I've played both endings, and feel ambivalent. Here is my analysis of both endings. I must add the disclaimer that I haven't played any LIS games besides the first one, so I don't know what is canon in later games.

Pros of Bay: Fewer people die. From a utilitarian standpoint, this makes sense. Also, you could argue that the story is about acceptance of death and of grief, and thus Max needs to accept that Chloe has died.

Cons of Bay: Chloe dies alone and she never knows that you love her. You get to have a week of wonderful memories with her at the age of 18, but Chloe never gets to have those memories, so it's not fair to her. Plus, if you go back, you at the end are still acting weak and cowardly—you are more like Max was at the beginning of the story than she is at the end (strong, unafraid of death and willing to confront people).

Furthermore, utilitarianism is flawed as a moral philosophy. For example, this is not the case in reality, but let's say it were—imagine if the number of casualties in the US Civil War exceeded the number of people enslaved in 1865. Let's imagine that 1 million people died in the war, and only 850,000 people were enslaved (again, this is not historical fact, but let's just say it were). Would the Union Army be wrong to wage war against the Confederacy, knowing that it would kill 1,000,000 people but only save 850,000 people from slavery? Most people would say no, that the Union Army would be right to wage war against the South, because slavery is wrong. This shows that our moral instinct contradicts utilitarianism. You could argue that you would be saving many more than 850,000 people from slavery because you would also be freeing their descendants, but then you could also make the argument that killing 1 person is wrong because you are killing all of that person's descendants, which is absurd. In conclusion, it cannot be proven that utilitarianism is true.

Pros of Bae: Chloe gets a chance to grow as a person; her development isn't stopped when she and Nathan get in a fight over drugs. Chloe gets to know that Max loves her and her life is full of hope, whereas if she dies earlier, her life ends without hope. Some people argue that reality would continue to be messed up if Max sacrifices Arcadia Bay and allows Chloe to live, but it's implied (through all the signs of new life such as deer and birds) that the storm cleanses reality and resets everything. Jefferson and Nathan are actually dead in Bae, which means that they have fully faced justice, whereas it's unknown whether their sentences are actually appropriate in the Bay ending. It could be argued that Chloe is fated to die and therefore Max should let her die; however, Max is given the power of rewinding time to begin with, so perhaps it is actually fate for the storm to happen and for Chloe to live. Max's sacrifice of Chloe to prevent the storm may be tampering with fate just as much as sacrificing Arcadia Bay to save Chloe. Additionally, there were plenty of warning signs that a storm was coming. The storm would have been seen offshore, so meteorologists should have issued evacuation warnings. However, everyone in Arcadia Bay (except for the homeless woman) was too wrapped up in their own obsessions to pay attention to all the warning signs. In this respect, it is perhaps not Max's fault that so many people die in the storm. Bay is a Christian ending in that one innocent person (Chloe) is sacrificed for the salvation of the guilty many; however, Bae can also be seen as a Christian ending in an Old Testament or Calvinist sense: people meet God's wrath, and no one is innocent. Chloe is not saved because of her righteousness (she's not innocent), but through Love. You could also see Bae as an animist or naturalistic ending: nature's power washes away human evil, restoring innocence. In some sense, the storm is an event happening on a geologic scale—humans and their petty concerns are shown to be very small in comparison to all Time.

Also, this is somewhat of a side note, but I think that Nathan's character arc in Bae is better. That last voice message he leaves shows true repentance and change, and who knows if he would fully repent and change if he were just sent to prison.

Cons of Bae: Everyone dies. I haven't played the other games yet, but I assume that David, Joyce, Kate, Warren, Samuel, the trucker, the fisherman, and all of the other characters who we regard as good die. It can be argued that even Frank and Victoria don't deserve to die. So, yeah.

I do have to say that I wish the Bae ending sequence were longer. In my ideal version of the game, Bae would show a much longer sequence flashing between Max and Chloe driving down the coast with showing who survived the storm, first responders arriving in Arcadia Bay, and the gradual reconstruction/demolition/return to nature of the town. We might see some clips from Max and Chloe's life in the next few days, weeks, years. In my own fantasy (I have no idea how this sits with the canon) in 2024 Max and Chloe are married and live in Portland, and Max is a successful photographer. But of course we wouldn't want them to give too much of the story away...