Bad Math at Federal Agencies Undervalues Human Life
June 29th, 2011
The views and opinions expressed in this “for expert comment” release are based on research and/or opinions of the researcher(s) and/or faculty member(s) and do not reflect the University’s official stance.
COLUMBIA, Mo — As the United States Congress considers whether to codify cost-benefit analysis (CBA) requirements, Ben Trachtenberg, a visiting associate professor at the University of Missouri School of Law, says that observers of the regulatory process should recognize that existing CBA procedures systematically undervalue the benefits of regulation, causing widespread under regulation of environmental harms and other health hazards.
Ben Trachtenberg is a visiting associate professor at the University of Missouri School of Law, where he teaches evidence, criminal procedure, and professional responsibility.
“Federal agencies consistently undervalue the benefit of saving human lives in the future by failing to account for “health inflation,” the rate at which health care costs rise more quickly than prices of normal goods and services, and “wealth inflation,” the phenomenon by which residents of wealthy countries tend to get richer over time,” Trachtenberg said. “The resulting undervaluation causes the agencies to underestimate the likely benefits of regulations, thereby causing agencies to forgo enacting some lifesaving policies.”
Trachtenberg says that before enacting major regulations, federal agencies are required by law to produce a regulatory impact analysis listing the costs and benefits of proposed rules. He says the valuation agencies give to human lives is important in its own right, but it is all the more important because too often this valuation is the only basis for estimating the overall benefits of a new regulation. Despite protestations to the contrary, Trachtenberg states that agencies regularly ignore certain kinds of non-economic benefits. He says that even many economic benefits are ignored, with agencies calculating only the value of saved lives – but not, for example, always including the value of preventing non-fatal illnesses or injuries.
“A recent meat labeling rule issued by the Food Safety and Inspection Service (FSIS) of the U.S. Department of Agriculture is a good example,” Trachtenberg said. “The point of the rule is to give meat eaters more information about the food they consume, allowing them to make healthier choices. As one might expect, the anticipated benefits come in the form of better health for American carnivores. But the agency excluded the benefits of preventing non-fatal cancers. FSIS stated that, ‘[g]iven questions concerning data quality and unsettled methodological issues in estimating the benefits of a reduction in non-fatal cases of coronary heart disease,” it would limit “its analysis of benefits to reductions in premature death.’”
For further analysis of Trachtenberg’s work, visit: http://www.law.upenn.edu/blogs/regblog/ 2011/06/how-bad-math-at-federal-agencies-undervalues-human-life.html For a complete copy of Trachtenberg’s article, “Health Inflation, Wealth Inflation, and the Discounting of Human Life,” which has recently been published in the Oregon Law Review, go to http://ssrn.com/abstract=1845504
Ben Trachtenberg is a visiting associate professor at the University of Missouri School of Law, where he teaches evidence, criminal procedure, and professional responsibility. He previously taught criminal law and environmental law at Brooklyn Law School.