Final Group Project

Essay Topic:
“Philosophical Views Regarding Cost Benefit Analysis”

Course Title: Business Ethics

Course Code: PHI 401
Section: 14
Course Instructor
Professor Mohammad Kamrul Ahsan, PhD
Department of History and Philosophy
School of Humanities and Social Science
North South University
Authors:
Sl. Name ID

1. Kazi Mohammad Ashequr Rahman 1610971030

2. Fowzia Rahman 1711704630

3. Shadman Sakib 1711784630

4. Tanmoy Kumar Biswas 1731189030

5. Kintu Roy 1812094030

6. Aurnab Basak 1831203630

7. Priyam Saha 1931233630

Date of Submission: 29/09/2020

[N.B. This is a jointly written paper, everyone contributed equally]
 Abstract
In this essay we have figured out the relation between Utilitarianism and Cost Benefit Analysis.

We have found that there is a huge impact of Utilitarianism in terms of Cost Benefit Analysis. It

is seen that a form of ethical theory is similar to the ideal of replacing reliance. There are some

weaknesses of CBA that relates to the weaknesses of Utilitarianism. Cost Benefit Analysis is

philosophically interesting and a well-organized form of Consequentialism. Incommensurability

and Decisional synopticism issues are also discussed under Philosophical Issue section. It is

Claimed by the that the CBA degrades human life when it sets a monetary value over human

benefits. Technological forecasting failure and Predicting in make decision are the major problems

of Cost Benefit Analysis identified. Several recommendations are referred for solving the issues

regarding CBA. The major limitation identified of cost-benefit analysis are quantifications of

intangibles, market imperfections, discount rate, income distributions and intergenerational equity.

Business firms should have a positive mind set and ethical perspectives in term of CBA.
 INTRODUCTION

Cost benefit analysis (CBA) is common in the field of monetary methodology of strategy

investigation. Nonetheless, it appears to be most investigators are not all around educated about

its utilization and evaluates. The objective of this paper is to convey a brief type of conversation

on the utilization of CBA in the grants. This paper will add to the utilization of CBA in an exact

manner by advising its restrictions in the financial examination. There are two dissimilar camps

with respect to the function of CBA in ecological law and strategy. The spoilers of CBA from one

perspective, contend that it should assume almost no job while they assault CBA's moral grounds.

Then again, supporters of CBA place that it should assume some part in ecological approach and

law dynamic. There is additionally a position proposing revisions in a substitute manner to CBA

while recognizing the function of CBA in bringing sanity into an administrative cycle. (Hwang,

january 2016)

At the broadest and vaguest level, cost benefit analysis examination might be viewed essentially

as orderly contemplating dynamic. Who can contradict, financial experts at times ask, endeavors

to think in a deliberate path about the outcomes of various strategies? The other option, no doubt,

is unexamined dynamic. However, characterizing money saving advantage examination so

basically leaves it with not many ramifications for genuine administrative dynamic.

Apparently, in this manner, the individuals who ask controllers to utilize the procedure have a

broader remedy as a primary concern (Kelman, 1981). Cost benefit analysis has been created over

an extensive stretch of time for strategy dynamic with a lot of guarantee CBA in natural strategy

is to some degree later advancement. The customary establishment of CBA is an effectiveness of

monetary hypothesis and utilities in government assistance financial matters. This exposition

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initially gives a brief rundown of the basis for the utilization of CBA in strategy decision-making.

At that point, I examine the three convincing evaluates of CBA followed by the constraints of

investigates. While scrutinizes challenge the inadequacies of CBA, I reason that CBA can be

utilized with alert as one contribution to the choice. Conversations are followed’. (Hwang, january

2016)

Research Methodology

We have conducted a short research on the Philosophical Views of Cost Benefit Analysis. The

entire paper is based on online research. Sources that we have used for our research work to gather

information are Articles, Journals, E-papers, Websites, Webpages. All of the sources are based on

our research topic. We have included as much as information we could gather to make this paper

livelier to our audiences. This paper is prepared for the Students, Researchers, Analysts, Teachers,

librarians and Commercial Investors. The purpose of creating this paper is to show the

philosophical and ethical views regarding Cost Benefit Analysis.

Discussion and Findings

Philosophical issues of Cost Benefit Analysis

Cost Benefit analysis is a set of decision-making strategies that weigh the advantages over the

disadvantages in terms of numbers. In a typical CBA, multidimensional problems are reduced to

one level, usually having the same financial value as a common currency. A reduction raises many

effective philosophical issues. Cost Benefit analysis highlights the range of the whole

philosophical issue. The most discuss of the margin of economic values that are presented as

resources that are incomplete with money. For example: As the continuity of a human life or an

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animal species. The CBA also involves other controversial assumptions such as the advantage that

affects one person may be fully compensated by the benefit which it affects another person. There

are some issues that I am discussed below: 1. Incommensurability 2. Decisional synopticism

(Hansson, 2016).

