The cases involving the explosion of Ford Pinto's due to adefective fuel system design led to the debate of many issues, mostcentering around the use by Ford of a cost-benefit analysis and theethics surrounding its decision not to upgrade the fuel systembased on this analysis.Although Ford had access to a new designwhich would decrease the possibility of the Ford Pinto fromexploding, the company chose not to implement the design, whichwould have cost $11 per car, even though it had done an analysisshowing that the new design would result in 180 less deaths. Thecompany defended itself on the grounds that it used the acceptedrisk/benefit analysis to determine if the monetary costs of makingthe change were greater than the societal benefit. Based on thenumbers Ford used, the cost would have been $137 million versus the$49.5 million price tag put on the deaths, injuries, and cardamages, and thus Ford felt justified not implementing the designchange. This risk/benefit analysis was created out of thedevelopment of product liability, culminating at Judge LearnedHand's BPL formula, where if the expected harm exceeded the cost totake the precaution, then the company must take the precaution,whereas if the cost was liable, then it did not have to. However,the BPL formula focuses on a specific accident, while therisk/benefit analysis requires an examination of the costs, risks,and benefits through use of the product as a whole. Based on thisanalysis, Ford legally chose not to make the design changes whichwould have made the Pinto safer. However, just because it was legaldoesn't necessarily mean that it was ethical. It is difficult tounderstand how a price can be put on saving a human life.

There are several reasons why such a strictly economic theoryshould not be used. First, it seems unethical to determine thatpeople should be allowed to die or be seriously injured because itwould cost too much to prevent it. Second, the analysis does nottake into all the consequences, such as the negative publicity thatFord received and the judgments and settlements resulting from thelawsuits. Also, some things just can't be measured in terms ofdollars, and that includes human life. However, there are argumentsin favor of the risk/benefit analysis. First, it is well developedthrough existing case law. Second, it encourages companies to takeprecautions against creating risks that result in large accidentcosts. Next, it can be argued that all things must have some commonmeasure. Finally, it provides a bright line which companies canfollow.

I. IntroductioIn May of 1968, the Ford MotorCompany, based upon a recommendation by then vice-president LeeIacocca, decided to introduce a subcompact car and produce itdomestically. In an effort to gain a large market share, theautomobile was designed and developed on an accelerated schedule.During the first few years sales of the Pinto were excellent, butthere was trouble on the horizon.

A. Grimshaw v. Ford Motor Company¹InMay 1972, Lily Gray was traveling with thirteen year old RichardGrimshaw in a 1972 Pinto when their car was struck by another cartraveling approximately thirty miles per hour. The impact ignited afire in the Pinto which killed Lily Gray and left Richard Grimshawwith devastating injuries. A judgment was rendered against Ford andthe jury awarded the Gray family $560,000 and Matthew Grimshaw $2.5million in compensatory damages. The surprise came when the juryawarded $125 million in punitive damages as well. This wassubsequently reduced to $3.5 million.²

B. The Criminal Case³Six monthfollowing the controversial Grirnshaw verdict, Ford was involved inyet another controversial case involving the Pinto. Theautomobile's fuel system design contributed (whether or not it wasthe sole cause is arguable) to the death of three women on August10, 1918 when their car was hit by another vehicle traveling at arelatively low speed by a man driving with open beer bottles,marijuana, caffeine pills and capsules of "speed."⁴ Thefact that Ford had chosen earlier not to upgrade the fuel systemdesign became an issue of public debate as a result of this case.The debate was heightened because the prosecutor of Elkart County,Indiana chose to prosecute Ford for reckless homicide and criminalrecklessness.Some felt the issues raised in the Ford Pinto caseswere an example of the "deep pocket" company disregarding consumersafety in pursuit of the almighty dollar. Others feel they are anexample of runaway media coverage blowing a story out ofproportion.⁵ Regardless of opinion, the Ford Pinto caseis a tangled web of many complex legal and ethical issues.

To determine if the proper result was achieved in this case, onehas to evaluate and weigh these many issues. The central issue indeciding whether Ford should be liable for electing not to redesigna defective product in order to maximize its bottom line, one mustanalyze the so-called "cost/benefit" analysis Ford used to defendthis decision. Within the scope of this paper, this cost/benefitissue (and associated sub-issues) will be the focus of discussion.Other issues, such as the ethics involved in Ford's decision, thechoice of prosecuting Ford criminally, whistle-blowing, theassignment of punitive damages and the Court of Appeals decisionreducing the damages are all important issues of this case thatwill not be the focus herein.

