The economics of ethics

The relationship between ethics and economics is closer than it may seem

Another semester comes to an end, in which I had the pleasure to engage with students on the topic of Ethical and Evidence-based Decision Making, a subject that regular readers might know is close to my heart. Naturally, we spend a good deal of the time discussing sources and types of evidence, and how inappropriately applied heuristics, uninformed intuition, emotion, and of course a large array biases can distort our decisions. That is how we typically tend to understand the challenges of good decision-making. But it is when we introduce ethics that things become really, really interesting. Why? Because many decisions, and certainly the most difficult ones, have an important, and inevitable ethical dimension. Once you realize this, you cannot unsee the innumerable ethical decisions all around you (and likely involving you).

The students ponder hypothetical questions like whether it is ethical or not for a Canadian investor to buy shares in a US arms manufacturer, speculating on impending unrest, or for a university professor who believes grading students’ work is archaic and punitive, to hand out “A” grades to everyone. But the on-going strike action in the UK by public sector workers, notably railway and postal workers, is also an excellent example of ethical decision making. What is more, it forms a good illustration of how ethical decision making is also economic decision making.

Striking ethics

Striking is generally a legitimate (and legal) instrument for workers in a conflict with their employers: they withdraw their labour in order to bolster their demands. The workers trade their labour for a wage, and if the wage is too low, or if there are other aspects of their working conditions that are, in their view, not appropriate, they can choose no longer to offer their labour. This is intended to shift the negotiations in favour of the workers (and it often succeeds). Unless the strike action does significant damage to the employer beyond the lost production by the withdrawal of the labour (e.g. valuable critical equipment is not maintained and is lost as a result), this is primarily an economic affair, with only little in the way of ethical considerations.