Incommensurability: The most talked about of these issues is the state of economic values that are

spent advantage-based analysis attribute to asset that have no market value. Many of these

resources are thought to be invaluable such as the continuous existence of a human life or an animal

species. Critics claim that the CBA degrades human life when it sets a monetary value to reduce

human life. If this valuable nature should be better considered, very little effort should be made to

study this figure. In particular, they do not price. Money linkage for a level sky money defined

money why does not this review go to another person with a price? This study suggests that it

should be provided for the survival of children. Imperfections between life and money are just

some of the imperfections that are dealt with in CBA. There is no definitive answer to the question

of how many cases of juvenile diabetes coincide with the death of a person, or to what extent

human suffering or death coincides with the extinction of a dying deer species. Since such

comparisons are technically influenced by financial standards in the CBA, the problem of

incompleteness seems to present itself as a problem of monetization. Even if money is removed

from the analysis, comparisons need to be made between death, disease and environmental

damage. The key problem is the need to make a comparative assessment of the we envision as

incomparable in order to make decisions (Hansson, 2016). Decisional synoptic CBA are primarily

designed to cover all aspects of the decision making of options under evaluation in principle. The

most obvious way to achieve this is to expand the CBA as much as possible. Therefore, Cost

benefits analysts often try to make decisions in large integrated units cover as many aspects as

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possible. It is trying to combine aspects and the decision-making aspects as possible. The decision-

making policies of the big unions are called policy areas “super”. If there is a perfect optimization,

all aspects are used but it seems clear that decisions should be made. Make the pieces as large as

possible, so that all aspects come together. (Hannson, 2007)

Utilitarianism & Cost Benefit Analysis

CBA is much more philosophically interesting than it has been generally recognized. Since it is

the only well-developed form of applied consequentialism, it is a testing-ground for

consequentialism and for the counterfactual analysis that it requires. Ten classes of philosophical

problems that affect the practical performance of cost–benefit analysis are investigated: topic

selection, dependence on the decision perspective, dangers of super synopticism and undue

centralization, prediction problems, the indeterminateness of our control over future decisions, the

need to exclude certain consequences for moral reasons, bias in the delimitation of consequences,

incommensurability of consequences, difficulties in defending the essential requirement of

transferability across contexts. The normatively questionable but equally essential assumption of

interpersonal compensability. Utilitarianism and cost-benefit analysis Shadow estimating,

theoretical markets, and “dissent bids.” It overlooks the conveyance of costs and benefits. The

“amplifying impact” of person wealth. It begins with two of these parallel a few standard protests

to utilitarianism. The most talked about among these issues concerns the status of the financial

values that cost–benefit examiners dole out to resources that don’t have a showcase of esteem.

Numerous of these resources are conceived as important, such as a human life or the continued

presence of a creature species. Faultfinders have claimed that CBA taints human life when

feedback would likely have been less common on the off chance that the nature of these values

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had been way better clarified. In specific, they are not costing. The task of a whole cash to the

misfortune of a human life does not infer that somebody can purchase another person, or the correct

to slaughter her, at that cost. What it implies is that society tends to pay (elective: have to be pay)

up to that whole to spare a human life (Macmillan, 2010).

In CBA, all costs and all benefits are combined into one and the same balance. This means that a

disadvantage affecting one person can be fully compensated for by an advantage affecting some

other person. In other words, interpersonal com- sensibility of advantages and disadvantages is

assumed. Prohibition of Aspects all assessments of long-haul impacts of choices tend, independent

of technique, to take off or make light of impacts that are troublesome to anticipate. Since CBA

points at numerical calculations, it tends to take off perspectives of future advancements that can

as it were be anticipated in non-quantitative terms. This applies for occurrence to dangers risks of

social impoverishment & social isolation. Decisional Synopticism the impacts of a choice

frequently depend intensely on other parallel choices. A CBA given to one of a few interconnected

choices can be delude ding due to the effect of the choices that it does not cover (Macmillan, 2010).

Problems with CBA

Firstly, we need to decide, with each of these alternatives, the possible changes that will follow if

it is selected in order to weigh the alternatives in a decision. However, from the parallel field of

technical forecasting, it is well understood that forecasts are highly unpredictable. A significant

explanation for the many failures in technological forecasting is that technological progress relies

on social factors, such as individual and social group decisions on whether and how technological

alternatives should be used. As surprises seem to come, new social innovations and their

experiences with technology. Previous forecast-oriented approaches to technology evaluation have

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therefore increasingly given way to more constrained approaches that do not profess to pursue the

potential implications of a specific course of action. In addition to cost-benefit analysis, our

inability to predict how various options will evolve in the future affects other policy guiding

activities as well. It restricts our ability, with cost-benefit analysis or with any other technique, to

prepare rationally for the future. However, this issue is potentially especially conspicuous for

techniques such as CBA that affirm consequentialist concepts. Consequentialism extends to all

results of an event, including results that arise in a far future far away and/or depend on very

complex causal mechanisms. It is therefore a matter of consequentialism that the distal effects of

our behavior can’t be grasped. Secondly, definition of future developments required in a CBA is

complicated not only by problems with prediction but also by the indeterminacy of our influence

over future decisions. Decision analysis typically focuses on one-shot decisions, i.e. situations in

which only one decision needs to be taken by a decision-maker in a matter. We also have a set of

potential decision points ahead of us in practice that impact the problem at hand. In Decision

Theory, in relation to individual decisions, the treatment of possible decisions has often been

debated. The key issue is whether or not future decisions should be viewed as being under one’s

influence. The obvious solution to this is to make a probabilistic evaluation of how one would

behave in the future situation of the decision, much as one would have done if any other person

were to make the future decision. Only the direct impacts will be included in a typical CBA of this

project. However, it is possible to make a strong argument that indirect effects should also be taken

into account. More broadly speaking, the care in a CBA of potential decision points is difficult,

and there seems to be no general recipe available for how to deal with them (Hannson, 2007).