II. Facts

A. Incident FactsOn August 10, 1978, threeteenage girls stopped to refuel the 1973 Ford Pinto sedan they weredriving. After filling up, the driver loosely reapplied the gas capwhich subsequently fell off as they headed down U. S. Highway 33.Trying to retrieve the cap, the girls stopped in the right lane ofthe highway shoulder since there was no space on the highway forcars to safely pull off the roadway. Shortly thereafter, a vanweighing over 400 pounds and modified with a rigid plank for afront bumper was traveling at fifty five miles an hour and stuckthe stopped Pinto. The two passengers died at the scene when thecar burst into flames. The driver was ejected and died shortlythereafter in the hospital. Inspecting the van shortly after theaccident, the police found open beer bottles, marijuana andcaffeine pills inside.⁶The subsequent proceedings wererather surprising. Based on the facts of the case, it seemed thatany one of a number of parties could be liable in a civil action orprosecuted criminally. The obvious target seemed to be the driverof the van. It seems he could have been prosecuted for criminalhomicide or the families of the victims could have pursued a civilaction, in light of the fact the driver possessed severalcontrolled substances at the time of the accident.A secondpotential party open to a civil suit was the Indiana Highwaydepartment. It was their design which left no safe stopping placealong Highway 33 where cars could pull over for emergencies. Infact, the road was so dangerous that the Elkart County Citizens'Safety Committee had previously written a letter to the departmentasking that the road design be modified to provide safe stoppingplace for emergencies.⁷ It is also conceivable, thedriver of the Pinto could have been found negligent for stopping acar in the middle of the highway.

The first surprise of the resulting litigation carne whenIndiana state prosecutor filed suit against Ford Motor Company forcriminal recklessness and reckless homicide.⁸ The famousand highly publicized legal battle was underway. Some have arguedthe prosecution acted unethically from day one, gathering andhiding evidence from the defendant and concealing information aboutthe condition of the van driver.⁹ Whether true or not,the following litigation caused damage that would take Ford yearsto recover from.

B. Questionable DesignThe controversysurrounding the Ford Pinto concerned the placement of theautomobile's fuel tank. It was located behind the rear axle,instead of above it. This was initially done in an effort to createmore trunk space. The problem with this design, which later becameevident, was that it made the Pinto more vulnerable to a rear-endcollision. This vulnerability was enhanced by other features of thecar. The gas tank and the rear axle were separated by only nineinches. There were also bolts that were positioned in a manner thatthreatened the gas tank. Finally, the fuel filler pipe designresulted in a higher probability that it would to disconnect fromthe tank in the event of an accident than usual, causing gasspillage that could lead to dangerous fires. Because of thesenumerous design flaws, the Pinto became the center of publicdebate.

These design problems were first brought to the public'sattention in an August 1977 article in Mother Jones magazine. Thisarticle condemned the Ford Motor Company and the author was latergiven a Pulitzer Prize.¹⁰ This article originated thepublic debate over the risk/benefit analysis used by the Ford MotorCompany in their determination as to whether or, not the design ofthe Pinto fuel tank be altered to reduce the risk of fire as theresult of a collision.The crux of the public debate about The FordMotor Company was the decision not to make improvements to the gastank of the Pinto after completion of the risk/benefit analysis.Internal Ford documents revealed Ford had developed the technologyto make improvements to the design of the Pinto that woulddramatically decrease the chance of a Pinto "igniting" after arear-end collision.¹¹This technology would have greatlyreduced the chances of burn injuries and deaths after a collision.Ford estimated the cost to make this production adjustment to thePinto would have been $11 per vehicle.¹²  Most people found it reprehensible that Ford determined that the$11 cost per automobile was too high and opted not to make theproduction change to the Pinto model.

C. Risk/Benefit AnalysisIn determining whetheror not to make the production change, the Ford Motor Companydefended itself by contending that it used a risk/benefit analysis.Ford stated that its reason for using a risk/benefit analysis wasthat the National Highway Traffic Safety Administration (NHTSA)required them to do so.¹³   The risk/benefitapproach excuses a defendant if the monetary costs of making aproduction change are greater than the "societal benefit" of thatchange. This analysis follows the same line of reasoning as thenegligence standard developed by Judge Learned Hand in UnitedStates vs. Carroll Towing in 1947 (to be discussed later). Thephilosophy behind risk/benefit analysis promotes the goal ofallocative efficiency. The problem that arose in the Ford Pinto andmany other similar cases highlights the human and emotionalcircumstances behind the numbers which are not factored in therisk/benefit analysis.The Ford Motor Company contended that bystrictly following the typical approach to risk,/benefit analysis,they were justified in not making the production change to thePinto model. Assuming the numbers employed in their analysis werecorrect, Ford seemed to be justified. The estimated cost for theproduction change was $11 per vehicle. This $11 per unit costapplied to 11 million cars and 1.5 million trucks results in anoverall cost of $137 million.

The controversial numbers were those Ford used for the "benefit"half of the equation. It was estimated that making the change wouldresult in a total of 180 less burn deaths, 180 less serious burninjuries, and 2,100 less burned vehicles. These estimates weremultiplied by the unit cost figured by the National Highway TrafficSafety Administration. These figures were $200,000 per death,$67,000 per injury, and $700 per vehicle equating to the total"societal benefit" is $49.5 million. Since the benefit of $49.5million was much less than the cost of $137 million, Ford feltjustified in its decision not to alter the product design. Therisk,/benefit results indicate that it is acceptable for 180 peopleto die and 180 people to burn if it costs $11 per vehicle toprevent such casualty rates. On a case by case basis, the argumentseems unjustifiable, but looking at the bigger picture complicatesthe issue and strengthens the risk/benefit analysis logic.

