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This book shows through argument and numerous policy-related examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores the idea of rationality and its connections to ethics, arguing that when they defend their formal model of rationality, most economists implicitly espouse contestable moral principles. Part II addresses the nature and measurement of welfare, utilitarianism and cost-benefit analysis. Part III discusses freedom, rights, equality, and justice - moral notions that are relevant to evaluating policies, but which have played little if any role in conventional welfare economics. Finally, Part IV explores work in social choice theory and game theory that is relevant to moral decision making. Each chapter includes recommended reading and discussion questions.
List of contents
1. Ethics and economics?; 2. Ethics in welfare economics; 3. Ethics in positive economics: two examples; Part I. Rationality, Morality, and Markets: 4. Rationality and utility theory; 5. Rationality and morality in positive economics; 6. The ethical limits to markets; Part II. Welfare and Consequences: 7. Utilitarianism, consequentialism, and justice; 8. Welfare; 9. Welfare economics; Part III. Liberty, Rights, Equality and Justice: 10. Liberty, rights and libertarianism; 11. Equality and egalitarianism; 12. Justice and contractualism; Part IV. Moral Mathematics: 13. Social choice theory; 14. Game theory; Conclusions: 15. Putting economics and ethics to work; 16. Economics and ethics, hand in hand; Appendix.
About the author
Daniel M. Hausman is the Herbert A. Simon and Hilldale Professor of Philosophy at the University of Wisconsin, Madison. A founding editor of the journal Economics and Philosophy (with Michael McPherson), his research has centered on epistemological, metaphysical, and ethical issues at the boundaries between economics and philosophy. He is the author of Capital, Profits, and Prices (1981), The Inexact and Separate Science of Economics (1992), Causal Asymmetries (1998), Preference, Value, Choice, and Welfare (2012), and Valuing Health: Well-Being, Freedom, and Suffering (2015).
Summary
This book shows how careful attention to moral reasoning can enrich economic understanding and clarify the importance and the limits of an economic analysis of policy problems.
Report
'The new edition of the book by Hausman, McPherson, and Satz is a rich and needed reading of economic analysis from the viewpoint of moral philosophy. Economists, if they reflect on these issues at all, think of their work as akin to physics; we find the pre-existing laws which govern the economic world. They can be considered simply as factual relations interesting in their own right; they can be used, as electricity, to serve human ends. What the authors demonstrate by detailed examination is that the analysis itself is shot through with normative and philosophical considerations. Any thoughtful reader will find his or her presuppositions challenged.' Kenneth J. Arrow, Stanford University, California, and Winner of the 1972 Nobel Prize in Economic Sciences
