IDEAS home Printed from https://ideas.repec.org/a/wly/riskan/v36y2016i6p1148-1170.html
   My bibliography  Save this article

Public Perceptions of Regulatory Costs, Their Uncertainty and Interindividual Distribution

Author

Listed:
  • Branden B. Johnson
  • Adam M. Finkel

Abstract

Public perceptions of both risks and regulatory costs shape rational regulatory choices. Despite decades of risk perception studies, this article is the first on regulatory cost perceptions. A survey of 744 U.S. residents probed: (1) How knowledgeable are laypeople about regulatory costs incurred to reduce risks? (2) Do laypeople see official estimates of cost and benefit (lives saved) as accurate? (3) (How) do preferences for hypothetical regulations change when mean‐preserving spreads of uncertainty replace certain cost or benefit? and (4) (How) do preferences change when unequal interindividual distributions of hypothetical regulatory costs replace equal distributions? Respondents overestimated costs of regulatory compliance, while assuming agencies underestimate costs. Most assumed agency estimates of benefits are accurate; a third believed both cost and benefit estimates are accurate. Cost and benefit estimates presented without uncertainty were slightly preferred to those surrounded by “narrow uncertainty” (a range of costs or lives entirely within a personally‐calibrated zone without clear acceptance or rejection of tradeoffs). Certain estimates were more preferred than “wide uncertainty” (a range of agency estimates extending beyond these personal bounds, thus posing a gamble between favored and unacceptable tradeoffs), particularly for costs as opposed to benefits (but even for costs a quarter of respondents preferred wide uncertainty to certainty). Agency‐acknowledged uncertainty in general elicited mixed judgments of honesty and trustworthiness. People preferred egalitarian distributions of regulatory costs, despite skewed actual cost distributions, and preferred progressive cost distributions (the rich pay a greater than proportional share) to regressive ones. Efficient and socially responsive regulations require disclosure of much more information about regulatory costs and risks.

Suggested Citation

  • Branden B. Johnson & Adam M. Finkel, 2016. "Public Perceptions of Regulatory Costs, Their Uncertainty and Interindividual Distribution," Risk Analysis, John Wiley & Sons, vol. 36(6), pages 1148-1170, June.
  • Handle: RePEc:wly:riskan:v:36:y:2016:i:6:p:1148-1170
    DOI: 10.1111/risa.12532
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/risa.12532
    Download Restriction: no

