Ethics, Rationality, and Economic Behaviour

Ethics, Rationality, and Economic Behaviour

Ethics, Rationality, and Economic Behaviour

Ethics, Rationality, and Economic Behaviour

Synopsis

The connection between economics and ethics is as old as economics itself, and central to both disciplines. It is an issue that has recently attracted much interest from economists and philosophers. The connection is, in part, a result of the desire of economists to make policy prescriptions, which clearly require some normative criteria. More deeply, much economic theory is founded on the assumption of utility maximization, thereby creating an immediate connection between the foundations of economics and the philosophical literature on utilitarianism and reasons for action. In fact, some influential contemporary approaches to ethics advocate decision-theoretic or game-theoretic foundations of some sort for moral principles, while several economic theorists are now prepared to take into account the ethical dimensions of rational decisions. As a result, it appears that economics and ethics are somehow inextricably linked through theories of rational decision-making. Most of us would probably find it disturbing to concede that there are contradictions between the prescriptions of rationality and the requirements of moral "rightness". The essays included in the present volume provide a detailed analysis of the connections between ethics and economics as viewed from several different--sometimes conflicting-- perspectives. This book, the outcome of a joint meeting of philosophers and economists, has three main themes: the validity of utilitarianism much used by economists, the notion of fairness and equity, and the coherence of the rationality postulate of economics. The book does not reach any final conclusions, but it greatly illuminates the exact areas of possible disagreement and indeed the open-ended nature of ethical reasoning. There is much that eoncomists, and especially welfare economists, can learn from these papers--including circumspection.

Excerpt

Most of us would probably find it disturbing to concede that the prescriptions of rationality may well contradict the requirements of moral 'rightness' and vice versa. In fact, a few most influential contemporary approaches to ethics advocate decision-theoretic or game-theoretic foundations of some sort for moral principles, while several economic theorists are now prepared to take into serious account the ethical dimension of rational decisions. As a result, it appears that economics and ethics are somehow inextricably linked through theories of rational decision-making. The essays included in the present volume provide a detailed analysis of these connections between ethics and economics as viewed from several different--sometimes conflicting-- perspectives.

The five papers included in the first section of this volume address some foundational issues regarding ethics, rational choice theory, and normative economics. The scope and significance of utilitarianism is bound to be an issue of central concern when venturing into that territory. This is so at least since Harsanyi's celebrated 'aggregation theorem' made it clear that any unanimity-respecting rule aggregating individual expected utilities into a 'social' expected utility function is representable by an utilitarian-like weighted sum of individual utility functions.

Indeed, the basic tenet of modern utilitarianism is that moral choice can be reduced to maximization of a social welfare functional which is in turn a 'sum' of suitable indicators of individual well-being (such indicators are usually constructed as representations of individual rational preferences or choices). This typically requires the feasibility of a full description of all relevant consequences of every action profile, the completeness and transitivity of social welfare evaluations on the part of the relevant moral actor, and the availability of reasonably 'hard' information in the right format (say, comparable interval scales) concerning individual preferences or utilities. Now, the contributions by Sen, Lukes, and Williams point to the inescapable multidimensionality and incompleteness of ethical evaluations by arguing for the irreducible plurality of values and reasons, while both Hahn's and Sen's papers insist on the limited reliability of preferences as . . .

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