October 1977
Just for Fun
A sound clip from the movie Fight Club, where the main character discusses his job as a cost-benefit analyst. WARNING: Contains some graphic language.
Ford at it Again
According to a 2001 article from the Albany Times Union, Ford Motor Company was facing a class-action lawsuit from defective ignition systems in nearly 20 million cars it had produced between 1983 and 1995. While Ford dismissed the charges claiming that the ignition systems were acceptable, their internal memos paint a different story. According to the article, “the company was concerned that the ignition design could make engines stall -- resulting in ``rapid catastrophic failure'' -- at high temperatures.” Furthermore, Ford seemingly used this faulty ignition system in order to save $2 per car in manufacturing cost. In a case in which 11 people have been killed, along with another 31 injured by 2001, the judge overseeing the case asserted that Ford full-well knew of the impending dangers of the ignition, and chose to conceal it. (Kravetz)
The Story
Thought Experiment: Pharmaceutical Responsibility
Consider a case where a pharmaceutical company released medication to treat depression. The medication is wildly effective, with nearly 85% of patients reporting a significant change in quality of life. However, in a few cases it has been shown to induce cardiac arrest so massive that it is nearly always fatal. Due to the benefits seen by the medication, the company has conducted a cost-benefit analysis and concluded that the amount that will be paid out annually to those harmed by the medication will be, on average, around 30 percent of the profit yielded. The issue in this case, like in the case of the Pinto, is whether or not it is ethical for the company to sell a product that will knowingly result in the death of some of its users.
Mother Jones Magazine
The October 1977 issue of Mother Jones was the first to officially spill the guts about Ford’s cost-benefit analysis in regards to the Pinto. You can read the original story from over thirty years ago here:
Mother Jones - October 1977
Just for Fun
A sound clip from the movie Fight Club, where the main character discusses his job as a cost-benefit analyst. WARNING: Contains some graphic language.
