Product Liability is legal liability of a manufacturer or seller is held responsible for a defective product being sold to the consumers. The Ford Pinto is a prime example of product liability and how cost benefit analysis led to the decisions that endangered the lives of the people driving the Ford Pinto. Ford was not willing to add an $11 component to the Pinto to make it safer, but was rather willing to have people die or receive serious burns because it was more beneficial to do so (Hosmer, 386-387). This case shows that a company was willing to endanger human life to reap benefits, and in the process damaging their long-term image for short term benefits.
Ford did a cost-benefit analysis based on the amount that would cost them to recall and fix the cars, and what a life was worth based on information from the National Highway Traffic Safety Administration (NTSA). Ford made a moral mistake by placing a cost-benefit analysis based on peoples lives and not fixing an issue with their car that they knew. After 8 years of lobbying against the safety issues, Ford decided to address the issue (Trevino, 390).
Comparing the case of the Ford Pinto and placing the value on human life by Ford is not comparable to the practice by insurance companies that use the same method to place a value on human life. The value is used to estimate the amount of money that an individual might have earned over their life. The insurers putting a value of human life are in case if an accident occurs and the victims die or are severely injured. But in the case of Ford the putting of a dollar value on human life and not addressing key safety issues with the car so they do not have to pay more to keep their cars safe for the users and the passengers.
The use of the dollar value of human life is used to calculate the value that should be paid that will be sufficient for the dependents but that should only be used if required in a time of unexpected tragedy, not in a situation that can be avoided by a known cheap fix to the problem rather than putting human lives under the cost-benefit analysis.
In my opinion Ford should not have used a cost-benefit analysis and determine a dollar value for human life, and chose not to recall the cars as it is more cost effective to payout the lawsuit settlements instead of the fixes to the car. The additional issue that occurred in the Ford Pinto case the negligence and double standard of Ford in terms of safety was outlined and knowingly providing customers with a defective product is morally wrong. Ford should have accepted its mistakes and immediately recalled the cars once the issue was identified and solved, instead of waiting for 8 years and recalling the car to fix the issue that could have been done before the car came into service. The cost-benefit analysis led to Ford losing millions in payments regarding the lawsuits and it also harmed Fords reputation as a car manufacturers.
The Ford Pinto case highlights when the ethical limitations for the cost-benefit analysis, and when it is not appropriate to conduct a cost-benefit analysis. The use of the data by organizations for their cost benefit analysis can be considered morally inappropriate. But the use of the data by insurers is justifiable as being ethical even if the human life is priceless. The sum can help support the dependents of the deceased person. The lessons learned by issues that occurred in the past have led to the development of better safety standards, as well as, more ethical business decision making and taking into consideration the actual human life not just the cost of the person involved in the incident.
Hosmer, L. (1988). Adding Ethics to the Business Curriculum. Business Horizons,
Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (3rd ed.). New York, NY: McGraw-Hill Education.
Borris, F. (2002). Post Rear End Collision Fires. National Highway Traffic Safety Administration. Retrieved October 13, 2014, from Post Rear End Collision Fires
Trevino, L.K. & Nelson, K. A. (2011). Managing Business Ethics. (5th Ed.) Hoboken, NJ: John Wiley & Sons, Inc.
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