Question

THE FORD PINTO CASE:
THE VALUATION OF LIFE AS IT APPLIES
TO THE NEGLIGENCE-EFFICIENCY ARGUMENT

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 decision not to upgrade the fuel system based on this analysis.

ISSUE

Should a risk/benefit analysis be used in situations where a defect in design or manufacturing could lead to death or seriously bodily harm, such as in the Ford Pinto situation?

RULE

There are arguments both for and against such an analysis. It is an economically efficient method which has been accepted by courts for numerous years, however, juries may not always agree, so companies should take this into account.

ANALYSIS

Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, which would have cost $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths. The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit. Based on the numbers Ford used, the cost would have been $137 million versus the $49.5 million price tag put on the deaths, injuries, and car damages, and thus Ford felt justified not implementing the design change. This risk/benefit analysis was created out of the development of product liability, culminating at Judge Learned Hand's BPL formula, where if the expected harm exceeded the cost to take the precaution, then the company must take the precaution, whereas if the cost was liable, then it did not have to. However, the BPL formula focuses on a specific accident, while the risk/benefit analysis requires an examination of the costs, risks, and benefits through use of the product as a whole. Based on this analysis, Ford legally chose not to make the design changes which would have made the Pinto safer. However, just because it was legal doesn't necessarily mean that it was ethical. It is difficult to understand how a price can be put on saving a human life.

There are several reasons why such a strictly economic theory should not be used. First, it seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it. Second, the analysis does not take into all the consequences, such as the negative publicity that Ford received and the judgments and settlements resulting from the lawsuits. Also, some things just can't be measured in terms of dollars, and that includes human life. However, there are arguments in favor of the risk/benefit analysis. First, it is well developed through existing case law. Second, it encourages companies to take precautions against creating risks that result in large accident costs. Next, it can be argued that all things must have some common measure. Finally, it provides a bright line which companies can follow.

Q: Please point out the relevant ethical issues in the Ford Pinto case.

Answer 1

Answer A)

Ethics looks to determine inquiries of human profound quality by characterizing ideas, for example, great and abhorrent, good and bad, goodness and bad habit, equity and crime.Business morals is the investigation of fitting business approaches and works on in regards to conceivably questionable subjects including corporate administration, insider exchanging, remuneration, segregation, corporate social obligation, and guardian duties.

• law has shown that business custom is not an excuse to escape liability, custom combined with the risk/benefit analysis would lead to the same result
• Ford is fail to follow its responsibility towards society
• Ford should implement the new security system even not supported by cost benefit analysis.
• Ford should recall all its sold car with immediate effect to give a perfect example of ethical business house.
• Such ethical activity may pay in future for company in terms of brand , goodwill and valuation of firm.