Version: v1, Published online: 1998
Retrieved March 07, 2021, from https://www.rep.routledge.com/articles/thematic/economics-and-ethics/v-1
Unlike many other sciences, economics is linked both to ethics and to the theory of rationality. Although many economists regard economics as a ‘positive’ science of one sort of social phenomena, economics is built around a normative theory of rationality, and has a special relevance to policy making and the criticism of social institutions. Economics complements and intersects with moral philosophy in both the concepts it has constructed and in its treatment of normative problems.
Fundamental to modern economics is its conception of human beings as rational agents, whose choices are determined by complete and transitive preferences. Although economists stress the usefulness of this notion of rationality in explaining human behaviour, rationality is clearly also a normative notion. The mathematical tools economists have developed to represent and study the implications of rational action in collective and interactive contexts are thus of immediate relevance to moral philosophers.
Also of interest to moral philosophy is the problematic attempt in welfare economics to fashion a normative theory of economic institutions and policies around the goal of helping people satisfy their subjective preferences. This project relies, controversially, on equating people’s wellbeing with the degree of satisfaction of their subjective preferences; an individual’s ‘utility’ on this view is no more than an index of how well their subjective preferences are satisfied. Furthermore, since most welfare economists assume that there is no meaningful way to compare degrees of preference satisfaction across people, the project also requires a scheme for weighing the effectiveness of alternative economic arrangements in satisfying preferences without weighing the comparative satisfaction levels of different individuals. Central to the project is Pareto optimality – the notion of an ‘efficient’ arrangement as one in which no individual can achieve higher preference satisfaction without someone else undergoing a reduction in their satisfaction level.
Economic policies and institutions can be appraised in terms of a variety of values other than efficiency. Notable both in historical and contemporary discussions are the values of liberty, justice and equality. Since a large part of economics is carried out with a view to its possible application to policy, ethics has a significant part to play in economics. By the same token, economics may be of great importance to ethics, both through its exploration of consequences and through the development of mathematical and conceptual tools.
Hausman, Daniel and Michael S. McPherson. Economics and ethics, 1998, doi:10.4324/9780415249126-S020-1. Routledge Encyclopedia of Philosophy, Taylor and Francis, https://www.rep.routledge.com/articles/thematic/economics-and-ethics/v-1.
Copyright © 1998-2021 Routledge.