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What are the limitations of CBA?

Cost-benefit analysis is a process that evaluates a project of comparison between cost and benefits.

It should have proper boundaries to achieve financial goal and determine the benefits of a

company. It is important to establish limitations of cost-benefits examination which helps to

increase profits and reduce the cost of an organization (N.Plowman, 2009). CBA has its own policy

and regulation which require proper limitations for organizational improvement and evaluation of

result. Cost-benefit analysis is important for economic growth of a corporation and it is essential

to have limitations to maintain the organizational hierarchy. A corporation should implement

boundaries for their rules or regulation to gain organizational success. That’s why they have to

control or monitor the activities of CBA tools. Limitations of cost-benefit analysis should not be

set to end up the procedures. There are some major limitation points of cost-benefit analysis like

market imperfections, quantifications of intangibles, income distributions, discount rate and

intergenerational equity. These tools are required to establish limitation in CBA process(Flood

Manager E-learning, n.d). Market imperfections mean the situation where competitive advantage

is missing. That means sellers and buyers are unable to make competitive market. For establishing

cost-benefit analysis, market price needs to be set. Quantification of intangibles is one of the

limitations which are required to judge values and adjustments of CBA procedure. For economic

growth or organizational financial development, income distribution should be done properly. This

will encourage the socio-economic groups to ensure economic efficiency. CBA process should be

used to control the activities of achieving benefits and maintain the cost. So, proper income

distribution is needed. CBA process includes discount system which ensures short term gain and

economic profit for future. High discount rate provides lower value to product and so the demand

of the product decreases. Equity issue is very necessary for decision making process of cost benefit

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analysis of a company. These limitations or boundaries are important for organizational benefits

and future progress of CBA process. (Flood Manager E-learning, n.d). If a particular corporation

or company fails to set limitations, then the company will face difficulties to identify or qualify

the costs and benefits. This will result in evaluating inaccurate analysis and chance of increasing

risks. The process of decision making will be inefficient. A company can’t able to distribute

financial income among people and generates revenue. For this reason, CBA process should have

limitations in order to gain profit and control the analysis for organization progress (N.Plowman,

2009).

Recommendation

According to the above discussion, we have concluded some points that could occur through the

cost benefit analysis process. Firstly, the cost benefit analysis process needs to be limited. The

government can put their hand on to this to restrict this process in a specific way for the business

organizations. An organization uses this process to gain success faster than before but this process

could play a vital role to destroy a competitive market. Lowering the price of a product will lower

the value of that product which will lead to decreased market demand. Government of a country

has the power to set specific limitations on this process for the welfare of the whole market.

Secondly, taking organizational decisions based on the cost benefit analysis ratio has led to

inaccuracies most of the time. The future decisions or predictions based on CBA possibly harm

the organization in certain ways. The obvious solution to this is to make a probabilistic evaluation

of how one would behave in the future situation of the decision, much as one would have done if

any other person were to make the future decision. Only the direct impacts will be included in a

typical CBA of this project. So, it is highly recommended that before taking any decision based

on CBA the possibility of inaccuracy should be accounted for. Lastly, the assumptions from this

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process should think not only about monetary value but also about the human well-being. Cost

Benefit analysis highlights the range of the whole philosophical issue. Most discuss the margin of

economic values that are presented as resources that are incomplete with money. Even if the

organizations fall into the ground due to economic recession, still they have to follow ethical and

moral values. Therefore, cost benefit analysis is important for organization in certain ways but

setting and following rules and regulations would do more for the organization as well as the

society. Business could flourish more than before by going through a specific manner.

Conclusion

We have discussed about the limitations, problems and philosophical issues of Cost Benefit

Analysis along with Utilitarianism. We have identified the pro and cons of CBA. The problems

and limitations are stated briefly in the paper. We have discussed theories and critics regarding the

topic and provided a recommendation. Finally, we can say that CBA is rational technique used for

evaluation. Projects can be evaluated under this method if there is enough data or no data at all.

The result of the cost and benefits must be evaluated quantitively for determining whether the

benefits outweigh the costs. Suggestions will be that benefits should be increased or cost should

be decreased for making projects more viable. Unethical approaches should be avoided and

positive steps should be taken by this, benefits will increase and cost will be minimum as well.

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analysis/

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Hansson, S. O. (2016, 11 26). springer Link. Retrieved from springer Link:

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