10/17/2021
“BUSINESS” ETHICS
Business & Ethics
Three
contrasting perspectives
◦ Novak
◦ Drucker
◦ Carr
1
10/17/2021
Novak’s Perspective
Businesses are special
◦ Different from government, religious
organizations, political organizations, etc.
◦ As an economic association, it has particular
responsibilities
“Seven plus seven” business responsibilities
◦ Internal
◦ External
“Internal” Responsibilities
1.
2.
3.
4.
5.
6.
7.
Make customers happy
Earn ROI
Create new wealth
Create new jobs
Give opportunities
Promote creativity & innovation
Diversify interests
What are the financial implications of
meeting these responsibilities?
2
10/17/2021
“External” Responsibilities
Foster community, positive culture within firm
Foster liberty- encourage ee’s to participate in
political process
Respect the law
Social justice– encourage ee’s to be active in
community
Open communication
Help community at organizational level
Contribute to “moral ecology” of freedom
1.
2.
3.
4.
5.
6.
7.
◦
E.g., Do not advertise on “immoral” TV programs
Drucker’s Perspective
No distinction between personal and
business ethics
We can’t always promise that we’ll make
people better off, but we can promise not
to intentionally cause them harm
“Above all, do no harm”
3
10/17/2021
Carr’s Perspective
Business is a special case with its own set
of rules
◦ If you can’t take the heat, stay out of the
kitchen
Position on bluffing: “Falsehood ceases to
be falsehood when it is understood on all
sides that the truth is not expected to be
spoken.”
The ethics of business are games ethics,
different from the ethics of religion
Business & Ethics
Which perspective do you agree with?
If you agree with Carr, where do you
draw the line?
◦ Where do other people draw the line?
Is “good” behavior for the sake of selfinterest “ethical”?
◦ Novak:Yes
◦ Carr: No
4
10/17/2021
STAKEHOLDER
ANALYSIS
Stakeholder Management Approach
Identifying and understanding multiple and
often competing claims of many
constituencies
Uses analytical methods for identifying,
mapping, and evaluating corporate strategy
with stakeholders
Based on the theory that certain ethical
principles can result in competitive advantage
GOAL: Win/Win vs. Zero Sum
1
10/17/2021
Primary Stakeholders
Owners
Suppliers
Organization
Customers
Employees
Secondary Stakeholders
Local community groups
Special Interest groups
Consumer groups
Environmental groups
Media
Society-at-large
American Civil Liberties groups
Should managers pay attention to the needs of these groups?
What priority should they have?
2
10/17/2021
How To Conduct a
Stakeholder Analysis
The stakeholder analysis is a series of steps,
conducted from an objective, third-party point
of view:
1.Mapping stakeholder relationships
2.Mapping stakeholder coalitions
3.Assessing the nature of each stakeholder’s interest
4.Assessing the nature of each stakeholder’s power
5.Constructing a matrix of stakeholder moral
responsibilities
6.Developing specific strategies and tactics
7.Monitoring shifting coalitions
Step 1: Questions for
Stakeholder Review
Who are our current stakeholders?
1.
◦
For each division and business, who are the
stakeholders?
Who are our potential stakeholders?
3. How does each stakeholder affect us?
4. How do we affect each stakeholder?
2.
3
10/17/2021
Sample Stakeholder Map for a Large
Corporation
Steps 2, 3 and 4: Assessing Coalitions,
Interests and Power
Map any stakeholder coalitions that may help or
hinder your strategy or decision
Assess the nature of each stakeholder’s interest
Assess the nature of each stakeholder’s power
◦
◦
◦
◦
◦
◦
◦
◦
Voting power
Political power
Economic power
Technological
Legal
Environmental
Cultural
Power over target individuals and/or groups
4
10/17/2021
Step 5 – Stakeholder Moral Responsibility
Matrix
Step 6: Develop Specific Strategies and
Tactics
1.
2.
3.
4.
