Posts Tagged ‘Product safety’

Milton Friedman on the price of human life

August 11, 2011

The following exchange between the Nobel economist Milton Friedman and a college student (who was not named Michael Moore) has been making the rounds of the Internet.

The video shows a segment from a 1977-1978 lecture series given by Milton Friedman, in which he is questioned by a student about free market principles and the Ford Pinto.  The Ford Pinto, which was sold from 1971 to 1980, was a subcompact which, because of its design, had a gasoline tank that would explode during rear-end collisions.  Ford in an internal memo estimated that the problem could be fixed through a $13 fix, but as this would amount to spending more than $200,000 per estimated life saved, this would be too much.  About 1,000 Ford Pinto drivers were victims of rear-end explosions.

The student said this was morally wrong.  Friedman said it is not a question of morality, but of economic calculation.  No human life is of infinite value, he said; you wouldn’t spend $1 billion to save a human life, because it would soak up resources needed to preserve other human lives.  So the only question, according to Friedman, is whether Ford weighed costs and benefits correctly.  He did not express an opinion on whether it did.

Here are some problems with Friedman’s argument:

  • The contemptuous dismissal of ordinary human moral intuition.
  • The substitution of a “rational” judgment based purely on monetary factors.
  • A “rational” judgment based on an extreme example that never would occur in real life.
  • Privileging a corporate executive to make the cost-benefit evaluation over the person affected.

All these assumptions are worth bringing to light and challenging, because they are widespread in American society today—thanks in part to Friedman’s influence.