MGMT 2010 · HKUST BUSINESS SCHOOL
Business Ethics & the Individual
Lecture 4: Consequentialism
Detailed Revision Notes · Compiled March 2026
1 What Is Consequentialism?
Consequentialism is the ethical theory that holds the moral worth of an action is
determined entirely by its consequences (outcomes). An action is right if it
produces good outcomes, and wrong if it produces bad outcomes.
Core question: "What will produce the best results?"
Virtue Ethics Deontology
"Who should I be?" "What is my duty?" Consequentialism
"What produces best
Focus: Character & Focus: Rules &
results?"
disposition. Origin: obligations. Origin:
Aristotle. Kant. Focus: Outcomes &
welfare. Origin:
Bentham & Mill.
2 The Two Major Forms
A. Utilitarianism (the dominant form)
The most important version of consequentialism. Associated with Jeremy Bentham
(1748–1832) and John Stuart Mill (1806–1873).
Core principle: An action is morally right if it maximises utility — typically
understood as happiness, pleasure, or well-being — for the greatest number of
people.
"The greatest happiness of the greatest number."
— Jeremy Bentham
B. Other Consequentialist Theories
PREFERENCE RULE CONSEQUENTIALISM
CONSEQUENTIALISM Follow rules that, if generally
Maximise satisfaction of people's followed, would produce the best
preferences, not just pleasure — outcomes. Bridges consequentialism
accounts for what people actually with deontology.
want.
3 Bentham's Hedonic Calculus
Bentham believed pleasure and pain could be measured and calculated. He
proposed the Hedonic Calculus — a method for measuring the value of
pleasure/pain using 7 dimensions.
INTENSITY DURATION CERTAINTY PROPINQUITY
How strong is the How long does it How likely is it to How soon will it
pleasure/pain? last? occur? happen?
FECUNDITY PURITY EXTENT
Will it lead to more Will it be followed How many people
pleasure? by opposite are affected?
sensations?
Exam tip: Bentham treats all pleasures as equal in kind — only differing in
quantity. Mill disagreed with this, introducing the concept of higher vs. lower
pleasures.
4 Mill's Refinement — Higher vs. Lower Pleasures
John Stuart Mill accepted Bentham's framework but made a crucial modification: not
all pleasures are equal in quality.
⬇ LOWE R PLE AS UR ES ⬆ HI G H ER P L EASU R ES
Bodily / Sensory Intellectual / Moral / Aesthetic
e.g., eating, physical comfort, sensory e.g., reading philosophy, music, moral
gratification reasoning
"It is better to be Socrates dissatisfied than a fool satisfied."
— John Stuart Mill
Mill argued that humans who have experienced both always prefer higher
pleasures. Quality matters, not just quantity.
5 Act vs. Rule Utilitarianism
FE AT URE ACT U T IL ITARIAN ISM RUL E UT IL ITARIANISM
Question Which action maximises utility in Which rule, if followed
this situation? generally, maximises utility?
Approach Calculate consequences of each Follow rules that generally
individual act produce good outcomes
Flexibility Very flexible — case by case More rigid — rule-based
Problem Can justify harmful acts if they Can conflict with act-level
produce good outcomes outcomes
Example: Lying is generally wrong (rule utilitarianism), but lying to save a life
might be justified in this specific case (act utilitarianism).
6 Consequentialism in Business
Cost-Benefit Analysis (CBA)
The most direct business application of consequentialism. Managers weigh the total
costs against total benefits of a decision.
Supports profit maximisation if it produces the greatest social good
Used in policy decisions, investment appraisals, risk assessments
Problem: How do you quantify non-financial harms (e.g., environmental damage,
human suffering)?
The Ford Pinto Case — Classic Example
F OR D PI NTO
Ford calculated that paying compensation for deaths from a known fuel tank
defect was cheaper than fixing it. This is pure act-utilitarian reasoning — and is
widely seen as a moral failure because it reduces human lives to financial
figures.
→ Widely condemned: human dignity cannot be reduced to a cost line
Stakeholder Analysis
STA KE H OLD ER IM PACT
A consequentialist approach asks: who is affected and how much? This maps
directly onto stakeholder theory — identifying all parties affected by a decision
and weighing the impact on each.
→ Consequentialism naturally supports broad stakeholder consideration
7–8 Strengths & Criticisms
ST R E NGT HS CRIT ICISM S
Intuitive and practical — we Justifies unjust acts — if
naturally think about torturing one person saves five,
consequences when making consequentialism may permit it
decisions
Ignores rights — minorities'
Flexible — adapts to the rights can be sacrificed for
specifics of each situation majority benefit
Impartial — everyone's Prediction problem — we cannot
happiness counts equally; no always know the consequences
one gets special treatment of our actions in advance
Measurable — outcomes can (in Measurement problem — how do
principle) be quantified and you compare different types of
compared happiness or suffering?