III. History and Development of ProductLiability

A. IntroductionWhen defendants were foundliable for only intentional harms, these harms fell under thecategory of absolute liability. Over time, courts added liabilityto some accidental harms. In order for a court to determine therewas no liability in a conflict, it had to be ascertained whether ornot the accident was "trulyunavoidable."¹⁴    Technological advancescreated societal harms that were never before contemplated bycourts. The truly unavoidable standard became a grayer area thatwas undefined and unreliable. Eventually, as industry rapidlyadvanced further, it became impossible and unreasonable to describeany accident as unavoidable.¹⁵   Still, courtsseemed unwilling to shift to the theory of absolute liability, asit seemed to strict. However, with the courts finding fewer andfewer harms "unavoidable", another level had to be found betweenunavoidable accidents and strict liability.¹⁶

B. The Ordinary Care StandardIn the mid 1800s,courts began the evolution of moving away from what they onceconsidered an important decision--whether a harm was a result of anaction "on trespass" or a harm as a result of an action "on thecase."¹⁷ The first landmark decision moving away fromthis distinction and thinking was Brown v. Kendall¹⁸ in1850. In the decision, Chief Justice Shaw acknowledged moving awayfrom this traditional distinction and to consideration of whether aharm was "willful, intentional, or careless."¹⁹ Not onlydid this decision move away from the strict "all or nothing"standard, it established the fluctuating standard of "ordinarycare." Judge Shaw explained the use of this new standard:

"In using this term, ordinary care, it may be proper to statethat what constitutes ordinary care will vary with thecircumstances of cases. In general, it means that kind and degreeof care, which prudent and cautious men would use, such as requiredby the exigency of the case, and such as is necessary to guardagainst probable danger."²⁰

In essence Judge Shaw had created a "moving" standard ofnegligence that varied from situation to situation depending on theextent of care used, rather than the inflexible extremes discussedabove. This new standard was not just a flat decision of whether anactor used due care in a situation, but whether the actor shouldhave recognized the danger before taking the risk. Courts alsorequired a defendant's actions be related to the harm incurred. InCrain v. Petrie,²¹ the court stated that "damages mustappear to be the legal and natural consequences arising from thetort.²² Courts also considered whether the defendantshould have taken some kind of preventive measure in advance thatcould have foreseeable prevented the harm.²³

These many factors the court considered boiled down into onemain question: Was the accident truly avoidable or the fault of thedefendant?²⁴   The Brown court stated,

"If, then, in doing this act, using due care and all properprecautions necessary to the exigency of the case, to avoid thehurt to others, in raising his stick..., he accidentally hit theplaintiff in his eye and wounded him, this was the result of thepure accident, or was involuntary, andunavoidable, and therefore the action would notlie.²⁵

This thinking was followed in similar cases and decisions of thetime.²⁶   As stated above, this thinking movedthe court from cut-and-dried ideas of negligence to ones thatfluctuated and had to be examined on a case by case basis. If anaccident seemed to be unavoidable and part of every day life therewould be no action for recovery.

As technology progressed, courts began to find less and lessaccidents "unavoidable." In Huntress v. Boston & MainR.R.,²⁷ the court found the defendant negligent eventhough it took all necessary precautions. When a pedestrian waskilled walking across the railroad tracks and the locomotiveengineer had used all possible precautions in conducting the train,the defendant was still found to be negligent. The court statedthat the railroad company should have foreseen the plaintiff's poorappreciation of the risk and that whether more precautions werenecessary was a question for the jury.²⁸ As the power ofdesign and invention advanced, so did the courts' perception of thepower to prevent accidents.²⁹   It seemed thecourts had almost moved to the extreme of absolute liability.

With this evolution, the courts were faced with a new problem.Should defendants be found liable in almost every situation becauseof new technological 'advancements? This created a new theory ofnegligence, one of balancing risks and benefits. In the early 1900sthe courts evolved from just determining if an accident wereunavoidable (as most at this point were considered to be) to whatthe costs were to avoid this accident in some fashion. The firstattempt to consider this question and create a new standard was ina 1919 case, Adams v. Bullock.³⁰

In Adams, a young boy was playing with a rod when it struck thedefendant's trolley wires that had been strung under a railroadbridge where the boy was walking. The court reversed a judgment forthe plaintiff, claiming that the company had taken all reasonableprecautions to avoid the accident. Judge Cardozo's opinion made useof the traditional analysis and verbiage of theavoidable/unavoidable analysis. However, he discussed the "duty toadopt all reasonable precautions.³¹Furthermore, JudgeCardozo stated that the defendant had acted with the area of normalprovision.³²

C. The Introduction of the BalancingApproachAlthough Judge Cardozo concluded that the accidentwas not foreseeable and therefore unavoidable, the Adams case laidthe groundwork for a "balancing" approach to negligence. Thebalancing approach assumes that if an accident has a very lowprobability, and there is a cost associated with preventing it, adefendant is not liable if he does not take precautionary measures.By stating that absent a "gift of prophecy the defendant could nothave predicted the point upon the route where such an accidentwould occur," Judge Cardozo indicated that giving every possibilitythe ultimate amount of protection would be too costly compared tothe risk of injury.³³   He further stated thatguards everywhere would have prevented the injury but this wouldprove to be much too costly, and "guards here and there are oflittle value.³⁴   This decision was theharbinger of the balancing standard and cost/benefit analysis; aweighing of the risk of harm and the overall costs of avoidingit.

