Your Value Is Going Up

by Stuart Shapiro

It’s rare that something I teach about makes the front page of the New York Times but indeed that was the case today. The paper reports on how federal agencies have increased the value of a statistical life, a key input into cost-benefit analysis (CBA).  CBA is used by agencies to evaluate their regulatory efforts.  The value of a statistical life is not really the value of life, but rather the value of reducing risks; but calling it “valuing life” is much sexier and makes it much more controversial.  Businesses have historically supported CBA as a way of demonstrating regulations were too costly.  But now that we are doing a more accurate job of measuring the benefits of reducing risks…

…some business groups are reconsidering the effectiveness of cost-benefit analysis as a check on regulations. The United States Chamber of Commerce is now campaigning for Congress to assert greater control over the rule-making process, reflecting a judgment that formulas may offer less reliable protection than politicians.

Arguments about methods like CBA are often masks for arguments about substance.  This article highlights the hypocrisy of the Chamber and opponents of regulation in general.  They don’t care if the benefits of a regulation outweigh its costs, they just care about avoiding the costs.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.