THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments

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Business Ethics MGT610

LESSON 33

THE ETHICS OF CONSUMER PRODUCTION AND MARKETING

Gas Explosions on a construction site

Gas explosions are caused by an ignition source coming into contact with a gas leak.

Construction workers must always remain alert to the presence of gas leaks. Gas can be a silent

killer, filling an area with flammable toxins while going unnoticed by most people. When a

flame or other source of ignition is introduced to a gaseous environment, the resulting gas

explosion can be catastrophic.

In 1937, a natural gas leak was responsible for the New London School explosion in Texas.

This disaster killed three hundred students and teachers. Similar explosions occur regularly

throughout the world, although typically with a less dramatic loss of life.

Gas explosions are preventable throughout effective safety procedures and responsible

leadership. If you are a victim of a gas explosion, you deserve justice and compensation for

your suffering. Contact an attorney who will fight for what you are entitled to. Do not hesitate

to move forward with your life and speak with a lawyer today.

Multi-Country Per Capita Fatality Data for 2003

Last updated on January 20, 2005 (re USA and Republic of Ireland) and on January 29

(Jamaica)

Number of c

OECD Per Capita

Number of m

Population

Death Country

Deaths

(millions)

Deaths in 2004

Pos'n Rate

2003

12 g

----

Brunei

0.37

3.29

----

Malta

0.4

4.00

----

F Y R Macedonia

118

2.1

5.62

3,508 ae

3,221ae

United Kingdom

60.3

5.81

Sweden

529

9.0

5.88

Norway

280

4.6

6.01

Netherlands

1,028

16.3

6.31

8,877 t

Japan

127.3

6.97

370/377 aa/ac

Finland

379

5.2

7.02

10=

Switzerland

546

7.45

7.33

10=

Iceland

0.3

7.33

Albania

264

3.5

7.54

Israel

482

6.2

7.77

Serbia

and

858

10.8

7.94

Montenegro

Denmark

432

5.4

8.00

Business Ethics MGT610

8.03 Germany

6,613

82.4

1,634 v

Australia

19.9

8.21

Ireland

337

4.0

8.43

336 k

Ireland -- Republic of

3.97

8.46

2,778 x

Canada

32.5

8.55

Azerbaijan

718

7.9

9.09

France

5,731

60.4

9.49

Moldova

425

4.4

9.66

Romania

2,235

22.4

9.98

>10

Bahrain

Austria

931

8.2

11.36

459 y

435 y

New Zealand

4.0

11.48

Luxembourg

0.46

11.52

11.7

Italy

58.0

Slovak Republic

653

5.4

12.09

Slovenia

242

2.0

12.10

Georgia

572

4.7

12.17

Estonia

164

1.3

12.62

Bulgaria

960

7.5

12.80

Portugal

1,356

10.5

12.91

3,966 f

Turkey

68.9

-----

Hungary

1,326

10.0

13.26

Spain

5,399

40.3

13.40

Czech Republic

1,447

10.2

14.19

14.5

Belgium

10.3

Poland

5,640

38.6

14.61

399 l

Jamaica

2.71

14.7

14.75

42,884 ag

290.8 j

42,636 af

U.S.A.

14.9

Repub. of Korea

48.6

Greece

1,615

10.6

15.24

Croatia

701

4.5

15.58

Liechtenstein

0.03

16.67

Belarus

1,763

10.3

17.12

238,584 z

China

1298.8

18.37

Lithuania

709

3.6

19.69

Latvia

493

2.3

21.43

>34,000 q

Russian Federation

35,600

143.7

24.77

Business Ethics MGT610

25.3

South Africa

12,353

44.3ab

6,286 h

6,223 p

Malaysia

23.5

26.75

117 n

Cyprus

0.78

649 o

Ghana

20.8

Multi-Country Data for 2004

See a 15-year history of per capita death rates for the (now) 30 member countries of the OECD,

including the USA. We also have a table showing the 2003 per capita data for all 50 American

states, here

DSA Comments

It must be remembered that there are three primary measures for comparing multi-national

crash and fatality data: the deaths per 100,000 population or per capita rate, as shown here,

deaths in relation to overall distance traveled (known in the USA as the VMT rate), and deaths

in relation to the number of registered motor vehicles in the country. All three measures should

be considered when comparing disparate countries but using just one of these methods is

generally acceptable when comparing countries of similar status (e.g. "highly motorized

countries" [HMCs], developed nations, third world countries, etc.).