    File URL: https://libkey.io/10.1111/risa.12532?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
    2. Nancy Kraus & Torbjörn Malmfors & Paul Slovic, 1992. "Intuitive Toxicology: Expert and Lay Judgments of Chemical Risks," Risk Analysis, John Wiley & Sons, vol. 12(2), pages 215-232, June.
    3. Paul Slovic & Baruch Fischhoff & Sarah Lichtenstein, 1982. "Why Study Risk Perception?," Risk Analysis, John Wiley & Sons, vol. 2(2), pages 83-93, June.
    4. Don Fullerton & Garth Heutel, 2010. "The General Equilibrium Incidence of Environmental Mandates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 64-89, August.
    5. John M. Mendeloff & Robert M. Kaplan, 1989. "Are Large Differences in “Lifesaving” Costs Justified? A Psychometric Study of the Relative Value Placed on Preventing Deaths," Risk Analysis, John Wiley & Sons, vol. 9(3), pages 349-363, September.
    6. Paul Slovic, 1999. "Trust, Emotion, Sex, Politics, and Science: Surveying the Risk‐Assessment Battlefield," Risk Analysis, John Wiley & Sons, vol. 19(4), pages 689-701, August.
    7. Fullerton, Don & Heutel, Garth, 2007. "The general equilibrium incidence of environmental taxes," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 571-591, April.
    8. Walstad, William B. & Rebeck, Ken, 2002. "Assessing the economic knowledge and economic opinions of adults," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(5), pages 921-935.
    9. Dorfman, Robert, 1977. "Incidence of the Benefits and Costs of Environmental Programs," American Economic Review, American Economic Association, vol. 67(1), pages 333-340, February.
    10. Timothy L. McDaniels, 1988. "Comparing Expressed and Revealed Preferences for Risk Reduction: Different Hazards and Question Frames," Risk Analysis, John Wiley & Sons, vol. 8(4), pages 593-604, December.
    11. Donald G. MacGregor & Paul Slovic & Torbjorn Malmfors, 1999. "“How Exposed Is Exposed Enough?” Lay Inferences About Chemical Exposure," Risk Analysis, John Wiley & Sons, vol. 19(4), pages 649-659, August.
    12. Baruch Fischhoff, 1995. "Risk Perception and Communication Unplugged: Twenty Years of Process," Risk Analysis, John Wiley & Sons, vol. 15(2), pages 137-145, April.
    13. Gregory W. Fischer & M. Granger Morgan & Baruch Fischhoff & Indira Nair & Lester B. Lave, 1991. "What Risks Are People Concerned About," Risk Analysis, John Wiley & Sons, vol. 11(2), pages 303-314, June.
    14. Michael Siegrist & George Cvetkovich, 2000. "Perception of Hazards: The Role of Social Trust and Knowledge," Risk Analysis, John Wiley & Sons, vol. 20(5), pages 713-720, October.
    15. William J. Burns & Ellen Peters & Paul Slovic, 2012. "Risk Perception and the Economic Crisis: A Longitudinal Study of the Trajectory of Perceived Risk," Risk Analysis, John Wiley & Sons, vol. 32(4), pages 659-677, April.
    16. T. Earle & M. Siegrist, 2008. "Trust, Confidence and Cooperation model: a framework for understanding the relation between trust and Risk Perception," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 8(1/2), pages 17-29.
    17. Isaac M. Lipkus & Greg Samsa & Barbara K. Rimer, 2001. "General Performance on a Numeracy Scale among Highly Educated Samples," Medical Decision Making, , vol. 21(1), pages 37-44, February.
    18. Gary E. Machlis & Eugene A. Rosa, 1990. "Desired Risk: Broadening the Social Amplification of Risk Framework," Risk Analysis, John Wiley & Sons, vol. 10(1), pages 161-168, March.
    19. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    20. Branden B. Johnson & Mathew P. White, 2010. "The Importance of Multiple Performance Criteria for Understanding Trust in Risk Managers," Risk Analysis, John Wiley & Sons, vol. 30(7), pages 1099-1115, July.
    21. Branden B. Johnson, 2003. "Further Notes on Public Response to Uncertainty in Risks and Science," Risk Analysis, John Wiley & Sons, vol. 23(4), pages 781-789, August.
    22. Robert B. Cumming, 1981. "Reflections on Decisions, Options, and Risks," Risk Analysis, John Wiley & Sons, vol. 1(2), pages 97-99, June.
    23. Michael Hanemann & John Loomis & Barbara Kanninen, 1991. "Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1255-1263.
