Are Risk Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions
AbstractUsing original data on the cleanup of 130 hazardous waste sites, W. Kip Viscusi of Harvard Law School and James T. Hamilton of Duke University's Sanford Institute of Public Policy examine the extent that political decisions and quantitative risk assessments influence cleanup and remediation decisions. They conclude that target risk levels chosen by regulators are largely a function of political variables and risk-perception biases. Communities with higher voter turnouts are more likely at times to have lower risks remaining after final site cleanup and to have more spent to avert expected cases of cancer. They find these political influences are most significant for the least cost-effective site cleanups and the lowest site risks. By basing its policies on an individual risk approach that does not reflect the size of the exposed population or whether the population exists at the site, the Environmental Protection Agency often fails to recognize important aspects of the overall beneficial consequences of its efforts. The mean cost per case of cancer averted at the sample of 130 EPA sites is $11.7 billion. The median cost is $418 million. These estimates use EPA conservative risk assumptions and assume no latency period. With such adjustments, the median cost rises to above $1 billion per cancer case. The most effective 5 percent of all cleanup expenditures eliminate over 99 percent of the cancer risk. Put somewhat differently, 95% of the costs are spent to address less than 1 percent of the risks.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 89 (1999)
Issue (Month): 4 (September)
Other versions of this item:
- Hamilton, James T. & Viscusi, W. Kip, 1999. "Are Risk Regulators Rational' Evidence from Hazardous Waste Cleanup Decisions," Working paper 525, Regulation2point0.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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