Alternative approaches to valuing intangible health losses: the evidence for multiple sclerosis.

This study uses both risk-risk and risk-dollar approaches to assess intangible health losses associated with multiple sclerosis (MS). Using an estimation approach that adjusts for potential perceptional biases that may effect the expressed risk tradeoffs, we estimated parameters of the utility function of persons with and without MS as well as the degree of subjects" overestimation of the probability of obtaining MS. The sample included subjects from the general population and persons with MS. We found that marginal utility of income is lower in the state with MS than without it. However, the difference in marginal in two states was greater for persons without MS than for those with the disease. Persons with MS overestimated the probability of acquiring MS to a greater extent than did persons within MS. Correcting for overestimation of this probability, the value of intangible loss of a statistical case of MS derived from responses of the general population was US$350,000 to US$500.000. Persons with MS were willing to pay somewhat more than this (D80,118,J17).

Synthetic risks, risk potency, and carcinogen regulation.

This article analyzes a comprehensive sample of over 350 chemicals tested for carcinogenicity to assess the determinants of the probability of regulation. Controlling for differences in the risk potency and noncancer risks, synthetic chemicals have a significantly higher probability of regulation overall: this is due to the greater likelihood of U.S. Food and Drug Administration (FDA) regulation. Measures of risk potency increase the probability of regulation by the U.S. Environmental Protection Agency (EPA), have a somewhat weaker positive effect on regulation by the U.S. Occupational Safety and Health Administration (OSHA), and decrease the likelihood of regulation by the FDA. The overall regulatory pattern is one in which the FDA targets synthetic chemicals and chemicals that pose relatively minor cancer risk. The EPA particularly performed more sensibly than many critics have suggested.

Constructive cigarette regulation.

Professor W. Kip Viscusi argues for a move away from the adversarial approach to tobacco regulation, an approach that is currently embodied in class action lawsuits and the proposed broadening of FDA regulatory power over cigarettes. In this Article, he suggests that the FDA should take a constructive role in fostering technological innovations to promote cigarette safety, in much the same way that the government currently fosters safety improvements in motor vehicles and jobs. Professor Viscusi claims that the objective of government policy should be to promote informed consumer risk taking--an approach which recognizes that adult consumers have a right to smoke and to incur the associated risks. He provides survey data demonstrating that although consumers know that smoking is a risky decision, they have little exposure to information regarding the comparative riskiness of various cigarette brands. According to Professor Viscusi, the government should assist in compiling and disseminating information regarding the comparative risks of different smoking options and the effects of certain innovative safety features for cigarettes. Making this information available would enable consumers to make more informed smoking decisions and potentially minimize the health hazards that smoking poses.

Mortality risk perceptions: a Bayesian reassessment.

"This study uses data on perceived and actual mortality risks to test several alternative Bayesian models of the factors influencing risk beliefs. The analysis...indicates that while the hazard rate for the individual age group is an influential factor, the overall population death rate and the discounted expected number of life years lost due to the cause of death are also influential in affecting risk perceptions.... The predictive power of a linear perception model increases with the level of the risk and is least accurate for very small risks."

Workers' compensation and injury duration: evidence from a natural experiment.

This paper examines the effect of workers' compensation on time out of work. It introduces a "natural experiment8 approach of comparing individuals injured before and after increases in the maximum weekly benefit amount. The increases examined in Kentucky and Michigan raised the benefit amount for high-earnings individuals by approximately 50 percent, while low-earnings individuals, who were unaffected by the benefit maximum, did not experience a change in their incentives. Time out of work increased for those eligible for the higher benefits and remained unchanged for those whose benefits were constant. The estimated duration elasticities are clustered around 0.3-0.4.

The effect of product safety regulation on safety precautions.

This paper explores the means by which lighter safety regulations alter the precautionary behavior of 200 subjects in a field test of cigarette lighters with a child-resistant feature. The new lighter design leads respondents to believe the lighters are safer, but there is no clear-cut evidence that the effect on perceived risk levels is excessive. Using the estimated relationship between cigarette lighter risk perceptions and a variety of measures of precautions, this paper provides explicit estimates of the effect of regulations on precautionary behavior and on lighter safety. On balance, the child-resistant feature will reduce fire-related injuries by much more than any diminished precaution taking.

Risk within reason.

Advances in low-level risk detection threaten to engulf us with information. Regulators typically respond to each newly highlighted risk, whether painstakingly uncovered through scientific investigation or divulged with fanfare by the media, on an ad hoc basis. This response makes it hard to relate disparate risks to the overall risk level and impedes intelligent risk reduction, which must consider the costs and benefits involved. Efficient risk management requires decisions not only about what to regulate and how stringently, but also about the appropriate division of labor among the agents influencing risks. These agents include individuals, whose potential contributions too often are overlooked, corporations, and government.

Regulating uncertain health hazards when there is changing risk information.

The usual regulatory strategy for imperfectly understood risks is to regulate these hazards more stringently than would be dictated by myopic benefit-cost concerns. When downward irreversibilities are present and there are opportunities for learning more about the risk over time, it is optimal to under-regulate the risk initially and then tighten the regulatory requirements after adverse information is acquired. Upward irreversibilities that limit the ability to augment the health and safety investment level create the opposite result. The expected value of perfect prior information is a decreasing function of the probability of acquiring future risk information and the probability that the risk will be discovered to be severe.

Labor market valuations of life and limb: empirical evidence and policy implications.

The empirical analysis of compensating wage differentials received by 496 blue-collar workers yields the first implicit values of injuries ever obtained and the only implicit values of life that take into account compensation for other nonpecuniary characteristics. Workers behave as if they attached a dollar value of $10(4) to nonfatal injuries and $10(6) to death. This value of life estimate exceeds those found in other studies, not because these earlier estimates are wrong, but simply because there is not a unique value of life but a distribution of such values across the population. Detailed discussions indicate the pertinence of these results not only to occupational health and safety policies but also to benefit-cost analyses of other policies affecting life and limb.