NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Regulation of Health, Safety, and Environmental Risks

W. Kip Viscusi

NBER Working Paper No. 11934
Issued in January 2006
NBER Program(s):   HC   HE   EEE

This paper provides a systematic review of the economic analysis of health, safety, and environmental regulations. Although the market failures that give rise to a rationale for intervention are well known, not all market failures imply that market risk levels are too great. Hazard warnings policies often can address informational failures. Some market failures may be exacerbated by government policies, particularly those embodying conservative risk assessment practices. Labor market estimates of the value of statistical life provide a useful reference point for the efficient risk tradeoffs for government regulation. Guided by restrictive legislative mandates, regulatory policies often strike a quite different balance with an inordinately high cost per life saved. The risk-risk analysis methodology enables analysts to assess the net safety implications of policy efforts. Inadequate regulatory enforcement and behavioral responses to regulation may limit their effectiveness, while rising societal wealth will continue to generate greater levels of health and safety.

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Document Object Identifier (DOI): 10.3386/w11934

Published: Polinsky, A. Mitchell and Steven Shavell (eds). Handbook of Law and Economics, Volume 1. Amsterdam: Elsevier, North-Holland, 2007.

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