Motor Vehicle Crash Fatalities and Fatality Rates (per Hundred Million Vehicle Miles Traveled), 1899-2009
B. Cost / Benefit Calculations and the Learned Hand Formula
2. Critiques of Cost-Benefit Reasoning
Critiques from First Principles
Posner’s influential articulation of the negligence test helped give rise to the economic analysis of the law, which is now pervasive in the academy and in some areas influential outside of it. The law and economics approach has also been the subject of controversy, however. Critics object that Learned Hand’s formula imbues the tort system with a utilitarian philosophy that fails to square either with the law as it is or with our moral intuitions about what it should be. We can get a flavor of this from the so-called
“trolley problem,” which is often invoked to establish that utilitarian considerations of costs and benefits do not capture the nuances of our moral reasoning:
Consider Judith Jarvis Thomson’s widely discussed formulation:
Suppose you are the driver of a trolley. The trolley rounds a bend, and there come into view ahead five track workmen, who have been repairing the track. The track goes through a bit of a valley at that point, and the sides are steep, so you must stop the trolley if you are to avoid running the five men down. You step on the brakes, but alas they don't work. Now you suddenly see a spur of track leading off to the right. You can turn the trolley onto it, and thus save the five men on the straight track ahead.
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Unfortunately, Mrs. Foot has arranged that there is one track workman on that spur of track. He can no more get off the track in time than the five can, so you will kill him if you turn the trolley onto him. Is it morally permissible for you to turn the trolley?
Everybody to whom I have put this hypothetical case says, Yes, it is. Some people say something stronger than that it is morally permissible for you to turn the trolley: They say that morally speaking, you must turn it-that morality requires you to do so....
[Now c]onsider a case—which I shall call Fat Man—in which you are standing on a footbridge over the trolley track. You can see a trolley hurtling down the track, out of control. You turn around to see where the trolley is headed, and there are five workmen on the track where it exits from under the footbridge. What to do? Being an expert on trolleys, you know of one certain way to stop an out-of-control trolley: Drop a really heavy weight in its path. But where to find one? It just so happens that standing next to you on the footbridge is a fat man, a really fat man. He is leaning over the railing, watching the trolley; all you have to do is to give him a little shove, and over the railing he will go, onto the track in the path of the trolley. Would it be permissible for you to do this? Everybody to whom I have put this case says it would not be. But why?
Judith Jarvis Thomson, The Trolley Problem, 94YALE L.J.1395, 1409 (1985).
We might put the question slightly differently. We might ask whether the estates and families of the workman or the fat man have causes of action against the driver or passerby. Or we might ask whether the estates and families of the five killed by a failure to switch the track or push the fat man might have a cause of action against the actor who failed to take the step that would have saved the five. Either way, however, the puzzle of the trolley problem, which was first introduced by the twentieth-century British
philosopher Philippa Foot, is that measured in terms of costs and benefits; the spur scenario and the fat man scenario seem identical. One death for five lives. And yet as Thomson says, the two scenarios seem to most people to require quite different moral analyses. It seems to follow, at least on one account, that non-utilitarian considerations are necessary to make sense of our evaluations of right and wrong.
Even if the trolley problem illustrates the limits of utilitarian considerations, however, does Thompson’s example rule out cost-benefit analysis altogether? Probably not. Observe that the decision to switch the tracks in the spur scenario would be
senseless absent the apparently greater cost of the five deaths as compared to the one.
Costs and benefits seem necessary for rational moral decision-making even if they are not entirely sufficient.
The claim of critics of cost-benefit reasoning is thus not that this form of reasoning has no place in law and morality. The claim, as the late legal philosopher
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Ronald Dworkin put it, is that in some circumstances, rights “trump” utilities. R.
DWORKIN,TAKING RIGHTS SERIOUSLY, ix (1977). The trick, then, is to identify the
circumstances in which rights take precedence over utility, and the circumstances in which utilitarian goals might indeed be sufficient.
Critiques from Administrability
Even setting aside objections to the moral structure of utilitarianism,
methodological difficulties abound for cost-benefit analysis. Ackerman and Heinzerling argue that the valuations commonly used by analysts are typically “inaccurate and implausible,” and that analysts “trivialize [] future harms and the irreversibility of some environmental problems” by valuing present economic gains over future economic losses (through a process economists call discounting). They also suggest that adding up all of society’s gains and losses muddles opportunities for a full conversation about
distributional and moral consequences, making a supposedly transparent and objective process anything but. Frank Ackerman and Lisa Heinzerling, Pricing the Priceless: Cost-Benefit Analysis of Environmental Protection, 150 U. PA.L.REV. 1553, 1563 (2002).