At the turn of the century, courts began focusing on this"balancing" method to determine liability. Costs, risks, andprobability began to make their way into decisions. Courts began tocompare degrees of risks and costs of harms with the benefits ofactivities on society. The trend moved toward placing the burden onsociety in instances where the benefit outweighed the risk or therisk was less than the cost to avoid it.³⁵  In cases such as this, the ``risk initiator" was assigned noliability. This balancing act seemed to be a tolerable middleground between the old negligence liability standard and theextreme standard of absolute liability.

With courts struggling to define the middle ground during thistime of technological advancement, they faced the same questionslegal systems faced in similar times such as the industrialrevolution and the growth of railroads. As the advancements creatednew products and the profits that went with them, courts had todecide what levels of risk society could tolerate and who shouldbear the costs when harms actually occurred.³⁶

F. Ford's Risk/Benefit AnalysisThe maincontroversy surrounding the Ford Pinto case was The Ford MotorCompany's choices made during development to compromise safety forefficiency and profit maximization. More specifically, it wasFord's decision to use the cost/benefit analysis detailed insection 11 to make production decisions that translated into lostlives. During the initial production and testing phase, Ford set"limits for 2000" for the Pinto. That meant the car was not toexceed $2000 in cost or 2000 pounds in weight. This set toughlimitations on the production team. After the basic design wascomplete, crash testing was begun. The results of crash testingrevealed that when struck from the rear at speeds of 31 miles perhour or above, the Pinto's gas tank ruptured. The tank waspositioned according to the industry standard at the time (betweenthe rear bumper and the rear axle), but studs protruding from therear axle would puncture the gas tank. Upon impact, the fuel fillerneck would break, resulting in spilled gasoline. The Pintobasically turned into a death trap. Ford crash tested a total ofeleven automobiles and eight resulted in potentially catastrophicsituations. The only three that survived had their gas tanksmodified prior to testing.⁵⁵

Ford was not in violation of the law in any way and had to makethe decision whether to incur a cost to fix the obvious probleminternally. There were several options for fuel system redesign.The option most seriously considered would have cost the Ford MotorCompany and additional $11 per vehicle.⁵⁶  Under the strict $2000 budget restriction, even this nominal costseemed large. In addition, Ford had earlier based an advertisingcampaign on safety which failed miserably. Therefore, there was acorporate belief, attributed to Lee Iacocca himself, of "safetydoesn't sell."⁵⁷

Ultimately, the Ford Motor Company rejected the product designchange. This was based on the cost-benefit analysis performed byFord (see Exhibit One). Using the NHTSA provided figure of $200,000for the "cost to society" for each estimated fatality, and $11 forthe production cost per vehicle, the analysis seemedstraightforward. The projected costs to the company for designproduction change were $137 million compared to the projectbenefits of making the design change which were approximately $49.5million. Using the standard cost/benefit analysis, the answer wasobvious--no production changes were to be made.

IV. The Negligence Efficiency Argument

A. Ford's DecisionThe Ford Motor Company's useof the risk/benefit analysis was the central issue of the suitsfiled against the company. Many pieces of evidence, including anumber of internal Ford documents indicate the risk/benefitanalysis was the main reason for Ford's decision not to make designchanges to increase vehicle safety. However, before discussion ofthe risk/benefit analysis it should be noted there were secondaryconcerns which supported Ford's decision not to upgrade the fuelsystem design: (1) As stated above, Ford had based an earlieradvertising campaign around safety, which failed. The companyrealized this was not a primary factor in car sales; (2) the badpublicity involved with a recall would be too much negativepublicity to overcome. If this unquantifiable factor were includedin the cost/benefit analysis the difference may have beenoverwhelming. Even though it was not a factor included in theanalysis, Ford wanted to avoid it at any cost; (3) At the time ofthe product design and crash tests, the law did not require them toredesign the fuel system; and, (4) It was customary in theautomotive industry to place the gas tank and between the rear axleand bumper.

Although case law has shown that business custom is not anexcuse to escape liability, custom combined with the risk/benefitanalysis would lead to the same result.⁵⁸  With these factors influencing the decision in the background, theprimary factor was Ford's risk/benefit analysis of making thechanges. The question is: Should a risk/benefit analysis be used inall circumstances, and was it the proper framework to use in thissituation? If so, it seems that the correct decision was made.Examining this question after-the-fact, it certainly seems like apoor decision.