As a result, some countries in the above table may appear to present bizarre results, either

because -- like China, for example -- they have a very high death toll but it is offset by a huge

population, or they simply have, say, a very low proportion of motor vehicles per head of

population -- such as Brunei, that is currently at the head of the per capita table, or Ghana.

There is also the question of how, exactly, a traffic fatality is defined in any particular country.

Some may only include deaths at the scene, whereas others will stipulate deaths within 24

hours, and some may allow a full week or even 30 days.

In some cases, therefore, the data for the number of deaths simply cannot be relied upon as

being accurate. In Turkey, for example, the national press state that over 9,000 people are killed

in road crashes each year, and yet each year data is published by that country giving a much

lower body count. For that reason we have elected to position Turkey in the table to allow for

an approximate per capita rate of 13.06 (based on the aforementioned 9,000 estimate) but have

not shown the rate in the relevant column.

The Ethics of Consumer Production and Marketing

As the examples of Bridgestone/Firestone and Metabolife International clearly demonstrate,

consumers are exposed daily to high levels of risk simply by using consumer products. The risk

translates into injury, death, and astonishingly high costs as a result. As if product injuries were

not enough, consumers must also bear the costs of deceptive sales practices, shoddy

merchandise, and un-honored warranties. This chapter examines the ethical issues raised by

product quality and advertising.

Business Ethics MGT610

Markets and Consumer Protection

Consumers are at great risk every day. Many believe that consumers are automatically

protected from injury by the operation of the free and competitive market. In the market

approach to consumer protection, consumer safety is seen as a good that is most efficiently

provided through the mechanism of the free market whereby sellers must respond to consumer

demands. If consumers want products to be safer, they will indicate this preference in markets

by willingly paying more for safer products and showing a preference for manufacturers of safe

products while turning down the goods of manufacturers of unsafe products. Producers will

have to respond to this demand by building more safety into their products or they risk losing

customers to competitors who cater to the preferences of consumers. Moreover, if consumers

do not place a high value on safety (or are unwilling to pay for it), then it is wrong to force

them to accept higher levels of safety through regulation.

Critics to the market approach respond that the benefits of free markets are obtained only when

the markets have all of the seven defining characteristics: (a) There are numerous buyers and

sellers, (b) everyone can freely enter and exit the market, (c) everyone has full and perfect

information, (d) all goods in the market are exactly similar, (e) there are no external costs, (f)

all buyers and sellers are rational utility maximizers, and (g) the market is unregulated. Critics

of the market approach to consumer issues argue that these characteristics are absent in

consumer markets.

Most importantly, markets are efficient only if participants have full and perfect information

about the goods they are buying. This is obviously not always the case, however; some

products are simply too complex for anyone but an expert to understand them. Gathering

information is also time consuming and expensive, so many consumers may not have the

resources to acquire the necessary information on their own.

In theory, of course, if consumers really wanted this information, then a market would be

created for consumer information. It is difficult, however, for such organizations to cover their

costs. Once costly information is released, it is easily leaked to others who do not pay. Because

people know they can become free riders, the number of people who pay for the information is

too small to cover the costs of gathering it. Second, consumers are unwilling to pay for

information because they do not know what its value is until after they get it, and then they

already have it and don't need to pay for it. When we buy information, we cannot know in

advance what we are purchasing until we have it. Markets alone, then, cannot provide

consumers with the information they need.

Another criticism of the free market approach to consumer issues refers to the sixth

characteristic of perfectly competitive free markets that of the consumer is a "rational utility

maximizer." The consumers defined by the theory think ahead, consider, and watch every

penny they spend, knowing how their choices will affect their preferences. This does not really

characterize consumer choice, however. Most consumer choices are based on probability

estimates that we make concerning the chances that the products we buy will function as we

expect. Research shows, unfortunately, that we become inept and irrational when we make such

choices.

Business Ethics MGT610

First, most of us are not good at estimating probabilities. We typically underestimate risks and

overestimate the probabilities of unlikely but memorable things. Our probability judgments go

astray for five reasons:

1. We ignore prior probabilities when we get new information, even if the new information is

irrelevant.

2. We emphasize "causation," but underweight evidence that is relevant but not seen as

"causal."

3. We generalize based on small sample findings.

4. We believe in the nonexistent "law of averages."

5. We believe that we control purely chance events.

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