Consider whether to approach each
stakeholder directly or indirectly
Decide to do nothing, monitor, taken an
offensive or a defensive position with the
stakeholder
Decide to accommodate, negotiate,
manipulate, resist, avoid, or take a ‘wait and
see’ approach
Decide which combination of strategies will
work best with each stakeholder
5
10/17/2021
Stakeholder Strategies
Step 7: Monitor Shifting Coalitions
Use the matrix from Step 6 to routinely
monitor progress and the evolution of
issues and actions by stakeholders (e.g., do
they move from a ‘Marginal’ to a ‘Nonsupporter’, or from a ‘Supporter’ to a
‘Marginal’?)
6
10/17/2021
Summary
Two predominant views of ethics at the
organizational level: Shareholder theory and
Stakeholder theory
Stakeholder analysis allows firms to systematically
evaluate strategic interactions with stakeholders
◦ Important for shareholder adherents as well
Remember:Your beliefs may not be shared by
others
◦ CEOs with a shareholder mindset must consider
financial implications of discounting other
stakeholders’ needs
7
10/17/2021
SHAREHOLDER &
STAKEHOLDER
THEORIES
WHAT IS CORPORATE SOCIAL
RESPONSIBILITY?
Two views:
1. Shareholder Theory
Make profits for shareholders.
Milton Friedman
2. Stakeholder Theory
Consider shareholders + others.
R. Edward Freeman
Michael Novak
2
1
10/17/2021
Shareholder Theory
(Milton Friedman)
A corporate executive has a direct responsibility to
his or her employer “to make as much money as
possible while conforming to the basic rules of
society” (i.e., engaging in free & open competition
without deception or fraud).
◦ Breaking the law is impermissible.
“Social responsibilities” are the responsibilities of
individuals, not of business.
◦ As Friedman writes, do we want CEOs acting as
“legislator, executive and jurist”?
◦ “Do we want corporations playing God?”
3
Shareholder Theory
(Milton Friedman)
Executives answer to shareholders, who
most often desire, and are entitled to,
profits.
If an executive is to be a civil servant
fulfilling social responsibilities, then they
should be elected via a democratic, political
process.
Corporate actions in the name of social
responsibility are “window-dressing”!
4
2
10/17/2021
Stakeholder Theory
(a.k.a. Corporate Social Responsibility)
A firm’s stakeholders are those parties affected by
corporate policies and practices. This includes, but
is not limited to, shareholders.
The normative case for CSR stems from a desire
to do good, while the business case for CSR
reflects an enlightened self-interest.
◦ Even the most profit-focused CEO must recognize
financial implications of their firm having a “poor CSR”
image
The operational definition of CSR is somewhat
vague.
5
Stakeholder Theory
(a.k.a. Corporate Social Responsibility)
“Stakeholder engagement” is critical.
Everyone affected should have their voice
heard (figuratively or literally) by those
making decisions.
If a business case exists for a CSR initiative,
there will always be those who regard the
initiative as self-serving (“window-dressing”).
◦ “Greenwashing” (ex. hotel linens)
6
3
10/17/2021
4
10/4/2021
BUSINESS ETHICS:
UTILITARIANISM &
DEONTOLOGY
A runaway trolley is headed for five people who
will be killed if it proceeds on its present
course. The only way to save them is to flip a
switch that will turn the trolley onto an
alternate set of tracks where it will kill one
person instead of five. Should you redirect the
trolley?
1
10/4/2021
A runaway trolley again threatens to kill five people. You are
standing next to a large stranger on a footbridge that spans
the tracks between the oncoming trolley and the five people.
If you push the stranger off the bridge onto the tracks below
he will die, but his large body will stop the trolley from
reaching the others (you cannot jump because you are not big
enough to stop the train and he won’t jump himself). Should
you push the stranger?
Utilitarian Theory
Objective: Create the greatest possible wellbeing
◦ Greatest Happiness Principle (Mill): The greatest
good for the greatest number
Adherents
◦ Jeremy Bentham
◦ John Stuart Mill
Consequentialist view: an action is good if it
has good consequences (regardless of motives
behind action) for well-being
2
10/4/2021
What Would Mill Do?