B. The NumbersThe Ford Motor Company'srisk/benefit analysis indicated costs would be 2.5 times largerthan the resulting benefits. It is apparent why Ford chose no to goahead with the fuel tank adjustment. However, basing this decisionon just the numbers with no consideration of any other factorsfalls short of a comprehensive analysis of the action. chose not togo ahead with the fuel tank adjustment. To do a complete job ofanalyzing Ford's decision, the variables inside the equation mustbe examined. On the cost side of the equation, the most questionedvariable during the case was the cost per vehicle used by Ford. Themanufacturer claimed making adequate changes to the fuel systemwould have cost $11 per vehicle. Some evidence indicated that thesepotential costs may have been much lower, maybe as low as $5 pervehicle.⁵⁹   Even with this lower cost and allother factors remaining the same, the costs still would haveexceeded the benefits, although the difference would have been muchless substantial (see Exhibit 2). In fact, will all other variablesremaining the same, the cost per vehicle would have had to be aslow as $3.96 to make the benefits "break even" with the costs (seeExhibit 3). However, if the costs were around $5 per vehicle, theFord Motor Company would not have had as strong a risk/benefitargument as with the $11 figure provided.

The "benefit side" of the equation contains the mostcontroversial number of the analysis--the value of a human life.Ford estimated no alterations to the gas tank design would resultin 180 deaths, 180 burn victims and 2100 burned vehicles. Inretrospect, these estimates are slightly low. It is hard todetermine the exact number of victims because every victim did notfile a claim, but these numbers were reasonable estimations at thetime. Ford used $200,000 as the "cost" or "lost benefit" for eachfatal burn injury, 567,000 for each burn injury and $700 for eachburned vehicle. The number quantifying the price of a value life($200,000) is what makes this problem so difficult. It is hard todecide what a life is worth, but most people feel the value oftheirs is greater than $200,000. While this $200,000 figure was themost controversial of the equation, it was not determined by Ford.In 1972, the National Highway Traffic Safety Administration (NHTSA)provided the auto industry with the number $200,725 as the value tobe utilized in risk/ benefit analysis such as was done by Ford (seeExhibit 4).⁶⁰Following the standard for negligenceestablished by Judge Learned Hand in Carroll Towing, or therisk/utility standard established for manufacturer's liability, thedecision was well founded. The costs to Ford to make this change,which would have been borne by the consumer, was 2.5 times higher(using the original numbers) than the benefit to society. Somenegative publicity may have been expected, but certainly Ford didnot anticipate being found criminally negligent. In fact, it wouldseem Ford had a strong argument against any liability whatsoever.The decision in the liability suit with the award of punitivedamages was a surprise to the Ford Motor Company, much less thecriminal prosecution. How could such a decision be rendered afterFord Motor Company had followed the standard set by the courtsthemselves? The answer lies in the fact that the "benefit" side ofthe equation included the benefit of saving lives, and putting avalue on this variable is not as defensible as putting a value onthe benefit of saving an inanimate object, such as a vehicle.

V. The Negligence-Efficiency Debate

A. IntroductionThe Ford Motor case has spurnedthe arguments for and against the use of risk/benefit analysisbecause of its foundation of economic efficiency. The Ford MotorCompany case has spurred this argument. In 1972, Judge RichardPosner's article on the negligence-efficiency theory seemed to bethe "starting point" for this argument and was both highly praisedand highly criticized. The essence of this article is summarized inthe following excerpt: "We lack a theory to explain the socialfunction of the negligence concept ... This article attempts toformulate and test such a theory.... The essential clue, I believe,is provided by Judge Learned Hand's famous formulation of thenegligence standard.... In a negligence case, Hand said, the judge(or jury) should attempt to measure three things: the magnitude ofthe loss if an accident occurs; the probability of the accident'soccurring; and the burden of taking precautions that would avertit. If the product of the first two terms exceeds the burden ofprecautions, the failure to take those precautions is negligence.Hand was adumbrating, perhaps unwittingly, an economic meaning ofnegligence.... If the cost of safety measures.... exceeds thebenefit in accident avoidance to be gained by incurring that cost,society would be better off, in economic terms, to forego accidentprevention.... Furthermore, overall economic value or welfare wouldbe diminished ... by incurring a higher accident-prevention cost toavoid a lower accident cost.''⁶¹

Thus, the economic efficiency of negligence argument was born.While many economists have agreed and praised this article, it hasbeen equally criticized by those not taking the "economic point ofview." I will first discuss some of the many arguments against thiseconomic efficiency point of view in light of the Ford Pinto case.Following is a further elaboration of Posner's view and defense ofhis position.

