The ethics of replacing things

I’m sticking to my decision not to blog the WTC site much any more, because

I just find the whole thing far too depressing, and I think the catalogue of

incompetence has been pretty clearly laid out at this point for anybody who’s

interested in what went wrong and when.

But I still read articles on it, including today’s NYT story on the Customs

Service, and others, moving into the Freedom Tower. Near the end comes this:

There may also be a financial incentive, since about $345 million in insurance

proceeds from the destruction of the old Customs building can be used to build

its space in the Freedom Tower. State officials said they did not think that

the money could be transferred elsewhere.

Which raises an ethical issue which has been niggling me for some time now:

If someone pays you the cost of replacing something they broke or damaged,

are you ethically obliged to use that money to replace it?

I’m sure that most of us have found ourselves in this situation at some point.

In the normal course of events, one arrives at "I’m so sorry, I’ll pay

you back". And then you get the money for a new X – but you realise

that you don’t really need the thing that was broken, and you do have a big

credit card bill, and you’ve been meaning to get a new Y for ages… and so

you use the money not for buying a new X, but rather for something else.

Is that OK? One way to arrive at an answer is to see how one would feel were

the roles reversed. There are two ways of looking at it from the donor’s point

of view:

  • "I gave him $x because I broke his X, and in order to replace his X.

    I could have given him a new X instead, rather than the money. But instead

    of using the money to replace his broken X, he went and spent it on something

    else entirely, and although I like the guy, I’m not the kind of person who’d

    just give him a brand-new Y. He took my money, which was given with good intentions

    to make him whole, but his intentions weren’t quite so good: it seems he never

    intended to buy a new X with the money at all! I didn’t give him money for

    a Y, I gave him money for an X, and he should have spent it on an X."

  • "I broke his X and at that point was morally obliged to replace it.

    I could have given him a new X, but instead I gave him both a bit more freedom

    and a bit more work by giving him $x instead. It turns out he was actually

    much happier with the $x than he would have been with a new X, since he used

    the $x for something else. This is a win-win situation for both of us: I don’t

    have to go out and buy an X, while he gets to use my money for something he

    wants even more than an X. I’m out $x anyway, so he should put that

    money to its best use. That’s the whole point of money: it’s fungible."

The Customs Service’s insurer, it would seem, is taking the first tack. They’re

obliged to pay the Customs Service the cost of rebuilding their offices at Ground

Zero. But if the Customs Service doesn’t rebuild its offices at Ground Zero,

then there’s no obligation.

Personally, I’m much more sympathetic to the second tack If I gave someone

money to replace something and they used it for some other purpose instead,

I would not feel aggrieved, since they clearly needed the money more for Y than

they did for replacing X.

I wonder what neuroeconomics

might have to say about this situation? Here’s Jonathan Cohen, a neuroeconomist

quoted in John Cassidy’s New Yorker article:

“The key idea in neuroeconomics is that there are multiple systems

within the brain. Most of the time, these systems coöperate in decision-making,

but under some circumstances they compete with one another."

It could be that people who take the first tack are reacting on the basis of

an emotional, limbic response, while people who take the second tack are being

more rational. If that’s the case, then one might have to make one’s purchasing

decision on the basis of whether the person paying you the money is more emotional

or rational when it comes to such things. If they’re emotional, then use the

money to replace the damaged item; if they’re rational, then use it for anything

you want.

But that, of course, just leaves us with the even bigger problem of second-guessing

the limbic state of our donor. Is there a better way, a more hard-and-fast ethical

principle, which can be applied here?

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2 Responses to The ethics of replacing things

  1. Roger says:

    Whatever the neuroeconomics, it is easy to understand the motivation of the inurance company. What is less clear to me is how after so many years of writing insurance they can still get away with writing a policy that is unclear in this crucial respect.

  2. Matthew says:

    Given money is more useful than goods, could you bargain the person down? I’ve broken your ߣ50 squash racket, so I’ll give you a new squash racket, worth ߣ50, or I’ll give you ߣ45 in cash. In fact as actually replacing the new thing takes some effort, ߣ50 in cash doesn’t quite replace the squash racket (let’s assume it was new, otherwise it’s complex) unless you assume there’s some benefit from it being cash (ie a ߣ50 credit note for a squash racket wouldn’t quite cut it).

    I think the first reaction is perhaps really a belief that the good wasn’t worth the money you had to give to compensate the person. You have no way of knowing what loss you’ve really caused the person. But if you replace it with something exactly the same you know they’ve lost/gained nothing. If on the other hand you give them the replacement cost in cash, and they spend it, you feel you might have overpaid.

    Saying that if the breakage was your fault, its your fault.

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