What Would Mill Do?
3
10/4/2021
The Utilitarian Algorithm
Specify the range of possible actions
2. Identify all who are affected by the
action(s)
3. Estimate the aggregate consequences of
the actions for their utilities
4. Choose the action with the greatest
utility sum
1.
Utilitarian Theory
Pros?
◦ Fair
◦ Rational
◦ Easily applied
Cons?
◦ Who decides? What is “good”?
◦ Costs/benefits of nonmonetary outcomes?
◦ No consideration of justice or rights
4
10/4/2021
Deontology
We can’t know the results prior to an action, so
what is ethical is determined by principles of
individual rights & justice
◦ People are duty-bound or morally obligated to
respect individual rights
◦ Actions are inherently ethical or unethical
independent of the consequences
Categorical Imperative
◦ Immanuel Kant
◦ Principles
Principle of Humanity
Principle of Universal Law
Principle of Humanity
Treat others always as an ends in
themselves and never merely as means
This principle gives rise to conceptions of
intrinsic rights and correlative duties
◦ If I lie to you, you are not being considered as
an equally important end. Because of this, you
have a right not to be lied to, and I have a duty
to tell the truth.
5
10/4/2021
Principle of Universal Law (Another
formulation of the categorical imperative)
Act only according to that maxim
whereby you can at the same time believe
that it should become a universal law
◦ Would I want this act performed on me
rather than by me (the principle of
reversibility)
◦ Only actions stemming from maxims that pass
universalibility test are permissible
Integrating Different Versions of CI
Doing things in a way that ignores the ends
of others (treating others as means) would, if
universalized, lead to the violation of my
own ends
◦ A contradiction in will and violation of
reversability
I cannot will to be exclusively self-regarding
for my own sake while at the same time
willing everyone to be that way, too.
◦ If everyone lies, then lying no longer serves my
self-interest
6
10/4/2021
Another version of Deontology:
Duties must be upheld
W.D. Ross
Seven key duties that must be upheld
1.
2.
3.
4.
5.
6.
7.
Beneficence
Non-maleficence
Justice
Self-improvement
Reparation
Gratitude
Promise-keeping
Contrasting Deontology and
Utilitarianism
Deontologists
Actions have only
Intrinsic Value
MOTIVES
ACTIONS
CONSEQUENCES
Utilitarians
Actions have only
Extrinsic Value
7
10/4/2021
Deontological Theory
Pros?
◦ Fair
◦ Simple
Cons?
◦ Principles are imprecise
◦ Hard to resolve conflicts of interest
Takeaways
•
Ethical theory deals with the reasoning
behind a decision or action, not with the
decisions or actions themselves
•
In other words, there will never be an ethical
theory that says “pollution is wrong”
•
Instead, theories provide frameworks that
help us objectively evaluate the ethicality of
a behavior
8
10/4/2021
BUSINESS ETHICS:
VALUES & THEORIES
Ethics
Ethics: Generally agreed upon rules that
govern our behavior
No objective standards of right or wrong
Ethics often comes down to right vs.
right.
◦ Individuals typically want to act ethically
◦ Our definitions of “ethical” (i.e., our rules)
may be different from others’
1
10/4/2021
Major Theme of this Course
Varied perspectives on what constitutes
ethical and unethical behavior
No easy answers
One of the most important jobs of a
leader is to recognize and reconcile
the differing beliefs of those in the
organization.
What are ethics?
Generally accepted rules of conduct that
govern society
◦ Higher standard than law
◦ “You know it when you see it”
Unfair
Dishonest
Unjust
Purpose of ethical theories: Move beyond
“I think…”
2
10/4/2021
Theories of Ethics
Divine Command Theory
Ethical Egoism Theory
Rights Theory (Entitlement Theory)
Moral Relativism
Utilitarian Theory*
Categorical Imperative (Deontology)*
Divine Command Theory
Decisions are made based on guidance
from a divine being
◦ E.g., Ten Commandments
Divine Command Theory and the law
◦ Sharia: Iran, Saudi Arabia, Nigeria
◦ Natural law
“We hold these truths to be self-evident, that all
men are created equal, that they are endowed by
their Creator with certain unalienable Rights, that
among these are Life, Liberty and the pursuit of
Happiness.”