Other critics observe that the informational demands of Posner’s approach to cost-benefit analysis are superhuman. In decentralized markets, well-informed market
participants compound vast quantities of information. The market’s capacity to crowd-source cost-benefit calculations is, as Nobel laureate Amartya Sen puts it, “[t]he
spectacular merit of the informational economy of the market system for private goods.”
But judicial cost-benefit analysis can claim no such market advantage. “When all the requirements of ubiquitous market-centered evaluation have been incorporated into the procedures of cost-benefit analysis,” Sen has remarked, “it is not so much a discipline as a daydream.” Amartya Sen, The Discipline of Cost-Benefit Analysis, 29 J. LEGAL STUD. 931, 951 (2000). See also David M. Driesen, Is Cost-Benefit Analysis Neutral? 77 U.
COLO.L.REV. 335 (2006); Ulrich Hampicke and Konrad Ott (eds.), Reflections on Discounting, 6 INT.J. OF SUSTAINABLE DEVELOPMENT 7 (2003).
A Precautionary Alternative?
Critics further argue that there are better alternatives to cost-benefit analysis.
Some advocate a “precautionary principle” for making policy decisions about risk. For example, the Declaration of the 1992 United Nations Conference on Environment and Development (also known as the “Rio Declaration”) states that “where there are threats of serious and irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”
How might a precautionary principle approach be adopted in tort law? Should we all have a duty to take special precautions to avoid irreversible damage to life and limb, even
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when not cost-justified? Or are injuries to life and limb themselves costs to be brought into the balance?
Can the precautionary principle handle decisions about risk that feature risks to human health and life on both sides of the equation? It is an important question, since most decisions about risk can be said to include risks to life on both sides of the equation.
Consider safety regulations that increase the cost of some consumer good. Safer cars will save lives. But more expensive cars will cost lives, too, since they may reduce the
number of cars sold, reduce wealth, and cost some people their jobs. Such “life-life” or
“risk-risk” situations, contend the defenders of cost-benefit reasoning, preclude resort to any “precautionary” approach, since there are risks on all sides. Even setting aside the risk-risk problem, opponents of the precautionary principle contend that its advocates are simply trying to put an illicit thumb on the scale for difficult policy balancing decisions.
See Cass Sunstein, Beyond the Precautionary Principle, 151 U. PA.L.REV. 1003 (2003).
Kysar’s Constructivist Critique
Professor Douglas Kysar has advanced a different defense of the precautionary principle. According to Kysar, the regulatory approaches we use are not just tools we manipulate to advance our social values. Our approaches to risk policy constitute our values, even as they implement them.
The precautionary principle encourages . . . conscientiousness by
reminding the political community, poised on the verge of a policy choice with potentially serious or irreversible environmental consequences, that its actions matter, that they belong uniquely to the community and will form a part of its narrative history and identity, helping to underwrite its standing in the community of communities, which includes other states, other generations, and other forms of life. Like the Hippocratic adage for physicians, the precautionary principle reminds the cautioned agent that life is precious, that actions are irreversible, and that responsibility is unavoidable. Such considerations, in contrast, hold no clear or secure place within the logic of welfare maximization, tending, as it does, to deny the political community a view from within itself and to ask the
community, in essence, to regulate from nowhere.
Douglas A. Kysar, Regulating from Nowhere, Environmental Law and the Search for Objectivity 16 (2010). Kysar’s point is that we construct ourselves in the policies we adopt. His precautionary principle is typically raised in debates over environmental law and regulation, which usually operate on a forward-looking basis to deal with ongoing pollution problems. Does the precautionary principle have a place in the tort system, which ostensibly is confronting past wrongs?
170 3. In Defense of Cost-Benefit Reasoning
Defenders of cost-benefit reasoning have responded to these critiques with their own counter-arguments, beginning with a response to the so-called “incommensurability problem”:
Robert H. Frank, Why is Cost-Benefit Analysis so Controversial?, 29 J.LEGAL STUD. 913, 914 (2000).
The cost-benefit principle says we should install a guardrail on a dangerous stretch of mountain road if the dollar cost of doing so is less than the implicit dollar value of the injuries, deaths, and property damage thus prevented. Many critics respond that placing a dollar value on human life and suffering is morally illegitimate.
The apparent implication is that we should install the guardrail no matter how much it costs or no matter how little it affects the risk of death and injury.
Given that we live in a world of scarcity, however, this position is difficult to defend. After all, money spent on a guardrail could be used to purchase other things we value, including things that enhance health and safety in other domains. Since we have only so much to spend, why should we install a guardrail if the same money spent on, say, better weather forecasting would prevent even more deaths and injuries?
