Business

Government response to hazards often haphazard

Laws passed hurriedly in response to tragic events often are bad policy. An overheard cafe conversation gave an example. One retiree grumped that a new law in our home state of Minnesota required he have a carbon monoxide detector installed in his boat because it had a closed compartment. A friend responded “Well, there was a little girl who died.” To which another responded, “Sad, but having the Legislature pass a law every time something tragic happens is a poor idea.”

He was right, but this is a frequent occurrence in democratic societies: Some defect in a device or system causes a tragic death. Shocked people seek government action to prevent any recurrence. A new regulation is issued. In reasoned retrospect, though, it turns out that losses averted by the regulation are less than the resources used in complying. Or it becomes clear that, if one wants to reduce tragic harms to society, there are much more effective ways to do it than the new rule.

There are few political or institutional mechanisms to avoid such ad hoc responses or to ensure effective use of resources in promoting health and safety.

At this point, someone inevitably says, “It is morally wrong to place a value on human life. How can you carp about the cost of installing carbon monoxide detectors if doing so may save the life of another child?”

The answer is that we all make decisions daily that implicitly value human life. My deciding to drive 65 mph rather than 45 is a decision to accept a very slightly higher risk of injury or death to myself, or others, in return for time saved. Skipping a flu shot because it isn’t convenient also values time and trouble over a slightly higher mortality risk. A little shake of salt on my steak means I value short-term better taste over longer-term cardiac health.

Such trade-offs are both internal and external. Giving up time, money or a pleasant sensation to have a longer life mostly affects me, but not entirely. If I drive 90 mph on bald tires, I may harm others by crashing into them. If I don’t get vaccinated, I marginally increase the odds of others getting a communicable disease. So safety trade-off decisions do not involve just the person making them.

Moreover, I might make bad decisions because important information is missing. I will be more inclined to take a weight-loss supplement if I don’t know that it may damage my heart valve.

Thus, even economists who deeply believe in letting markets function freely accept cases where government should act to protect the public. But how does society get the greatest benefits relative to the resources used?

In many cases, Congress acts. In response to well-publicized rollovers of Ford Explorers with Firestone tires, Congress passed a law in 2000 requiring the National Highway Traffic Safety Administration to take measures. The agency required tire pressure sensors on all new cars after 2007. It also since has issued rules requiring backup cameras on vehicles sold after 2018 to reduce driving over young children.

In the tire case, Congress ordered a specific technology; in the backup camera case, the NHTSA acted within its statutory responsibility. In both, studies found benefits to society exceeded costs.

In other cases, private entities play a role. The federal Department of Transportation has statutory authority over safety in transportation, including containers for hazardous substances like propane.

However, the DOT also defers in some issues to the National Fire Protection Association, which writes fire and electrical codes. In the 1990s, the NFPA decided that all 20-pound LP cylinders should have an “overfill protection device.” All tanks manufactured after 1996 had to include the device, and no existing tanks without one could be refilled after 2002. This meant tens of millions of otherwise serviceable tanks had to be scrapped. There was no mandated cost-benefit study. Consumers and members of Congress grumbled, but the rule went ahead.

There are skeptics about the actual costs and benefits of tire sensors, backup cameras and overfill protectors. But once any initial kerfuffle dies down, the public pays little attention. That may be a bad thing.

Congress’s mandating “positive train control systems” for all railroads in response to the 2008 collision of a commuter train with a freight in Chatsworth, Calif., is a classic case of emotional news driving legislation. The deaths of 25 people and the fact that the engineer of the passenger train had been texting caused public outcry. The act got strong majorities in both parties, including votes from members who had campaigned long and hard against “excessive government regulation.”

Eight years and many billions of dollars later, positive train control is still not a reality. Take railroads’ grumbling with a grain of salt, but Congress clearly acted hastily with no idea of how large and costly the mandate was. Eventually, lives will be saved, but at an extreme cost compared with other ways in which we might reduce injury and death.

That is the ultimate challenge, and one that our country continues to fail. If one took all causes of illness, injury and premature death and ranked them by the cost of measures to reduce them, one would find little relationship between resource effectiveness and the actions we actually choose to take.

We pass up opportunities to save lives for tens of thousands of dollars and choose options where the cost per life saved is tens of millions. There is no clear way to overcome this, but prudent hesitation by legislators and members of Congress to pass ad hoc legislation in the wake of tragedies would be good.

St. Paul economist and writer Edward Lotterman can be reached at boise@edlotterman.com.

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