Plucked from this poignant post about externalities (which reminds me of my realization that limited liability corporations evolved from pirates) is this bit from a Rolling Stone article. It’s a nice clean example of cost benefit analysis in the “real world.”
BP has also cut corners at the expense of its own workers. In 2005, 15 workers were killed and 170 injured after a tower filled with gasoline exploded at a BP refinery in Texas. Investigators found that the company had flouted its own safety procedures and illegally shut off a warning system before the blast. An internal cost-benefit analysis conducted by BP – explicitly based on the children’s tale The Three Little Pigs – revealed that the oil giant had considered making buildings at the refinery blast-resistant to protect its workers (the pigs) from an explosion (the wolf). BP knew lives were on the line: “If the wolf blows down the house, the piggy is gobbled.” But the company determined it would be cheaper to simply pay off the families of dead pigs.
Billions of years ago, in a course on Biotechnology, I got a A+ for writing a long paper outlining a cost benefit analysis for some research on kidney machines. I’d written the entire paper in a similar sardonic tongue in cheek tone and I was shocked that the instructor seemed to be oblivious to that. It was, I thought at the time, the most interesting lesson I took from the course.
I must look for a chance to use the The Three Little Pigs as design framework!