Abstract
The Frameworks used to guide analysis and the decisions made regarding proposed health and safety regulations are inextricably linked. For example, if an agency is required by law to ban any substance shown to be a carcinogen, little or nothing is gained by an elaborate analysis of the economic and other implications of alternative decisions. The decision framework establishes priorities among issues and changes the way both regulators and nongovernmental decision makers view health and safety issues. Choosing a decision framework and using it consistently is perhaps the most important device for influencing the billions of decisions governing health and safety that are outside the control of federal regulators. Failure to appreciate the importance of the decision framework is the root of much of the criticism of social regulation. Legislation such as the Toxic Substances Control Act; the Federal Insecticide, Fungicide, and Rodenticide Act; and the Consumer Product Safety Act requires analysis of benefits, costs, and risks in formulating a regulation1. Unfortunately, subject areas such as carcinogenicity lack a firm scientific foundation for an analysis for those areas having a scientific foundation. Legislation such as the Delaney Clause is highly specific in requiring a ban2, but occasionally this action is so counter to public desires that the agency is condemned for carrying out the legislation, for example, for banning saccharin.
From, The Strategy of Social Regulation: Deci si on Frameworks for Policy, Brookings Institution, 1981. Used by Permission.
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References
Michael S. Baram, “Regulation of Health, Safety and Environmental Quality and the Use of Cost-Benefit Analysis,” pp. 46, 59–60, 75–76; and L. E. Erickson, “Issues and Experiences in Applying Benefit Cost Analysis to Health and Safety Standards,” app. A and F.
The so-called Delaney Clause resulted from hearings held by Congressman James Delaney of New York and is found in the Food Additives Amendment of 1958 to the Food, Drug, and Cosmetic Act of 1938 (72 Stat. 1786). It states in part that “no additive shall be deemed to be safe if it is found… to induce cancer in man or animal.”
Arranging the frameworks is not so simple. For example, risk- benefit analysis requires as much information as benefit-cost analysis, although it is less formal. While more than a single dimension is involved, the ordering is roughly accurate. See the bibliography for additional references.
Gerard Debreu. Theory of Value: An Axiomatic Analysis of Economic Equilibrium; and Kenneth J. Arrow and F. H. Hahn, General Competitive Analysis.
Kenneth J. Arrow, “Limited Knowledge and Economic Analysis.” pp. 1–10; and Jacques H. Dreze, ed., Allocation under Uncertainty: Equilibrium and Optimality.
Theodore F. Keeler, “Domestic Trunk Airline Deregulation: An Economic Evaluation,” pp. 75–149; and Paul W. Mavoy and John W. Snow, eds., Railroad Revitalization and Regulatory Reform, p. 6.
George J. Stigler. The Citizen and the State: Essays on Regulation; and Milton Friedman. Capitalism and Freedom.
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Friedman. Capitalism and Freedom; and Stigler. The Citizen and the State.
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See NAS, Food Safety Policy, pp. 4–17, 8–5; and Oliver E. Williamson, “Public Policy and Saccharin: The Decision Process Approach and Its Alternatives,” in Robert Crandall and Lester B. Lave, eds., The Scientific Basis of Health, Safety, and Environmental Regulation.
Smith, “Compensating Wage Differentials and Public Policy.”
Ibid.; and Richard Thaler and Sherwin Rosen, “The Value of Saving a Life: Evidence from the Labor Market,” pp. 265–98. The various studies attempt to control for other factors affecting pay, such as years of training.
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Personal communication with Charles L. Schultze. See U. S. Department of Commerce Regulatory Reform Seminar: Proceedings and Background Paper, pp. 17–31; Christopher C. Duth, “Constraining Regulatory Costs,” pt. 1: “The White House Review Programs,” pp. 13–36; Duth, “Constraining Regulatory Costs,” pt. 2: “The Regulatory Budget,” pp. 29–44; and William Nordhaus and Robert Litan, “A Regulatory Budget for the United States.”
National Academy of Scienes. Analytical Studies for the U. S. Environmental Protection Agency, vol. 2: Decision Making in the Environmental Protection Agency, app. D; Baruch Fischoff and others, “Approaches to Acceptable Risk,” pp. 169–204; and Baram, “Requlation of Health, Safety, and Environmental Quality.”
Benefit-cost analysis usually assumes fixed prices, wages, and discount rates. If the scope of project or projects being analyzed is sufficiently large, however, prices and discount rate must be determined within the analysis. Thus, applying benefit-cost analysis to all health and safety decisions made by the Food and Drug Administration would require a determination of the appropriate discount rate and would probably specify more projects than the agency could afford to do immediately. In this sense, the regulatory budget framework is a specialization of benefit-cost. analysis.
Paul M. Newberne, “Dietary Nitrite in the Rat.” See also Newberne, “Nitrite Promotes Lymphoma Incidence in Rats,” pp. 1079–81; Council on Agricultural Science and Technology, “Comments on the Newberne Report on the Effect of Dietary Nitrite in the Rat;” Food Safety and Quality. Hearings, pp. 5–28, 176–80, 131–34, 236–38, 356–64; Comptroller General of the United States, Does Nitrite Cause Cancer? Concerns about Validity of FDA-Sponsored Study Delay Answer.
See, for example, Howard Raiffa. Decision Analysis: Introductory Lectures on Choice under Uncertainty.
For a discussion of this point see Richard Zeckhauser and Albert Nichols, “The Occupational Safety and Health Administration: An Overview,” app., pp. 161–248; and National Academy of Sciences. Decision flaking for Regulating Chemicals in the Environment.
Lave and Seskin. Air Pollution and Human Health, p. 212; and U. S. Environmental Protection Agency. Protecting Visibility: An EPA Report to Congress, pp. 11–12 through 11–17.
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© 1984 Martinus Nijhoff Publishers, The Hague
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Lave, L. (1984). Eight Frameworks for Regulation. In: Ricci, P.F., Sagan, L.A., Whipple, C.G. (eds) Technological Risk Assessment. NATO ASI Series, vol 81. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-6155-5_8
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