Economic Analysis, Moral Philosophy and Public Policy

This book shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists analytical tools, and how economic analysis and moral philosophy together can inform public policy. The book lays out the standard theory of rationality and connections to welfare economics, and it clarifies important moral notions omitted in standard welfare economics, including freedom, inequality, and justice. It also introduces technical work in social choice theory and game theory that is relevant to moral theorizing.

This 2006 book shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores rationality and its connections to morality. It argues that in defending their model of rationality, mainstream economists implicitly espouse contestable moral principles. Part II concerns welfare, utilitarianism and standard welfare economics, while Part III considers important moral notions that are left out of standard welfare economics, such as freedom, rights, equality, and justice. Part III also emphasizes the variety of moral considerations that are relevant to evaluating policies. Part IV then introduces technical work in social choice theory and game theory that is guided by ethical concepts and relevant to moral theorizing. Chapters include recommended readings and the book includes a glossary of relevant terms.

1. Ethics and economics?; 2. Normative economics: two examples; 3. How ethics matters to positive economics: two examples; Part I. Rationality and Morality: 4. Rationality; 5. Rationality in positive and normative economics; 6. Rationality, norms, and morality; Part II. Welfare and Consequences: 7. Utilitarianism and consequentialism; 8. Welfare; 9. Efficiency; Part III. Liberty, Rights, Equality, and Justice: 10. Liberty, rights and libertarianism; 11. Equality and egalitarianism; 12. Justice and contractualism; Part IV. Moral Mathematics: 13. Social choice and theory; 14. Game theory; 15. Pollution transfers and school vouchers - normative economics reconsidered; 16. Economics and ethics, hand in hand; Appendix; Glossary; References.

Economic Analysis, Moral Philosophy and Public Policy, first published in 2006, shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy.

Daniel M. Hausman is Herbert A. Simon Professor of Philosophy at the University of Wisconsin, Madison. He is the author or editor of seven books, including Causal Asymmetries (1998), Essays on Philosophy and Economic Methodology (1992), The Separate and Inexact Science of Economics (1992), both editions of The Philosophy of Economics: An Anthology (1984, 1994), and the first edition of Economic Analysis and Moral Philosophy (Cambridge Surveys in Economic Literature, 1996, with Michael McPherson), all published by Cambridge University Press. Professor Hausman has worked on issues concerning ethics and economics, foundational questions concerning the nature of rationality, economic methodology, and causation. He is currently investigating questions concerning the relations between health, welfare, and preferences.
Michael McPherson, President of the Spencer Foundation in Chicago, Illinois, is past President of Macalester College, St. Paul, Minnesota, and served as Dean of Faculty and Professor of Economics at Williams College. He has been a Fellow of the Institute for Advanced Study in Princeton and Senior Fellow at the Brookings Institution. Jointly with Daniel M. Hausman he founded and edited the Cambridge University Press journal Economics and Philosophy. Dr. McPherson is co-author of five books. His articles have appeared in the Journal for Economic Literature, American Economic Review, Philosophy and Public Affairs, and Ethics. He has served as a trustee at the College Board and the American Council for Education, and is a member of the National Academy of Education.