B. Arguments Against Negligence-Efficiency

         1.EthicsTaking an ethical approach to the Ford Pinto casemakes accepting the risk/benefit analysis performed by the FordMotor Company difficult. In making what seems to be the correctdecision based on numbers, Ford is essence adopted a policy ofallowing a certain number of people to die or be injured eventhough they could have prevented it. When taken on a case-by-casebasis the decision seems to be a blatant disregard for human life.From a human rights perspective, Ford disregarded the injuredindividual's rights and therefore, in making the decision not tomake adjustments to the fuel system, actedunethicallv.⁶²

2. Act UtilitarianismA second problem withstrictly applying the risk/benefit framework is that it does notseem to take into account all of the consequences of Ford'sdecision. This position is considered the "act utilitarian' pointof view. The act utilitarian approach evaluates each actionseparately and the consequences that arise fromit.⁶³   This analysis would include any"harms" or "benefits" incurred by any people involved in the case.In utilizing this approach, it seems there are many factors thatthe Ford Motor Company did not account for in its risk/benefitanalysis. When taking the situation from this perspective, it seemslike the harms of not changing the fuel system outweighed thebenefits. Not included in the previous risk/benefit analysis wasthe millions of dollars in settlements in unreported cases thatnever saw the courtroom. It is almost a sure bet that thesettlement numbers were more on a per-case basis than the averagenumbers used for lost life per accident. Also, the bad publicityand reputational damage suffered by Ford over the next few yearsfor being the cause of these lawsuits is hard to quantify, but theharm was considerable.⁶⁴   >From theutilitarian point of view, the harms and the benefits are farcloser together than Ford determined in its analysis. In addition,if this was figured after-the-fact the harms far outweighed thebenefits. This would be due to the cost of having to recall the1971­1976 Pintos after the fact and the extreme bad publicity (muchworse than could have been expected) that the Ford Motor Companysuffered through for years after all litigation was settled.

3. Health and Safety RegulationExceptionCritics argue there are several other related,yet distinct reasons why the Ford Motor company, as well othercompanies finding themselves in similar positions, should becondemned for relying on a risk/benefit analysis to make decisionsbased on consumer safety. In the areas of safety and healthregulation, there are instances where it may not be wise toundertake a certain decision even though the benefits do notoutweigh the costs.⁶⁵ This idea is imbedded somewherebetween the utilitarian point of view and ethical point of view,discussed above. That is, the issue of whether the benefitsoutweigh the costs should not govern our moral judgment. There aresome cases where a company must "do the right thing." While thismay seem an argument based on emotion, there seem to be certaininstances where these kind of considerations must be made. Forinstance, when governmental officials decide what level ofpollution is allowable they take into effect certain vulnerablepeople--such as asthmatics or the elderly--and set the standardhigher although the average citizen would not be affected by alower one. This decision escapes the risk/benefit analysis. Thehigher standard is set so that the rights of the minority are notsacrificed for the needs of the majority. This kind of decision,much like automobile safety, are in the realm of specially valuedthings. For these, many will argue, risk/benefit analysis shouldnot apply.⁶⁶

4. Expressing Terms in Dollar ValuesIn order toperform a risk/benefit analysis, all costs and benefits must beexpressed in some common measure. This measure is typically indollars, as the Ford Motor Company used in its analysis. This canprove difficult for things that are not commonly bought and sold onthe open market. This is mainly the case for environmental policy,such as permissible levels of air pollutants, as in the exampleabove.⁶⁷ The Ford Pinto case provides an extremeexample. It questions how to value human life.

