Cost-Benefit Analysis

Under a utilitarian model of ethics, an action is morally correct, or “right,” when, among the people it affects, it produces the greatest amount of good for the greatest number (or creates the least amount of harm). When an action affects the majority adversely, it is morally wrong. Applying the utilitarian theory thus requires the following steps:

1. A determination of which individuals will be affected by the action in question.

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2. A  cost-benefit analysis , which involves an assessment of the negative and positive effects of alternative actions on these individuals.

3. A choice among alternative actions that will produce maximum societal utility (the greatest positive net benefits for the greatest number of individuals).

For instance, assume that expanding a factory would provide hundreds of jobs but generate pollution that could endanger the lives of thousands of people. A utilitarian analysis would find that saving the lives of thousands creates greater good than providing jobs for hundreds.


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