Discussion Questions on Hausman and McPherson, " Philosophical Foundations of Normative Economics"

1. Read the memorandum by Lawrence Summers at least twice and think carefully about both his conclusions and his premises. Then study the seven features listed on pp. 228-9 and table 13.1 on p. 230. What are the alternatives to the approach that Summers takes. Are these alternatives feasible? What other framework of economic evaluation might economists realistically have chosen?

2. Why can't we leave it to the market to provide clean air and water in the same way that we leave it to the market to provide bicycles and shoes?

3. Why in Summers's view would a state of affairs in which rich countries pay poor countries to take the garbage and pollution generated by rich countries be better than the status quo in which most of the garbage and pollution produced by rich countries stays within those countries?

4. In you view, would it be an improvement on the status quo if rich countries were to ship their pollution to poor countries without paying poor countries to accept it? Why would some economists think that it would be a good thing if such uncompensated transfers of pollution were possible?

5. Study the reconstruction of Summers's argument on p. 232 and the five objections to it. How telling do you find the objections?

6. Explain the difference between ontological, explanatory, and ethical individualism.

7. What is the point of figure 13.2 on page 245? What important conclusion does it purportedly support?

8. pp. 246-7 lists four ethical problems with cost-benefit analysis. What are they and how serious do you think they are?

9. What is the moral of the story of eflornithine told in footnote 4 on page 249?

10. Be sure that you are clear on the notion of a Pareto improvement, a potential Pareto improvement, and a Pareto efficient state of affairs.