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DEALING WITH UNCERTAINTY ABOUT RISK IN RISK MANAGEMENT 49 original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. insensitive to resource constraints and do not incur significant opportunity costs, and (3) that activities or agents identified as hazardous (whether true positives or false positives) can be eliminated without the creation of significant new risks. The potential protectiveness of conservatism also depends on whether risk managers compensate for conservatism in standard setting. The Social Costs of Error In his analysis Page described dichotomous risk decisions and classifications as follows: substances were either carcinogenic or not, and when they were misclassified the resultant errors were either false positives or false negatives. This representation is a useful way to show how it is socially desirable to balance the costs of errors in managing uncertain risks, and this was Page's objective. Actual problems are generally not so black or white. They often involve a substance's degree of carcinogenic potency and the establishment of exposure limits. Under this view, risks and risk-management alternatives are continuously variable rather than discrete. It is actually easier to make the case for controlling risk under this continuous perspective, because it is generally harder to justify the ban of a hazardous substance on cost-benefit grounds than it is to justify a marginal reduction. This follows from the common assumption that health benefits are constant per unit of reduced exposure but that as use decreases to zero, progressively more valuable social benefits are forgone. If potency and exposure are variable, the harm from risk assessment errors is far less than if they are discrete. A shift in analytic assumptions, for example, to the average carcinogenic potency exhibited in several species rather than potency in the most sensitive species, could result in a less stringent standard. But this seems unlikely to lead to the public health disaster or excessive individual risk that one associates with the failure to recognize and control a potent carcinogen. However, this argument may not apply to environmental risks such as those from biotechnologies or climate changes. Consider basing regulatory standards for exposure to hazards on assessed risk, using analytic criteria that appropriately reflect social cost. For exposures at the standard, the marginal costs of regulatory action should exactly balance the marginal benefits of reduced public health risk. For standards that are slightly displaced from the point at which marginal costs equal marginal benefits, perhaps because of small errors in assessing risk, the social costs of overexposure or underexposure will largely be offset by reduced or increased costs of risk control. These costs due to small inaccuracies in the estimation of false positive and false negative errors are roughly
