A trolley leaves Philadelphia at 1:20 PM, traveling at 50 miles per hour. It approaches a junction. If it turns left at the junction, you will arrive at the station in 50 minutes while killing twenty strangers, but if it turns right, you will arrive at the station in 1.5 hours and the U.S. tax rate is lowered by 1.07%. Which decision makes your boss the most money? Explain.
That was problem 1(b) in my recent Finessing Finance class, which I am taking at the prestigious Charles Booth School of Business. This is the only p-set for the class, so obviously there’s a lot of pressure. However, I just can’t seem to crack it. Am I missing something?
On the one hand, 40 minutes is a lot of time, time that could be spent improving the PowerPoint I’m gonna use to fire my unpaid intern Jenny. I know the problem doesn’t say anything about Jenny, but she’s clearly implied. However, presumably my boss, who’s a billionaire (why else would I choose to work for him?) only pays 8% income tax, so a 1% decrease in the tax rate would mean a lot to him. Maybe a vacation in Dubai instead of the Maldives.
I’m curious what everyone else got on this problem, though. I heard someone in a problem session say that this question was impossible, and that you can’t possibly compare the value of a tax rate decrease and 40 minutes. Well, actually, I don’t go to problem sessions. My poli-sci friend/frat brother told me that.
Obviously the very first thing I did when I got this problem was run it through Chegg and Google. However, all I seem to get is results about “the value of a human life.” I found that ridiculous, ‘cause everyone knows the value of human life is 5000 Icelandic króna.
Can anyone help me out on this?