Widely used in policy — cost- Demandingness — always
benefit analysis underpins maximising utility could require
government and corporate extreme personal sacrifices
decision-making
Neglects character and duty — a
good outcome produced by bad
means still counts as good
9 Consequentialism vs. Other Frameworks
FE AT URE CONSE QUE NT IAL ISM D E ON TOLOGY VIRT UE E T HICS
Focus Outcomes / Rules / duties Character of the agent
consequences
Key "What produces best "What is my "What kind of person
question results?" duty?" should I be?"
Basis Utility / welfare Rational moral Virtuous character
law
Flexibility High — adapts to Low — rules Medium — context-
context are rigid sensitive
Key Can justify harmful Can be Vague action guidance
weakness acts inflexible
10 Key Thinkers
Jeremy Bentham John Stuart Mill
1748–1832 1806–1873
Founded utilitarianism. Proposed the Refined utilitarianism by introducing
Hedonic Calculus. Held that all higher vs. lower pleasures. Argued
pleasures are equal in kind, differing quality matters, not just quantity.
only in quantity. "Greatest happiness Author of Utilitarianism and On
of the greatest number." Liberty.
Peter Singer
b. 1946
Modern consequentialist. Applied
ethics to global poverty, animal
welfare, and effective altruism.
Argues impartiality demands far
more from us than we typically give.
11 Key Terms to Know
Consequentialism Moral worth determined entirely by the
outcomes/consequences of an action
Utilitarianism Maximise happiness/utility for the greatest
number of people
Utility Happiness, pleasure, or well-being — the thing
to be maximised
Hedonic Calculus Bentham's method for measuring and comparing
pleasures/pains across 7 dimensions
Act Utilitarianism Judge each act individually by its consequences
in that specific situation
Rule Utilitarianism Follow rules that, if generally adopted, would
produce the best overall outcomes
Higher Pleasures Mill's category for intellectual, moral, and
aesthetic pleasures — superior in quality
Lower Pleasures Mill's category for bodily and sensory pleasures
— inferior in quality to higher pleasures
12 Quick Revision Checklist
Can you explain the core principle of consequentialism in one sentence?
Can you explain Bentham's Hedonic Calculus and name at least 4 of its 7
dimensions?
Can you explain Mill's distinction between higher and lower pleasures?
Can you contrast act and rule utilitarianism with an example?
Can you apply consequentialist reasoning to a business ethics scenario (e.g.,
Ford Pinto)?
Can you list at least 2 strengths AND 2 criticisms of consequentialism?
Can you compare consequentialism to virtue ethics and deontology in a table?
Exam strategy: In case-based questions, the key move for consequentialism is
to: (1) identify all stakeholders affected, (2) weigh the total harms vs. benefits
for each party, and (3) determine whether the overall outcome maximises utility
— then evaluate whether this ignores any rights or duties.
Business Ethics & the Individual
Lecture 4: Consequentialism
Detailed Revision Notes · Compiled March 2026
1 What Is Consequentialism?
Consequentialism is the ethical theory that holds the moral worth of an action is
determined entirely by its consequences (outcomes). An action is right if it
produces good outcomes, and wrong if it produces bad outcomes.
Core question: "What will produce the best results?"
Virtue Ethics Deontology
"Who should I be?" "What is my duty?" Consequentialism
"What produces best
Focus: Character & Focus: Rules &
results?"
disposition. Origin: obligations. Origin:
Aristotle. Kant. Focus: Outcomes &
welfare. Origin:
Bentham & Mill.
2 The Two Major Forms
A. Utilitarianism (the dominant form)
The most important version of consequentialism. Associated with Jeremy Bentham
(1748–1832) and John Stuart Mill (1806–1873).
Core principle: An action is morally right if it maximises utility — typically
understood as happiness, pleasure, or well-being — for the greatest number of
people.
"The greatest happiness of the greatest number."
— Jeremy Bentham
B. Other Consequentialist Theories
PREFERENCE RULE CONSEQUENTIALISM
CONSEQUENTIALISM Follow rules that, if generally
Maximise satisfaction of people's followed, would produce the best
preferences, not just pleasure — outcomes. Bridges consequentialism
accounts for what people actually with deontology.
want.
3 Bentham's Hedonic Calculus
Bentham believed pleasure and pain could be measured and calculated. He
proposed the Hedonic Calculus — a method for measuring the value of
pleasure/pain using 7 dimensions.
INTENSITY DURATION CERTAINTY PROPINQUITY
How strong is the How long does it How likely is it to How soon will it
pleasure/pain? last? occur? happen?
FECUNDITY PURITY EXTENT
Will it lead to more Will it be followed How many people
pleasure? by opposite are affected?
sensations?
Exam tip: Bentham treats all pleasures as equal in kind — only differing in
quantity. Mill disagreed with this, introducing the concept of higher vs. lower
pleasures.
4 Mill's Refinement — Higher vs. Lower Pleasures
John Stuart Mill accepted Bentham's framework but made a crucial modification: not
all pleasures are equal in quality.
⬇ LOWE R PLE AS UR ES ⬆ HI G H ER P L EASU R ES
Bodily / Sensory Intellectual / Moral / Aesthetic
e.g., eating, physical comfort, sensory e.g., reading philosophy, music, moral
gratification reasoning
"It is better to be Socrates dissatisfied than a fool satisfied."
