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xecutlve summary
Regulatory agencies regularly confront the difficult task of placing a
value on the prevention of death and illness due to encounters (sometimes
years earlier) with toxic substances and other health and safety hazards of
modern life. Because they require explicit or implicit allocations of scarce
resources, regulatory decisions about environmental health attach values to
the consequences of those decisions. The problems encountered by benefit-
cost analysts responsible for valuing environmental, health, and safety risks
are closely related to the legal and administrative context in which they
appear, the types of potential threats they pose to life and health, and the
characteristics and availability of information about those threats.
With support from the Environmental Protection Agency, a steering
committee of the National Research Council planned and conducted a con-
ference addressing these issues. On the basis of its conference discussions
and papers, the steering committee identified the challenge facing health
and safety regulators in improving the application of benefit-cost analy-
sis to regulation: it is to design practical procedures and techniques that
accommodate (1) considerable situational variation; (2) the fairly limited
role played by formal benefit-cost analysis in the full process of identifying,
regulating, and enforcing solutions to environmental, health, and safety
problems; and (3) the tendency for both critics and supporters of analysis
to overemphasize its influence in the regulatory process.
Both those who would generally support the use of benefit-cost analysis
and those who would oppose its current use recognize genuine moral
and ethical dilemmas underlying evaluation of the costs and benefits of
programs to regulate health and safety risks. They raise serious questions
regarding whether current approaches to characterizing and valuing risks
can accommodate the full range of factors that decision makers are asked
to take into account, particularly those drawing comparisons across time.
They also express concerns regarding the appropriateness of formalizing
approaches to issues such as intertemporal equity.
Moreover, although many analysts would agree on the use of cer-
tain specific benefit-cost approaches and techniques- for example, the use
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EXECUTIVE SUMMARY
of willingness-to-pay approaches to valuing prevention of deaths legal
statutes, court interpretations, and other forms of policy guidance provide
inconsistent signals to analysts regarding the use of general approaches and
specific methods for attaching values to death prevention and life extension.
There are both debate among researchers and practicing analysts as to the
appropriateness of many specific techniques in given circumstances and a
puzzling array of situations confronting regulatory decisions makers.
The following recommendations for improving benefit-cost analysis
draw on such considerations:
1. Benefit-cost analysis should be thought of as a set of information-
gathering and organizing tools that can be used to support decision making
rather than as a decision-making mechanism itself.
2. Analytic methods and techniques should be more systematically
matched to types of health and safeW problems in the regulatory process.
3. Regulatory agencies should consider expanding the use of formal
peer review mechanisms in the area of benefit-cost analysis for health and
safety decisions.
Representative terms from entire chapter:
regulatory decisions