3
10/4/2021
Divine Command Theory
Pros?
◦ Can be simple
◦ Wide buy-in in homogenous groups
Cons?
◦ Creates conflict in heterogeneous groups
◦ Conflicting principles
◦ How do you resolve disputes?
Ethical Egoism Theory
Everything is determined by self-interest
◦ We should limit our judgment to our own
ethical egos and not interfere with judgment
of others
◦ Laws are needed to maintain order
Adherents
◦ Ayn Rand, Thomas Hobbes
◦ Adam Smith
Long-term self-interest can constrain short-term
behavior
4
10/4/2021
Ethical Egoism Theory
Pros?
◦ Realistic (?)
◦ Unethical behavior can be constrained
Government (Hobbes)
Free market (Smith)
Cons?
◦ Inaccurate?
What makes people happy?
Spending on Self or Others
N = 632: Nationally representative
American sample
DV: General happiness
◦ “Do you feel happy, in general?”
Yes, Most of the time, Sometimes, Rarely, No
IV’s
◦ Personal spending (M = $1,714 / mo.)
Bills, expenses, gifts for self
◦ Prosocial spending (M = $146 / mo.)
Gifts for others, donations to charity
◦ Income
5
10/4/2021
What Makes People Happy?
Personal
Spending
Prosocial
Spending
What Makes People Happy?
Personal
Spending
Prosocial
Spending
Income
6
10/4/2021
Rights Theory (Entitlement Theory)
Main contributor: Robert Nozick
Two principles
1. Everyone has a set of rights
2. It’s up to the government to protect those
rights
Issue: Government made up of utilitarians,
deontologists, etc.
Moral Relativism
“When in Rome, do as the Romans do”
Moment-to-moment changes in moral
code
No absolute rules
The situation dictates (and justifies) the
action taken
7
Purchase answer to see full
attachment
“BUSINESS” ETHICS
Business & Ethics
Three
contrasting perspectives
◦ Novak
◦ Drucker
◦ Carr
1
10/17/2021
Novak’s Perspective
Businesses are special
◦ Different from government, religious
organizations, political organizations, etc.
◦ As an economic association, it has particular
responsibilities
“Seven plus seven” business responsibilities
◦ Internal
◦ External
“Internal” Responsibilities
1.
2.
3.
4.
5.
6.
7.
Make customers happy
Earn ROI
Create new wealth
Create new jobs
Give opportunities
Promote creativity & innovation
Diversify interests
What are the financial implications of
meeting these responsibilities?
2
10/17/2021
“External” Responsibilities
Foster community, positive culture within firm
Foster liberty- encourage ee’s to participate in
political process
Respect the law
Social justice– encourage ee’s to be active in
community
Open communication
Help community at organizational level
Contribute to “moral ecology” of freedom
1.
2.
3.
4.
5.
6.
7.
◦
E.g., Do not advertise on “immoral” TV programs
Drucker’s Perspective
No distinction between personal and
business ethics
We can’t always promise that we’ll make
people better off, but we can promise not
to intentionally cause them harm
“Above all, do no harm”
3
10/17/2021
Carr’s Perspective
Business is a special case with its own set
of rules
◦ If you can’t take the heat, stay out of the
kitchen
Position on bluffing: “Falsehood ceases to
be falsehood when it is understood on all
sides that the truth is not expected to be
spoken.”
The ethics of business are games ethics,
different from the ethics of religion
Business & Ethics
Which perspective do you agree with?
If you agree with Carr, where do you
draw the line?
◦ Where do other people draw the line?
Is “good” behavior for the sake of selfinterest “ethical”?
