Is Cost/Benefit Analysis Appropriate for Life & Death Matters? Were their lives worth saving?

After we were instrumental in getting underride rulemaking initiated in July 2014, I realized that, though we had made it over one hurdle, in reality  the battle had only begun. I became concerned that the cost/benefit analysis which had so often compromised past underride rulemaking was still a very real threat. It was then that I surmised that a Vision Zero Executive Order to modify the regulatory analysis process might well be necessary. Thus the Vision Zero Petition was birthed.

CBA Victim

Some of the warning signs that the Cost/Benefit Analysis (CBA) bugaboo might be lurking around the corner can be seen in the Preliminary Cost/Benefit Analysis for the current underride rulemaking:

  1. To avoid making this post too-lengthy, I will provide the link to my initial reactions when the proposed rule was published in December 2015: A Mom’s Knee-Jerk Reaction to NHTSA’s Proposed Rule to Improve Rear Underride Protection  with an excerpt here–“NHTSA’s comments in the NPRM indicate that they do not want to compromise safety in the more common crash scenario and so have proposed to concentrate on making that area of the trailer safer and do nothing, at least at this stage in the game, about the other weaker area where crashes are reportedly less common. (See p. 44, ” NHTSA is not convinced that improved protection in the less frequent 30 percent overlap crashes should come at the cost of adequate protection in the more common 50 and 100 percent overlap crashes.”)I just have to ask, Is it really an Either/Or situation? Are we sure that we cannot reasonably address both problems?”
  2. Back in December, I put together a handy-dandy document highlighting important points in the Preliminary Analysis:  NPRM Rear Impact Guards, Rear Impact Protection December 2015 document; A Summary of Some of the Highlights
  3. Hey, I forgot about this: They are asking for information about higher (than 35 mph) speeds.  We recognize, however, that benefits may accrue from underride crashes at speeds higher than 56 km/h (35 mph), if, e.g., a vehicle’s guard exceeded the minimum performance requirements of the FMVSS. NHTSA requests information that would assist the agency in quantifying the possible benefits of CMVSS No. 223 rear impact guards in crashes with speeds higher than 56 km/h (35 mph)What are we waiting for?!
  4. Based on their proposed requirements, their CBA comes up with a figure which is very close to the current Value of a Statistical Life (VSL), $9.4 million–which tells me that if more improvements were added to the proposed rule, that figure would go up and they would then say that such a counter-measure was “not cost-effective.” Get it? p. 55 The agency estimates that the net cost per equivalent lives saved is $9.1 million and $9.5 million discounted at 3 percent and 7 percent, respectively. 
  5. See what I mean? p. 55 “We have tentatively decided not to require used trailers be retrofitted with CMVSS No. 223 compliant rear impact guards. Our analysis indicates such a retrofitting requirement would be very costly without sufficient safety benefits
  6. Of course, they aren’t figuring in (that I can see) the additional lives which would be saved with better protection or adequately considering undercounted lives–like AnnaLeah and Mary. Our FARS report said, “Compartment Intrusion Unknown.” Crash Report data on underride from our crash
  7. Why on earth, anyway, are they playing God and deciding that it isn’t worth it to save a certain number of lives? Besides, have they taken into account the fact that the underride victims are not the consumer of the product (improved guards on trailers)? The consumer is the trailer buyer who has already shown a willingness to seek safer trailers. And the manufacturers have responded to that by producing safer trailers (to a degree). See my recent comment on the Federal Register: Public Comment on the NPRM by Marianne Karth

When it gets right down to it, I want to just throw the cost/benefit analysis out the window. It is downright unethical and considers profit over people. Jerry says that the Cost Effectiveness Analysis would be more appropriate and is, in fact, mentioned in OMB Circular A-4 as a regulatory requirement.  Circular A-4, “Regulatory Impact Analysis: A Primer”

It is my hope that we can pursue a recommendation, made by a participant of the Underride Roundtable during the afternoon panel discussion, and organize a group of affected individuals and organizations/companies to meet together and develop a proposal to take to NHTSA in order to bring about a comprehensive negotiated rulemaking. The result could more quickly bring about a more effective underride rule which would cover all the bases to save as many lives as is humanly possible through improved technology. It would also get the manufacturing companies out of limbo so that they can make long-term plans and move forward with designing and producing safer products. Win/Win. N’est-ce pas?

Side note to Cost/Benefit Analysis Question: The fallacy behind the Australian fed. gov’t’s CBA.