— John Stuart Mill
Mill argued that humans who have experienced both always prefer higher
pleasures. Quality matters, not just quantity.
5 Act vs. Rule Utilitarianism
FE AT URE ACT U T IL ITARIAN ISM RUL E UT IL ITARIANISM
Question Which action maximises utility in Which rule, if followed
this situation? generally, maximises utility?
Approach Calculate consequences of each Follow rules that generally
individual act produce good outcomes
Flexibility Very flexible — case by case More rigid — rule-based
Problem Can justify harmful acts if they Can conflict with act-level
produce good outcomes outcomes
Example: Lying is generally wrong (rule utilitarianism), but lying to save a life
might be justified in this specific case (act utilitarianism).
6 Consequentialism in Business
Cost-Benefit Analysis (CBA)
The most direct business application of consequentialism. Managers weigh the total
costs against total benefits of a decision.
Supports profit maximisation if it produces the greatest social good
Used in policy decisions, investment appraisals, risk assessments
Problem: How do you quantify non-financial harms (e.g., environmental damage,
human suffering)?
The Ford Pinto Case — Classic Example
F OR D PI NTO
Ford calculated that paying compensation for deaths from a known fuel tank
defect was cheaper than fixing it. This is pure act-utilitarian reasoning — and is
widely seen as a moral failure because it reduces human lives to financial
figures.
→ Widely condemned: human dignity cannot be reduced to a cost line
Stakeholder Analysis
STA KE H OLD ER IM PACT
A consequentialist approach asks: who is affected and how much? This maps
directly onto stakeholder theory — identifying all parties affected by a decision
and weighing the impact on each.
→ Consequentialism naturally supports broad stakeholder consideration
7–8 Strengths & Criticisms
ST R E NGT HS CRIT ICISM S
Intuitive and practical — we Justifies unjust acts — if
naturally think about torturing one person saves five,
consequences when making consequentialism may permit it
decisions
Ignores rights — minorities'
Flexible — adapts to the rights can be sacrificed for
specifics of each situation majority benefit
Impartial — everyone's Prediction problem — we cannot
happiness counts equally; no always know the consequences
one gets special treatment of our actions in advance
Measurable — outcomes can (in Measurement problem — how do
principle) be quantified and you compare different types of
compared happiness or suffering?
Widely used in policy — cost- Demandingness — always
benefit analysis underpins maximising utility could require
government and corporate extreme personal sacrifices
decision-making
Neglects character and duty — a
good outcome produced by bad
means still counts as good
9 Consequentialism vs. Other Frameworks
FE AT URE CONSE QUE NT IAL ISM D E ON TOLOGY VIRT UE E T HICS
Focus Outcomes / Rules / duties Character of the agent
consequences
Key "What produces best "What is my "What kind of person
question results?" duty?" should I be?"
Basis Utility / welfare Rational moral Virtuous character
law
Flexibility High — adapts to Low — rules Medium — context-
context are rigid sensitive
Key Can justify harmful Can be Vague action guidance
weakness acts inflexible
10 Key Thinkers
Jeremy Bentham John Stuart Mill
1748–1832 1806–1873
Founded utilitarianism. Proposed the Refined utilitarianism by introducing
Hedonic Calculus. Held that all higher vs. lower pleasures. Argued
pleasures are equal in kind, differing quality matters, not just quantity.
only in quantity. "Greatest happiness Author of Utilitarianism and On
of the greatest number." Liberty.
Peter Singer
b. 1946
Modern consequentialist. Applied
ethics to global poverty, animal
welfare, and effective altruism.
Argues impartiality demands far
more from us than we typically give.
11 Key Terms to Know
Consequentialism Moral worth determined entirely by the
outcomes/consequences of an action
Utilitarianism Maximise happiness/utility for the greatest
number of people
Utility Happiness, pleasure, or well-being — the thing
to be maximised
Hedonic Calculus Bentham's method for measuring and comparing
pleasures/pains across 7 dimensions
Act Utilitarianism Judge each act individually by its consequences
in that specific situation
Rule Utilitarianism Follow rules that, if generally adopted, would
produce the best overall outcomes
Higher Pleasures Mill's category for intellectual, moral, and
aesthetic pleasures — superior in quality
Lower Pleasures Mill's category for bodily and sensory pleasures
— inferior in quality to higher pleasures
12 Quick Revision Checklist
Can you explain the core principle of consequentialism in one sentence?
Can you explain Bentham's Hedonic Calculus and name at least 4 of its 7
dimensions?
Can you explain Mill's distinction between higher and lower pleasures?
Can you contrast act and rule utilitarianism with an example?
Can you apply consequentialist reasoning to a business ethics scenario (e.g.,
Ford Pinto)?
Can you list at least 2 strengths AND 2 criticisms of consequentialism?
Can you compare consequentialism to virtue ethics and deontology in a table?
Exam strategy: In case-based questions, the key move for consequentialism is
to: (1) identify all stakeholders affected, (2) weigh the total harms vs. benefits
for each party, and (3) determine whether the overall outcome maximises utility
— then evaluate whether this ignores any rights or duties.