◦ Novak:Yes
◦ Carr: No
4
10/17/2021
STAKEHOLDER
ANALYSIS
Stakeholder Management Approach
Identifying and understanding multiple and
often competing claims of many
constituencies
Uses analytical methods for identifying,
mapping, and evaluating corporate strategy
with stakeholders
Based on the theory that certain ethical
principles can result in competitive advantage
GOAL: Win/Win vs. Zero Sum
1
10/17/2021
Primary Stakeholders
Owners
Suppliers
Organization
Customers
Employees
Secondary Stakeholders
Local community groups
Special Interest groups
Consumer groups
Environmental groups
Media
Society-at-large
American Civil Liberties groups
Should managers pay attention to the needs of these groups?
What priority should they have?
2
10/17/2021
How To Conduct a
Stakeholder Analysis
The stakeholder analysis is a series of steps,
conducted from an objective, third-party point
of view:
1.Mapping stakeholder relationships
2.Mapping stakeholder coalitions
3.Assessing the nature of each stakeholder’s interest
4.Assessing the nature of each stakeholder’s power
5.Constructing a matrix of stakeholder moral
responsibilities
6.Developing specific strategies and tactics
7.Monitoring shifting coalitions
Step 1: Questions for
Stakeholder Review
Who are our current stakeholders?
1.
◦
For each division and business, who are the
stakeholders?
Who are our potential stakeholders?
3. How does each stakeholder affect us?
4. How do we affect each stakeholder?
2.
3
10/17/2021
Sample Stakeholder Map for a Large
Corporation
Steps 2, 3 and 4: Assessing Coalitions,
Interests and Power
Map any stakeholder coalitions that may help or
hinder your strategy or decision
Assess the nature of each stakeholder’s interest
Assess the nature of each stakeholder’s power
◦
◦
◦
◦
◦
◦
◦
◦
Voting power
Political power
Economic power
Technological
Legal
Environmental
Cultural
Power over target individuals and/or groups
4
10/17/2021
Step 5 – Stakeholder Moral Responsibility
Matrix
Step 6: Develop Specific Strategies and
Tactics
1.
2.
3.
4.
Consider whether to approach each
stakeholder directly or indirectly
Decide to do nothing, monitor, taken an
offensive or a defensive position with the
stakeholder
Decide to accommodate, negotiate,
manipulate, resist, avoid, or take a ‘wait and
see’ approach
Decide which combination of strategies will
work best with each stakeholder
5
10/17/2021
Stakeholder Strategies
Step 7: Monitor Shifting Coalitions
Use the matrix from Step 6 to routinely
monitor progress and the evolution of
issues and actions by stakeholders (e.g., do
they move from a ‘Marginal’ to a ‘Nonsupporter’, or from a ‘Supporter’ to a
‘Marginal’?)
6
10/17/2021
Summary
Two predominant views of ethics at the
organizational level: Shareholder theory and
Stakeholder theory
Stakeholder analysis allows firms to systematically
evaluate strategic interactions with stakeholders
◦ Important for shareholder adherents as well
Remember:Your beliefs may not be shared by
others
◦ CEOs with a shareholder mindset must consider
financial implications of discounting other
stakeholders’ needs
7
10/17/2021
SHAREHOLDER &
STAKEHOLDER
THEORIES
WHAT IS CORPORATE SOCIAL
RESPONSIBILITY?
Two views:
1. Shareholder Theory
Make profits for shareholders.
Milton Friedman
2. Stakeholder Theory
Consider shareholders + others.
R. Edward Freeman
Michael Novak
2
1
10/17/2021
Shareholder Theory
(Milton Friedman)
A corporate executive has a direct responsibility to
his or her employer “to make as much money as
possible while conforming to the basic rules of
society” (i.e., engaging in free & open competition
without deception or fraud).
◦ Breaking the law is impermissible.
“Social responsibilities” are the responsibilities of
individuals, not of business.
◦ As Friedman writes, do we want CEOs acting as
“legislator, executive and jurist”?
◦ “Do we want corporations playing God?”
3
Shareholder Theory
(Milton Friedman)
Executives answer to shareholders, who
most often desire, and are entitled to,
profits.
