Tag Archives: cost-effectiveness analysis

Understanding Underride VII: Cost/Benefit Analysis

A panel of experts discuss underride at a Briefing on The Hill, October 12, 2017, to bring greater understanding of the problem and solutions of deadly but preventable truck underride. Jason Levine, Director of the Center for Auto Safety, discusses the flaws in the cost/benefit analysis of truck underride protection.

For more information on the STOP Underrides! Act of 2017, go to http://annaleahmary.com/ and/or https://stopunderrides.org/

Here are some further thoughts on cost benefit analysis related to underride protection:

  1. “Even if cost-benefit analysis is theoretically a neutral tool. . . it is biased against strong public protections.”Recently, NHTSA announced statistics for 2016 traffic fatalities:
    • 37,461 people killed in crashes on U.S. roadways in 2016
    • Up 5.6% from 2015
    • Tucked in the back of the report, if you look for it, you will see that there were 4,317 fatalities in crashes involving large trucks — up 5.4% from 2015, the highest since 2007. . .
  2. Public Comments on Underrride Rulemaking & Cost/Benefit Analysis: Public Comments Re: Cost/Benefit Analysis in NHTSA Proposed Underride Rulemaking on Rear Guards for Tractor-Trailers & for Single Unit Trucks and       Current NHTSA #Underride Rulemaking (Cost/Benefit Analysis): Summary of Public Comments and http://annaleahmary.com/2016/10/dot-omb-are-you-using-cea-or-cba-rulemaking-road-to-zero-requires-vision-zero-rulemaking/

  3. Jerry Karth’s Public Comments on Underride Rulemaking: Comments on the NPRM for Rear Underride Guards on Trailers and Reflections from a bereaved dad on the Underride Roundtable & what that means for rulemaking

  4. Stoughton improved underride guards–standard “at no cost or weight penalty.”
  5. Underride Statistics 

  6. The Future of Trucking: Who pays for the costs of safer roads?

    I thought about all of this, on a recent trip “back home”, as I reflected on the plight of small trucking companies and independent owner-operator truck drivers. Are the costs of owning a company and the pressure to drive many miles creating a situation where they won’t be able to stay in business?

    Frequently, I hear that changes of one kind or another in the trucking industry–in order to improve safety (i.e., reduce crashes, injuries and deaths)–will result in increased costs for the trucking companies. I hear that it will put them out of business.

    Is this true? According to whom and based on what information? If it is true, then does something need to change in the trucking industry itself in order to allow for the beneficial work, which trucking provides, to continue but to also allow for truckers to make a decent living wage–without jeopardizing their health and the safety of travelers on the roads? . . .  Read more here: The Future of Trucking; Who pays for the costs of safer roads?

  7. Whose lives are you going to sacrifice? If decisive action is not taken to end these preventable deaths, then who should we hold responsible? Whose lives are we thereby choosing to sacrifice?

  8. TTMA: Truck Trailer Manufacturers Association Reminds NHTSA Why Side Guards Are Not Cost Effective, May 18, 2016 post:

    Yesterday morning, I checked my email and saw that there was a new Public Comment posted on the Federal Register regarding the Notice of Proposed Rulemaking on Underride Guards.

    I quickly went to the site and saw that the Truck Trailer Manufacturers Association had posted a comment (see their comments in the PDFs below). Apparently our Underride Roundtable two weeks ago at IIHS has spurred them to spell out the steps which have been taken over the years to squash side guards from being mandated and manufactured to prevent smaller passenger vehicles from riding under trucks upon collision with the side of the larger vehicle.

    TTMA_Side_Impact_Main_Comment_2016-05-13

    TTMA_Side_impact_Exhibits_A-D_2016-05-13

    Their rationaleCost/Benefit Analysis shows that adding side guard to trucks is “not cost-effective”. From this post: Truck Trailer Manufacturers Ass’n “Reminds” NHTSA: Side Guards Are “Not Cost-Effective” Says Who? 

    I am encouraged by the closing paragraph of the TTMA letter to NHTSA:

    TTMA would support the implementation of side guards if they ever become justified and technologically feasible. We continue to support the NHTSA review of Petitioners’ requests and stand ready to partner in the development of justified and feasible designs if they possibly emerge. Jeff Sims, President

  9. How can we possibly justify allowing Death by Underride to continue when solutions exist to prevent it?, As I allow myself to remember the joy and laughter and love and creativity and grumpiness and irritability and silliness of my daughters, AnnaLeah and Mary, I also remember why I am working tirelessly to bring an end to Death by Underride — which snatched AnnaLeah from this earthly life on May 4, 2013, and Mary on May 8, 2013. I was in that horrific truck crash four years ago today. I survived but they did not because of Death by Underride. . .
  10. Mandates take burden off manufacturers. Crash tests in labs better than crash tests occurring in real world., Lou Lombardo has written a thought-provoking opinion piece, Creating a Demand for Crash Testing (CTTI, September 2011). It holds great value in confirming the need for comprehensive underride protection legislation to be introduced and passed in a timely manner. . .
  11. They fought the good fight, they finished the race. . .
  12. Every Day’s A Holiday With Mary; Joyful Memories of Mary
  13. Amazing Grace Goodbye, AnnaLeah & Mary, With Love From Grandpa
  14. Truck Industry Leaders: “Clarity is probably the biggest need we have so we can plan accordingly.”
  15. AnnaLeah Karth. May 15, 1995 – May 4, 2013. Death by Underride.