More generally, critics object to the cost-benefit framework’s use of a monetary metric to place the pros and cons of an action on a common footing. They complain, for example, that when a power plant pollutes the air, our gains from the cheap power thus obtained simply cannot be compared with the pristine view of the Grand Canyon we sacrifice....
This view has troubling implications.... Scarcity is a simple fact of the human condition. To have more of one good thing, we must settle for less of another. Claiming that different values are incommensurable simply hinders clear thinking about difficult trade-offs.
Notwithstanding their public pronouncements about incommensurability, even the fiercest critics of cost-benefit analysis cannot escape such trade-offs. For example, they do not vacuum their houses several times a day, nor do they get their brakes checked every morning. The reason,
presumably, is not that clean air and auto safety do not matter, but that they have more pressing uses of their time. Like the rest of us, they are forced to make the best accommodations they can between competing values.
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Cass Sunstein articulates a different defense of cost-benefit reasoning, one that focuses on the architecture of the decision-making process:
Cass Sunstein, Cognition and Cost-Benefit Analysis, 29 J.LEGAL STUD. 1059, 1060 (2000).
[C]ost-benefit analysis is best defended as a means of overcoming predictable problems in individual and social cognition. Most of these problems might be collected under the general heading of selective attention. Cost-benefit analysis should be understood as a method for putting “on screen” important social facts that might otherwise escape private and public attention. Thus understood, cost-benefit analysis is a way of ensuring better priority setting and of overcoming predictable obstacles to desirable regulation, whatever may be our criteria for deciding the hardest questions about that topic. . . . [T]his method, conceived in a particular way, might attract support from people with varying
conceptions of the good and the right, including, for example, neoclassical economists and those who are quite skeptical about some normative claims in neoclassical economics, involving those who do and who do not take private preferences, and willingness to pay, as the proper foundation for regulatory policy.
Sunstein’s support of cost-benefit reasoning sees the method as the best—perhaps the only—tool to make transparent, rational decisions in regulatory agencies and
courtrooms. He claims that cost-benefit analysis actually helps us organize a broad range of value judgments, whether or not they fit neatly into existing markets.
Sunstein has also used behavioral science research to suggest that our moral intuitions against utilitarianism, and potentially for alternatives like the precautionary principle, are fundamentally mistaken. Taking up Judith Jarvis Thomson’s trolley
problem, which we encountered above, Sunstein argues that in unusual cases our ordinary moral intuitions mislead us and that the two trolley scenarios are morally identical:
Cass Sunstein, Moral Heuristics, 28 BEHAV.&BRAIN SCI. 531, 540-1 (2005) As a matter of principle, there is no difference between the two cases.
People’s different reactions are based on moral heuristics that condemn the throwing of the stranger but support the throwing of the switch. As a matter of principle, it is worse to throw a human being in the path of a trolley than to throw a switch that (indirectly?) leads to a death. The relevant heuristics generally point in the right direction. To say the least, it is desirable for people to act on the basis of a moral heuristic that makes it extremely abhorrent to throw innocent people to their death. But the underlying heuristics misfire in drawing a distinction between the two cleverly devised cases. Hence, people struggle heroically to rescue their
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intuitions and to establish that the two cases are genuinely different in principle. But they aren’t. In this sense, a moral heuristic... leads to errors.
And this objection does not bear only on ingeniously devised hypothetical cases. It suggests that a moral mistake pervades both commonsense morality and law, including constitutional law, by treating harmful omissions as morally unproblematic or categorically different from harmful actions.
Is there anything to be said to those who believe that their moral
judgments, distinguishing the trolley and footbridge problems, are entirely reflective, and embody no heuristic at all? Consider a suggestive
experiment designed to see how the human brain responds to the two problems (Greene et al. 2001). The authors do not attempt to answer the moral questions in principle, but they find “that there are systematic variations in the engagement of emotions in moral judgment,” and that brain areas associated with emotion are far more active in contemplating the footbridge problem than in contemplating the trolley problem. An implication of Greene et al.’s finding is that human brains are hard-wired to distinguish between bringing about a death “up close and personal” and doing so at a distance. Of course, this experiment is far from decisive;
emotions and cognition are not easily separable (Nussbaum 2002), and there may be good moral reasons why certain brain areas are activated by one problem and not by the other. Perhaps the brain is closely attuned to morally irrelevant differences. But consider the case of fear, where an identifiable region of the brain makes helpfully immediate but not entirely reliable judgments (Ledoux 1996), in a way that suggests a possible physical location for some of the operations of [our moral heuristics]. The same may well be true in the context of morality, politics, and law (Greene
& Haidt 2002).