If an executive is to be a civil servant
fulfilling social responsibilities, then they
should be elected via a democratic, political
process.
Corporate actions in the name of social
responsibility are “window-dressing”!
4
2
10/17/2021
Stakeholder Theory
(a.k.a. Corporate Social Responsibility)
A firm’s stakeholders are those parties affected by
corporate policies and practices. This includes, but
is not limited to, shareholders.
The normative case for CSR stems from a desire
to do good, while the business case for CSR
reflects an enlightened self-interest.
◦ Even the most profit-focused CEO must recognize
financial implications of their firm having a “poor CSR”
image
The operational definition of CSR is somewhat
vague.
5
Stakeholder Theory
(a.k.a. Corporate Social Responsibility)
“Stakeholder engagement” is critical.
Everyone affected should have their voice
heard (figuratively or literally) by those
making decisions.
If a business case exists for a CSR initiative,
there will always be those who regard the
initiative as self-serving (“window-dressing”).
◦ “Greenwashing” (ex. hotel linens)
6
3
10/17/2021
4
10/4/2021
BUSINESS ETHICS:
UTILITARIANISM &
DEONTOLOGY
A runaway trolley is headed for five people who
will be killed if it proceeds on its present
course. The only way to save them is to flip a
switch that will turn the trolley onto an
alternate set of tracks where it will kill one
person instead of five. Should you redirect the
trolley?
1
10/4/2021
A runaway trolley again threatens to kill five people. You are
standing next to a large stranger on a footbridge that spans
the tracks between the oncoming trolley and the five people.
If you push the stranger off the bridge onto the tracks below
he will die, but his large body will stop the trolley from
reaching the others (you cannot jump because you are not big
enough to stop the train and he won’t jump himself). Should
you push the stranger?
Utilitarian Theory
Objective: Create the greatest possible wellbeing
◦ Greatest Happiness Principle (Mill): The greatest
good for the greatest number
Adherents
◦ Jeremy Bentham
◦ John Stuart Mill
Consequentialist view: an action is good if it
has good consequences (regardless of motives
behind action) for well-being
2
10/4/2021
What Would Mill Do?
What Would Mill Do?
3
10/4/2021
The Utilitarian Algorithm
Specify the range of possible actions
2. Identify all who are affected by the
action(s)
3. Estimate the aggregate consequences of
the actions for their utilities
4. Choose the action with the greatest
utility sum
1.
Utilitarian Theory
Pros?
◦ Fair
◦ Rational
◦ Easily applied
Cons?
◦ Who decides? What is “good”?
◦ Costs/benefits of nonmonetary outcomes?
◦ No consideration of justice or rights
4
10/4/2021
Deontology
We can’t know the results prior to an action, so
what is ethical is determined by principles of
individual rights & justice
◦ People are duty-bound or morally obligated to
respect individual rights
◦ Actions are inherently ethical or unethical
independent of the consequences
Categorical Imperative
◦ Immanuel Kant
◦ Principles
Principle of Humanity
Principle of Universal Law
Principle of Humanity
Treat others always as an ends in
themselves and never merely as means
This principle gives rise to conceptions of
intrinsic rights and correlative duties
◦ If I lie to you, you are not being considered as
an equally important end. Because of this, you
have a right not to be lied to, and I have a duty
to tell the truth.
5
10/4/2021
Principle of Universal Law (Another
formulation of the categorical imperative)
Act only according to that maxim
whereby you can at the same time believe
that it should become a universal law
◦ Would I want this act performed on me
rather than by me (the principle of
reversibility)
◦ Only actions stemming from maxims that pass
universalibility test are permissible
Integrating Different Versions of CI
Doing things in a way that ignores the ends
of others (treating others as means) would, if
universalized, lead to the violation of my
own ends
◦ A contradiction in will and violation of
reversability
I cannot will to be exclusively self-regarding
for my own sake while at the same time
willing everyone to be that way, too.
◦ If everyone lies, then lying no longer serves my
self-interest
6
10/4/2021
Another version of Deontology:
Duties must be upheld
W.D. Ross
Seven key duties that must be upheld
1.
