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Chapter 2: Problem 13

Lawrence Summers served as secretary of the Treasury in the Clinton administration and as director of the National Economic Council in the Obama administration. He has been quoted as giving the following defense of the economic approach to policy issues: There is nothing morally unattractive about saying: We need to analyze which way of spending money on health care will produce more benefit and which less, and using our money as efficiently as we can. I don't think there is anything immoral about seeking to achieve environmental benefits at the lowest possible costs. Would it be more ethical to reduce pollution without worrying about the cost or by taking the cost into account? Briefly explain.

Short Answer

Expert verified
The approach proposed by Summers, primarily based on cost-benefit analysis, is not inherently immoral as it aims at optimizing societal benefits while minimizing costs. This could, in turn, make more resources available for other pressing societal needs. However, it is important to ensure that the calculation of benefits does not overlook any significant costs, particularly those that are not easily quantifiable such as the impact on vulnerable groups. In other words, cost efficiency should not lead to compromises on ethical values and principles.

Step by step solution

01

Analysing the quotation

Examine the details of Lawrence Summers's statement. He highlights the importance of cost-efficient decisions in public policy matters especially health care and environmental issues.
02

Understanding cost-benefit analysis

Recognize that the suggestions proposed by Summers are akin to cost-benefit analysis. It is a fundamental economic principle wherein the value of actions is assessed based on their costs and benefits. The aim is to maximize the average benefit and to minimize the average cost.
03

Ethical considerations in decision-making

Evaluate the ethical implications of Summers's approach. Think about whether his insistence on taking the cost into account in achieving societal benefits adds or subtracts from the ethical value of such decisions.
04

Applying the concepts to the question

Finally, apply these understandings to answer the question. Consider whether more ethics lie in making cost-efficient decisions, as Summers suggests, or if making decisions without regard to cost would be more ethical.

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