Economists have attempted to quantify, non-quantifiable itemsusing varying methods with varyingsuccess.⁶⁸   Since individuals have uniquetastes and values they are willing to pay different amounts forproducts and resources. This valuation system often receives highcriticism. People's willingness to pay for something can also varywidely depending upon other circumstances. Based on these reasons,attempts to quantify something such as a human life can be verydifficult and is the most debated aspect of the Ford Pintocase.
There are numerous things which individuals consider "priceless."For instance, most people would claim that they would not selltheir right to vote or their freedom of speech for any amount ofmoney.⁶⁹ Therefore, to tell someone that there is acertain price for their life is a preposterous notion. Thereforewhen taken on a case-by-case basis it is impossible for anindividual to grasp the concept. There are numerous things whichindividuals consider "priceless." For instance, most people wouldclaim that they would not sell their right to vote or their freedomof speech for any amount of money. Moreover, would a parent be ableto put a value on the life of a child? Obviously, the notion that,on an individual basis, a person would take a certain amount ofmoney for their life is ludicrous. To tell someone that $200,725 isa sufficient trade-off for their life, as argued in the Ford Pintocase, illustrates this point.
Economists, however, do not agree with the "priceless" concept. Tothem, to trade one unit of anything, even a life, for an infinitequantity of all other goods is an equally preposterous notion. Itcan be argued that everything can be priced or have a value laidupon it. To take this theory down to an individual level reducesthe strength of this notion.
In Ford's case, the $200,725 value of a human life was provided tothe company by the National Highway Traffic Safety Administration.The criticism for the value can not be laid upon Ford. Thecriticism is in using a number, or in other words using therisk/benefit analysis, in this situation at all. To compound theproblem, Ford seemed to blindly follow the dictated numbers withoutgiving any extra consideration to the fact that it in fact was ahuman life they were quantifying.
5. No Wealth MaximizationRelated to the lack of"markets" or "prices" for a life is the idea of wealthmaximization. The foundation of the risk/benefit analysis is thetheory of economic efficiency and an underlying principle forefficiency is wealth maximization. If legal decisions are based onefficiency, then nothing will be wasted and the wealth of thecountry will be at its maximum.⁷⁰   However,in order to conduct an efficiency analysis, everything must have aprice--returning to the reoccurring problem. Since the reliance onprices is necessary and not merely contingent, the system of wealthmaximization cannot tell us anything about right conduct where noprices exist. Prices are, in part, the result of demand and demandis the result of prior entitlements. Consequently, wealthmaximization cannot generate an initial set of entitlements."⁷¹
Along the same lines, efficiency theory assumes that wealthmaximization is the goal of law, which is not the case. The goal oflaw is the indefinable term. "justice."⁷²  Judges and juries do not attempt to make decisions based on wealthmaximization, they base their decisions on justice. This differencecan be seen in the special rules for rescue, handicapped citizens,and whether the insane are found liable for theirtorts.⁷³
6. ExternalitiesAnother potential problem with therisk,/benefit approach is the fact that it does not takeexternalities into effect. This is a topic with which the law oftorts often has trouble. However, it cannot be ignored just becauseit is hard to compute.⁷⁴ Victims are permitted torecover for pain and suffering and the cost/benefit analysis seemsto ignore this point. It is yet another one of the variables thatis almost impossible to estimate, much less pinpoint. In addition,this is another area where the lack of a market is influential.Minimization of social costs differs from the minimization ofprivate costs precisely because there is an absence of completemarkets, and this absence is exactly what makes measurements sodifficult.⁷⁵
7. Activity FrequencyIf a company or a court wereto accurately analyze the costs and benefits of an activity, itmust calculate the number of times the potential victim engages inthe activity.⁷⁶   Taking out the number oftimes the activity is engaged in reduces the damages. Thiscalculation is often unobtainable, especially in Ford's case interms of automobile use. Professor Polinsky, in his book, AnIntroduction to Law and Economics explains, "In practice it isusually not feasible to include the level of participation in theactivity has an aspect of the standard of care. For example, itwould be virtually impossible for a court to determine bow manymiles a particular person drives each. year since that person mightdrive a different car that is shared with other family members orhe might drive different cars owned by the household. If theinjurer's level of participation in the activity is omitted fromthe standard of care, than a negligence rule generally will leadhim to participate in the activity to an excess degree. The reasonfor this is straightforward, if the care he exercises meets thestandard of care, be will not be liable for any damages. Inpractice, the negligence rule is likely to be inefficient for thisreason.⁷⁷

8. Negligence is Predictable: Victims OftenLoseFinally, the cost/benefit analysis and economicefficiency reasoning is argued to be a skewed framework because itdoes not take into account the fact that injured parties are at adisadvantage. While the law attempts to place the plaintiff anddefendant on equal ground, it is impossible to accomplish. Theplaintiff must prove the negligence, a difficult task. Thenegligence-efficiency theory does not account for plaintiffs whocannot afford to bring a lawsuit to trial or those who cannotestablish negligence although it exists. With the adoption of thenegligence-efficiency theory, it is predictable that victims aregoing to lose more than. They are going to win.⁷⁸