2.
3.
4.
5.
6.
7.
Beneficence
Non-maleficence
Justice
Self-improvement
Reparation
Gratitude
Promise-keeping
Contrasting Deontology and
Utilitarianism
Deontologists
Actions have only
Intrinsic Value
MOTIVES
ACTIONS
CONSEQUENCES
Utilitarians
Actions have only
Extrinsic Value
7
10/4/2021
Deontological Theory
Pros?
◦ Fair
◦ Simple
Cons?
◦ Principles are imprecise
◦ Hard to resolve conflicts of interest
Takeaways
•
Ethical theory deals with the reasoning
behind a decision or action, not with the
decisions or actions themselves
•
In other words, there will never be an ethical
theory that says “pollution is wrong”
•
Instead, theories provide frameworks that
help us objectively evaluate the ethicality of
a behavior
8
10/4/2021
BUSINESS ETHICS:
VALUES & THEORIES
Ethics
Ethics: Generally agreed upon rules that
govern our behavior
No objective standards of right or wrong
Ethics often comes down to right vs.
right.
◦ Individuals typically want to act ethically
◦ Our definitions of “ethical” (i.e., our rules)
may be different from others’
1
10/4/2021
Major Theme of this Course
Varied perspectives on what constitutes
ethical and unethical behavior
No easy answers
One of the most important jobs of a
leader is to recognize and reconcile
the differing beliefs of those in the
organization.
What are ethics?
Generally accepted rules of conduct that
govern society
◦ Higher standard than law
◦ “You know it when you see it”
Unfair
Dishonest
Unjust
Purpose of ethical theories: Move beyond
“I think…”
2
10/4/2021
Theories of Ethics
Divine Command Theory
Ethical Egoism Theory
Rights Theory (Entitlement Theory)
Moral Relativism
Utilitarian Theory*
Categorical Imperative (Deontology)*
Divine Command Theory
Decisions are made based on guidance
from a divine being
◦ E.g., Ten Commandments
Divine Command Theory and the law
◦ Sharia: Iran, Saudi Arabia, Nigeria
◦ Natural law
“We hold these truths to be self-evident, that all
men are created equal, that they are endowed by
their Creator with certain unalienable Rights, that
among these are Life, Liberty and the pursuit of
Happiness.”
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Divine Command Theory
Pros?
◦ Can be simple
◦ Wide buy-in in homogenous groups
Cons?
◦ Creates conflict in heterogeneous groups
◦ Conflicting principles
◦ How do you resolve disputes?
Ethical Egoism Theory
Everything is determined by self-interest
◦ We should limit our judgment to our own
ethical egos and not interfere with judgment
of others
◦ Laws are needed to maintain order
Adherents
◦ Ayn Rand, Thomas Hobbes
◦ Adam Smith
Long-term self-interest can constrain short-term
behavior
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Ethical Egoism Theory
Pros?
◦ Realistic (?)
◦ Unethical behavior can be constrained
Government (Hobbes)
Free market (Smith)
Cons?
◦ Inaccurate?
What makes people happy?
Spending on Self or Others
N = 632: Nationally representative
American sample
DV: General happiness
◦ “Do you feel happy, in general?”
Yes, Most of the time, Sometimes, Rarely, No
IV’s
◦ Personal spending (M = $1,714 / mo.)
Bills, expenses, gifts for self
◦ Prosocial spending (M = $146 / mo.)
Gifts for others, donations to charity
◦ Income
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What Makes People Happy?
Personal
Spending
Prosocial
Spending
What Makes People Happy?
Personal
Spending
Prosocial
Spending
Income
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Rights Theory (Entitlement Theory)
Main contributor: Robert Nozick
Two principles
1. Everyone has a set of rights
2. It’s up to the government to protect those
rights
Issue: Government made up of utilitarians,
deontologists, etc.
Moral Relativism
“When in Rome, do as the Romans do”
Moment-to-moment changes in moral
code
No absolute rules
The situation dictates (and justifies) the
action taken
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