Benefit-Cost Analysis in Environmental, Health, and Safety by Kenneth J. Arrow

By Kenneth J. Arrow

This primer highlights either the strengths and the constraints of benefit-cost research within the improvement, layout, and implementation of regulatory reform.

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Example text

It is, to put things rather sharply, tantamount to treating humans as though they were carthorses. They are good only for what they produce, after deducting what they cost in fodder and watering (for details on this criticism, see Pritchard and Sculpher 2000). The approach neglects any benefit to individuals that is not work-related, as for example, the direct benefit of being free from pain, or not depressed, or not severely stressed, or able to move about. It neglects the value to individuals of leisure time and it also fails to consider any external valuations of people’s time, such as valuations by their families and friends.

From such a perspective the means remain the reductions in risk, but the end is increased output, something to which it is relatively easy to attach a monetary value. Of course, in many cases health and safety interventions enhance both health and productivity. Notwithstanding the fact that safety is in many cases a means, we have identified three ends associated with resource investment in health and safety that are of value to society: improved health, the inherent value of greater security, and enhanced productivity.

That is, unless one is prepared to argue that productivity differentials are morally relevant aspects that justify such discrimination. Dismissing the perfect market line of thought will tend to also require dismissing benefit estimation techniques based on market behaviour. , Moore and Viscusi 1988; Gegax et al. , Rosen 1986; Knieser and Leeth 1991). These are vulnerable to the same criticisms on the grounds both of efficiency and equity. The occasions when they are sufficiently 25 26 WHAT IS A LITTLE MORE HEALTH AND SAFETY WORTH?

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