        9.ConclusionObviously there are a number of argumentsagainst the use of cost/benefit analysis and thenegligence-efficiency theory. Most of these arguments are separatebut related and .revolve around the fact that there are no marketsor prices for human life. It will be forever debated whether it ispossible to set a price or value on a life to use in thesecalculations and whether this leads to an economically efficientoutcome In the case of Grimshaw, the jury was obviously appalledwith Ford's attempt to apply the NHTSA's calculation torisk/benefit standard. Was this a sign of this standard'sinefficiency or was it just a sign of an ineffective jury?
C. For Negligence-EfficiencyFor as many argumentsas there are against risk/benefit analysis, there are as manyclaiming it is economically efficient and therefore the correctstandard. In defense of the Ford Motor Company, this standarddeveloped over many years of caselaw, as detailed earlier in thispaper. This negligence standard and the use of risk/benefitanalysis for product liability had been accepted by courts foryears before the Pinto controversy. There was no reason for Ford tobelieve that this was not the standard that should be used inmaking its decision. Ford's automatic decision once it "ran thenumbers" confirms the fact that they did not question the idea ofusing this analysis. In addition, there are many arguments insupport of this sort of analysis other than just the fact that thiswas the standard at the time.
        1. Risk/benefitAnalysis is "Instinctively Done"In 1972, Judge RichardPosner wrote an article entitled, "A Theory of Negligence,"claiming all tort law furthers economic efficiency. He claims thatwhile judges do not write opinions in terms of welfare economics,there has always been an effort to decide cases on this basis."People can apply the principles of economics intuitively--and thus`do' economics without knowing they are doing it.''⁷⁹Therefore, Posner claims that the Carroll Towing decision was not anovel concept, it just expressed in algebraic terms what court hadlong been applying.⁸⁰
        2. Maximizationof Social ResourcesFor defendants, such as the Ford MotorCompany, who create risks of harm that may be suffered by others,the risk-benefit standard for negligence provides incentives totake precautions to avoid or minimize risks that can be avoidedmore cheaply than the cost of the precautions. By holding adefendant liable for injuries that could have been avoided at lesscost than the accident, a risk-benefit test acts as a deterrent tocurb risks that are worth avoiding, while allowing a defendant totake actions or avoid precautions that are not worth deterring.Deterring conduct that results in greater accident costs than thebenefits of the conduct minimizes the total costs of accidents andaccident precaution. Therefore, it seems this tort "policy" servesthe goal of maximizing societal resources.⁸¹
To understand the efficiency theory of the risk-benefits analysis,one other point must be explained. In a products liability designdefects case, use of the discussed liability standard requiresidentification of an alternative design that would have preventedthe accident. One must be able to compare the additional costscreated by the alternative design, in relation to the existingdesign, with the costs of the injuries that the alternative designcould prevent.⁸²   In the Pinto case, Fordobviously undertook this analysis, examining the additional $11cost per unit of changing the fuel system design.
        3. EconomicFeasibility of Valuing Non-Economic ItemsThe decision touse a risk/benefit analysis does not necessarily result in thestrict utilitarianism as suggested by somecritics.⁸³   Most all detractors ofcost/benefit analysis center their argument around the idea thatplacing a value on "non-economic" items, such as a human life, doesnot lead to economic efficiency. Proponents of the system claimtheir risk/benefit analysis is nothing more than what it claims tobe--an effort to find some common measure for things that are noteasily comparable, yet must be compared. While this may seemcrass--comparing lives to dollars--some comparison must be made andall the factors in the equation must be brought down to a commondenominator for the comparison to take place. Other instances arisewhere lives are traded against lives, just not brought down to thedollar amount that took place in the Ford Pinto case. In the choicebetween hospital beds and preventive treatment, lives are tradedagainst lives.⁸⁴   It is when the analysis istaken down to an individual level that it becomesproblematic.Economists dispel the related argument just as easily.The idea that if one can quantify "non-economic" items, there arecertain "specially valued" things that cannot be priced. It is truethat different individuals value certain things differently, butsimply because an individual deems something has "special value"does not mean that they are unaffected by economic factors. One mayspecially value a personal relationship, but how often he callsthis person is influenced by long-distance rates. One may speciallyvalue music or watching sporting events, but still can be affectedby the price of records and tickets to the Kennedy Center or theprice for watching events on cable or a ticket to the ball game.⁸⁵
        4. EfficiencyDoes Not Equal ImmoralCritics look at risk/benefitanalysis in cases such as the Ford Pinto case as a depravity ofmorality. The idea is that everyone has the "right" to a safe andhealthy workplace, or the "right" to expect product they purchaseto be safe.⁸⁶   Those who subscribe to thisphilosophy feel there are some "moral" decisions that must be madeno matter what the fiscal impacts may be or what the risk,/benefitrelationship dictates. Proponents of the risk/benefit analysiscounter this "ethical" argument with the idea that these are noteither/or decisions being made, but rather gradations ofrisk.⁸⁷   That is, Ford is not sacrificing allsafety features of the Pinto, it is a question of to what degreeFord feels safety features are necessary. It could be argued thatthe safety question was answered for them prior to the risk/benefitanalysis when Ford's earlier advertising campaign based on safetyfailed. Decisions involving gradation of risks are made every day,just not under such strict scrutiny. Obviously, highways would besafer if the speed were restricted to 25 miles per hour on allroads. However, this must be balanced with the "price" of slowertraffic. in choosing 55 or 65 as the speed limit, we aresacrificing lives to make travel quicker and less costly.Therefore, the Ford Motor Company is not morally void for choosingbetween levels of safety. Auto manufacturers do this everydav.
        5. No Standardfor Using an "Ethical Balancing"All of the argumentsagainst the use of risk/benefit analysis seem to center around the"ethical argument." Instead of a monetary system, sire should adoptan ethical system that balances conflicts between certainunspecified duties and rights according to "deliberatereflection.⁸⁸   While placing dollar amountson these items is admittedly arbitrary, the "ethical" method wouldopen a much larger debate. Who would be in charge of this ethicalreflecting and on whose behalf would these decisions be made? Therewould be no clear limits for the actions of regulatory agencies.What public values would rise above these vague guidelines? Findingor arriving at a consensus for this ethical standard is virtuallyimpossible.

USING ABOVE CASE PLEASE

Please use this strategy when you analyze a case:

Identify and write the main issues found discussed in the case(who, what, how, where and when (the critical facts in a case).

List all indicators (including stated "problems") that somethingis not as expected or as desired.

Briefly analyze the issue with theories found in your textbookor other academic materials. Decide which ideas, models, andtheories seem useful. Apply these conceptual tools to thesituation. As new information is revealed, cycle back to sub stepsa and b.

Identify the areas that need improvement (use theories from yourtextbook)

Specify and prioritize the criteria used to choose actionalternatives.

Discover or invent feasible action alternatives.

Examine the probable consequences of action alternatives.

Select a course of action.

Design and implementation plan/schedule.

Create a plan for assessing the action to be implemented.

Conclusion ( should end with a strong conclusion or summary)

Writing Requirements

3–5 pages in length (excluding cover page, abstract, andreference list)

APA format,