A Bereaved Dad Takes a Close Look at the Flaws in Underride Regulatory Cost/Benefit Analysis

Jerry Karth submitted some additional comments on the proposed underride rule–with reflections on what was learned through the Underride Roundtable. These comments have now been posted on the Federal Register: Additional Comments on Underride Rulemaking by Jerry Karth, May 19, 2016

Jerry submitted his original public comment regarding the proposed underride rulemaking on February 16, 2016. Here is an excerpt from that which addresses NHTSA’s preliminary cost/benefit analysis:

I would like to respond to the utilitarian logic approach that NHTSA has appeared to have applied to this issue. Their utilization of a cost/benefit analysis (called for by Executive Order 12866) is sadly lacking moral and ethical depth on the benefits side.

This type of logic was applied in 2000 by the Philip Morris Company in the Czech Republic when they funded a research study on the costs/benefits of smoking in the Czech Republic. http://www.mindfully.org/Industry/Philip-Morris-Czech-Study.htm The study concluded that it would be more beneficial for the people of the Czech Republic to smoke than not. What was this startling conclusion based on? A cost/benefit analysis.

The results are summarized in Figure 1:

Figure 1: The public finance balance of smoking in the Czech Republic in 1999 is estimated at +5,815 mil. CZK

Income and positive external effects 21,463 mil CZK
  Savings on housing for elderly 28,mil CZK
  Pension & soc. expenses savings due to early mortality 196 mil CZK
  Health care costs savings due to early mortality 968 mil CZK
  Customs duty 354 mil CZK
  Corporate income tax 747 mil CZK
  VAT 3,521 mil CZK
  Excise tax 15,648 mil CZK
Smoking related public finance costs 15,647 mil CZK
  Fire induced costs 49 mil CZK
  Lost income tax due to higher mortality 1,367 mil CZK
  Days out of work related public finance costs 1,667 mil CZK
  ETS related health care costs 1,142 mil CZK
  Smoking (first hand) related health care costs 11,422 mil CZK
NET BALANCE +5,815 mil. CZK

The study concluded that $1,227 was saved in pensions, health care, and housing every time a smoker dies. [Photo and caption from http://www.mindfully.org/Industry/Philip-Morris-Czech-Study.htm ]

$1,227 ?

That’s how much a study sponsored by Philip Morris said the Czech Republic saves on health care, pensions and housing every time a smoker dies.

photo: American Cancer Society full-page SF Chronicle advertisement 2aug01


In comparison, let’s look at how this approach could be applied to the underride issue. This type of cost/benefit analysis could lead us to conclude that it is not beneficial to require stronger underride guards because the benefits of keeping weak and ineffective standards for underride guards are greater than the cost of upgrading them to the best possible protection. What might those benefits be?

  1. Save the trucking industry money by holding down manufacturing and installation costs.
  2. Save the consumer money by holding down shipping costs.
  3. Reduce medical costs by killing people at a younger age (and avoiding costly medical costs of the elderly population).
  4. Preserve the Social Security fund by decreasing the number of people who draw from their account due to early Death by Motor Vehicle.
  5. Improve the job market due to the decrease in the workforce from the elimination of workers through Death by Motor Vehicle.

In both cases, the conclusions lack common sense. I hope that we can agree upon that.

In other words, this kind of analysis could potentially require that we decide whether we are willing to fork over money to protect people from Death by Motor Vehicle. It forces us to choose between saving a life or saving costs. When that life is one of your loved ones, what would you choose?

In contrast, a cost-effectiveness approach may be a better solution because it compares the relative costs and outcomes (effects) of two or more courses of action. “Cost-effectiveness analysis is distinct from cost-benefit analysis, which assigns a monetary value to the measure of effect.” https://en.wikipedia.org/wiki/Cost-effectiveness_analysis In this situation, the desired outcome of both courses of action would be an underride guard which did not fail upon collision with a vehicle. The two solutions could be compared based upon cost, but a performance standard of a successful crash test would guarantee that lives would be saved.

Cost.Benefit Analysis

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

Cost-effectiveness vs Cost/Benefit Analysis & Vision Zero

I am hard put to think of a better way to show the opposite, of what we are asking Obama and Foxx to do with our Vision Zero petitions, than what is being suggested here:

http://www.bloombergview.com/articles/2016-01-20/5-smart-ways-to-cut-red-tape

According to this article, Cass Sunstein apparently is encouraging the increase of cost/benefit analysis at the price of costly delays in needed safety regulations. Cost in terms of lost human lives.

We, on the other hand, are calling for suspension of overdependence on the cost/benefit analysis process–if it leads to delays and blockage of safety regulations which have been proven to save lives.

Number Line Rulemaking Method

After I discussed this concern with another safety advocate, he suggested the alternative approach of cost-effectiveness analysis vs cost/benefit analysis. I have taken a quick look at a description of it online and will be thinking about it further.

Costeffectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action. Costeffectiveness analysis is distinct from cost–benefit analysis, which assigns a monetary value to the measure of effect.” https://en.wikipedia.org/wiki/Cost-effectiveness_analysis

My question is, “Would such an approach lead to a reduction in crash deaths & serious injuries?” In other words, would it further the goal of Vision Zero? Towards Zero.

[Note to self: Look into this further.]