Last night, I decided to find out if anyone agrees with my opinion that cost/benefit analysis is inappropriate for rulemaking related to traffic safety matters of life and death. Here is what I am finding:

  1. “Cost-Benefit Analysis: An Inadequate Basis for Health, Safety, and Environmental Regulatory Decisionmaking”* Michael S Baram ** “INTRODUCTION The use of cost-benefit analysis in agency decisionmaking has been hailed as the cure for numerous dissatisfactions with governmental regulation. Using this form of economic analysis arguably promotes rational decisionmaking and prevents health, safety, and environmental regulations from having inflationary and other adverse economic impacts. Closer analysis, however, reveals that the cost-benefit approach to regulatory decisionmaking suffers from major methodological limitations and institutional abuses. In practice, regulatory uses of cost-benefit analysis stifle and obstruct the achievement of legislated health, safety, and environmental goals.  The Article concludes that if the health, safety, and environmental regulators continue to use cost-benefit analysis, procedural reforms are needed to promote greater accountability and public participation in the decisionmaking process. Further, to the extent that economic factors are permissible considerations under enabling statutes, agencies should conduct cost-effectiveness analysis, which aids in determining the least costly means to designated goals, rather than cost-benefit analysis, which improperly determines regulatory ends as well as means.” Cost-Benefit Analysis: An Inadequate Basis for Health, Safety, and Environmental Regulatory Decisionmaking*
  2. “Since 1981, the Office of Information and Regulatory Affairs (OIRA) in the White House has reviewed significant proposed and final regulations for conformity with cost-benefit tests.3 Under a series of executive orders, OIRA has performed this role through Republican and Democratic presidencies.4 These policy reviews are controversial: Some claim that OIRA promotes the use of sound social-scientific reasoning; others see it as a front for business interests and a triumph of cold and heartless economic reasoning.” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 2 by Susan Rose-Ackerman
  3. President Barak Obama has continued the practice of regulatory review under the executive order originally issued by President Bill Clinton and kept in place by President George W. Bush. However, in January 2009, the Administration expressed an interest in revising the executive order. OIRA opened a comment period and received a broad response from the policy community.6 So far, nothing has happened. The comments seem to have fallen into a black hole. OIRA has not attempted a full-blown reconsideration of the executive order. It has concentrated instead on increasing the transparency of government, and especially, on the ease of access to regulatory information and data sets. Otherwise, it is “business as usual”—with the staff reviewing proposed and final rules with only an occasional flare-up over controversial issues, such as whether or not to designate coal ash as a hazardous waste.7 The failure to rethink the executive order is unfortunate—especially given the global trend to institutionalize something called impact assessment (IA).” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 3
  4. With no change in the executive order, CBA will continue to be enshrined as the ideal standard for regulation in the United States. Even if the actual cost-benefit studies performed by U.S. government agencies are highly variable in quality and often lack key components, the technique remains a benchmark for analysis.10 I seek to challenge the hegemony of CBA on two grounds. First, cost-benefit analysis should be used to evaluate only a limited class of regulatory policies, and even then it should be supplemented with value choices not dictated by welfare economics. Second, CBA presents an impoverished normative framework for policy choices that do not fall into this first category.”  Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p.4
  5. “Here, the main problems are measurement difficulties that are sometimes so fundamental that better analysis or consultation with experts cannot solve them. I am thinking mainly of debates over the proper discount rate for future benefits and costs; efforts to incorporate attitudes toward risk; and the vexing problems of measuring the value of human life, of aesthetic and cultural benefits, and of harm to the natural world. Disputes over these issues turn on deep philosophical questions—for example, valuing future generations versus” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 5
  6. “These issues do not have “right” answers within economics. They should not be obscured by efforts to put them under the rubric of a CBA. Politically responsible officials in the agencies and the White House should resolve them in a transparent way. ” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 6
  7. ” There is no need to resolve difficult conceptual and philosophical issues if the preferred outcome does not depend on the choice of a discount rate or the value given to human life. ” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 6
  8. “I review the limitations of CBA as a policy criterion and use my critique as a ground for proposing a revised executive order to the Obama Administration. The new executive order should continue to require both up-front consultation on the regulatory agenda and ongoing review of major regulations above some minimum level of importance. As Revesz and Livermore recommend, OIRA could play a larger role in overall agenda setting and policy coordination across agencies.13 Such review serves the interest of any president seeking to influence the overall regulatory environment. Hence, both consultation and review should be mandatory for core executive agencies, but, under my proposed framework, the executive order would only require agencies to carry out formal CBAs for a subset of regulations.” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 7
  9. “To avoid conflicts with the political pressures facing the President, an advisory body independent of the White House should provide expert analytic advice to agency policy analysts and to OIRA. In this, I build on Stephen Breyer, who urges the creation of a separate expert agency with the mission of rationalizing regulatory policy across programs that regulate risk.14 Bruce Ackerman also recommends the creation of an integrity branch, concerned with transparency and limiting corruption, and a regulatory branch insulated from day-to-day political influences but required to justify its actions publicly.15 Either OIRA, or this new advisory body, should create a library of innovative tools for achieving regulatory goals that go beyond the much criticized command-and-control model. Agency policymakers could access this library as they look for innovative ways to achieve goals, as could those contemplating amendments to existing laws” Putting Cost-Benefit Analysis in Its Place: Rethinking Regulatory Review p. 7-8

Do it, President Obama, for We the People of this United States of America! #VisionZero

Letter to President Obama from the Karth Family, including the Vision Zero Executive Order

Vision Zero Petition Book 3rd Edition

Cost Benefit Analysis Victim

Leave a Reply

Your email address will not be published. Required fields are marked *