We Live in a Cost-Benefit Analysis Society

by Nancy Barr, Professor of Practice, Mechanical and Aerospace Engineering


The Covid-19 pandemic is revealing some uncomfortable truths about American society when we consider the devastating impact the virus is having on minority and poor communities. On May 13, 2020, PBS NewsHour interviewed representatives of several Native American tribes hit hard by the Covid-19 pandemic; one man called it an existential crisis because of the loss of so many elders who pass on the tribe’s traditions. It has been reported that Black Americans are dying from Covid-19 at three times the rate of white Americans. Michigan’s Department of Health and  Human Services reported that of those infected in Michigan, 31 percent identify as Black despite making up just 14 percent of the state’s population. According to the Economic Policy Institute, not only are black workers more likely to be laid off during the pandemic, they are also more likely to hold low-wage frontline jobs such as those at grocery stores, hospitals, and public transit. The conditions that have led to these inequities include a lack of access to quality education and discriminatory criminal justice policies. The Atlantic reported in 2016 that in half of America’s 100 largest cities, most African American and Latino children attended schools where 75 percent of the students qualified as poor or low-income. This statistic matters because one of the best indicators of whether a child will perform well in school is the economic status of her classmates, i.e., more affluent school districts have more resources available to help all children, not just the high performers. When a child does not have access to quality educational opportunities, it is less likely they will achieve financial independence and live a healthy, safe lifestyle. Added to that, criminal records for any petty offenses follow them throughout their lives and contribute to preventing them from obtaining better-paying jobs.

This pandemic has revealed stark contrasts between the privileged and the vulnerable. Why is the United States, the richest country on the planet by so many measures, also one of the least equitable in terms of educational attainment, health outcomes, and family balance sheets? Those inequities are rooted in our nation’s tendency to rely on cost-benefit ethics, where the costs are born by certain--mostly minority--populations and the benefits are enjoyed by a much smaller--privileged--population When the vulnerable would benefit, the cost is often deemed too high for the privileged to bear. This ethical philosophy, also known as ethical egoism or social Darwinism, purports that when people act in their own self-interest all of society benefits because the strongest thrive while the weak do not. Ayn Rand may not have used the same terminology, but she sums up this philosophy well in The Virtue of Selfishness by stating, “The principle of trade is the only rational ethical principle for all human relationships, personal and social, private and public, spiritual and material” (1964, p. 34). 

While political leaders in the U.S. might refrain from blatantly echoing Rand’s words, many have long argued that our country was founded on principles of self-reliance, freedom, and personal responsibility. But how often have we as citizens questioned how one becomes self-reliant, whether every citizen can participate in the freedoms supposedly guaranteed by our Constitution, and how far personal responsibility extends to our fellow citizens? Not often enough. We allow our community leaders to perform simplistic cost-benefit analyses when faced with questions of equity. They only look at what financial resources are needed to change the situation and from where those resources need to be extracted. Their analyses label the cost in the form of taxes on businesses and property owners, with the benefits going to populations with little political power, e.g., minorities and the poor. The cost is seen as too high because businesses would either leave or decide against moving to their locale; meanwhile, the benefit is viewed as not worth that cost because of the lack of political gain. This shortsighted view means the cycle of poverty continues. The strongest (those with the financial and political capital) continue to thrive, and the weakest (those with the wrong skin color, wrong name, and wrong bank balance) are driven further into desperation.

We claim to be a caring nation, one that comes to the aid of the downtrodden, and we do have some inspiring examples of when our aid did make a difference in the world. But we never seem to let go of the simplistic cost-benefit analysis in determining who is worthy of our aid. For examples, see the desire to support the military-industrial complex that made the Cold War “worth” the $8 trillion spent and the nearly 100,000 American lives lost (Goede, 2019) or the $80 billion the U.S. spends each year to incarcerate 2.3 million of its citizens. The rhetoric of political leaders during this pandemic is showing that same decision-making tool in use in the most simplistic of ways. Throughout much of April and May, the president and many of his supportive governors vowed to “reopen” despite the devastation wrought in minority urban communities. Again, the cost of lost lives of the vulnerable was “worth” the benefit to businesses.

Cost-benefit analysis can be a useful tool, but only when the costs and benefits are not based on financial gain. The 17th-century philosopher Thomas Hobbes witnessed the inequalities wrought by England’s rigid class system, which brought about the English Civil War, bloodshed, and social upheaval. He argued that society needed to live by a set of moral rules, supported by a government that would enable everyone to live well, according to what he called the social contract. What if we measured benefits in terms of whether every person desiring to live healthy, productive lives could achieve those dreams? What if we measured the cost in terms of human resources wasted, i.e., lives lost and potential unrealized? What then would our response to this pandemic look like? Perhaps the nation would have prepared long before anyone had ever heard of Covid-19 by ensuring that every person had access to safe housing, quality health care, and living wages for meaningful employment. What if, instead of profits, we always put people first?