    24. Branden B. Johnson & Paul Slovic, 1995. "Presenting Uncertainty in Health Risk Assessment: Initial Studies of Its Effects on Risk Perception and Trust," Risk Analysis, John Wiley & Sons, vol. 15(4), pages 485-494, August.
    25. Harry Otway & Kerry Thomas, 1982. "Reflections on Risk Perception and Policy," Risk Analysis, John Wiley & Sons, vol. 2(2), pages 69-82, June.
    26. Donald MacGregor, 1991. "Worry Over Technological Activities and Life Concerns," Risk Analysis, John Wiley & Sons, vol. 11(2), pages 315-324, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Branden B. Johnson & Adam M. Finkel, 2023. "Sensitivity to scope in estimating the social benefits of prolonging lives for regulatory decisions using national stated preference tradeoffs," Environment Systems and Decisions, Springer, vol. 43(3), pages 509-528, September.
    2. Michael Siegrist & Philipp Hübner & Christina Hartmann, 2018. "Risk Prioritization in the Food Domain Using Deliberative and Survey Methods: Differences between Experts and Laypeople," Risk Analysis, John Wiley & Sons, vol. 38(3), pages 504-524, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. P. Marijn Poortvliet & Anne Marike Lokhorst, 2016. "The Key Role of Experiential Uncertainty when Dealing with Risks: Its Relationships with Demand for Regulation and Institutional Trust," Risk Analysis, John Wiley & Sons, vol. 36(8), pages 1615-1629, August.
    2. Meredith Frances Dobbie & Rebekah Ruth Brown, 2014. "A Framework for Understanding Risk Perception, Explored from the Perspective of the Water Practitioner," Risk Analysis, John Wiley & Sons, vol. 34(2), pages 294-308, February.
    3. Dominic Balog‐Way & Katherine McComas & John Besley, 2020. "The Evolving Field of Risk Communication," Risk Analysis, John Wiley & Sons, vol. 40(S1), pages 2240-2262, November.
    4. Kazuya Nakayachi, 2013. "The Unintended Effects of Risk‐Refuting Information on Anxiety," Risk Analysis, John Wiley & Sons, vol. 33(1), pages 80-91, January.
    5. Rita Saleh & Angela Bearth & Michael Siegrist, 2019. "“Chemophobia” Today: Consumers’ Knowledge and Perceptions of Chemicals," Risk Analysis, John Wiley & Sons, vol. 39(12), pages 2668-2682, December.
    6. Donald G. MacGregor & Raymond Fleming, 1996. "Risk Perception and Symptom Reporting," Risk Analysis, John Wiley & Sons, vol. 16(6), pages 773-783, December.
    7. Parry, Ian W.H. & Sigman, Hilary & Walls, Margaret & Williams, Roberton C., III, 2005. "The Incidence of Pollution Control Policies," Discussion Papers 10651, Resources for the Future.
    8. Sara Jonsson & Inga-Lill Söderberg, 2018. "Investigating explanatory theories on laypeople’s risk perception of personal economic collapse in a bank crisis – the Cyprus case," Journal of Risk Research, Taylor & Francis Journals, vol. 21(6), pages 763-779, June.
    9. Michael Greenberg & Charles Haas & Anthony Cox & Karen Lowrie & Katherine McComas & Warner North, 2012. "Ten Most Important Accomplishments in Risk Analysis, 1980–2010," Risk Analysis, John Wiley & Sons, vol. 32(5), pages 771-781, May.
    10. Creed Tumlison & Rachael M. Moyer & Geoboo Song, 2017. "The Origin and Role of Trust in Local Policy Elites’ Perceptions of High‐Voltage Power Line Installations in the State of Arkansas," Risk Analysis, John Wiley & Sons, vol. 37(5), pages 1018-1036, May.
    11. Kazuya Nakayachi & Branden B. Johnson & Kazuki Koketsu, 2018. "Effects of Acknowledging Uncertainty about Earthquake Risk Estimates on San Francisco Bay Area Residents’ Beliefs, Attitudes, and Intentions," Risk Analysis, John Wiley & Sons, vol. 38(4), pages 666-679, April.
    12. Isaac M. Lipkus, 2007. "Numeric, Verbal, and Visual Formats of Conveying Health Risks: Suggested Best Practices and Future Recommendations," Medical Decision Making, , vol. 27(5), pages 696-713, September.
    13. Laura N. Rickard, 2021. "Pragmatic and (or) Constitutive? On the Foundations of Contemporary Risk Communication Research," Risk Analysis, John Wiley & Sons, vol. 41(3), pages 466-479, March.
    14. Frédéric Vandermoere, 2008. "Hazard Perception, Risk Perception, and the Need for Decontamination by Residents Exposed to Soil Pollution: The Role of Sustainability and the Limits of Expert Knowledge," Risk Analysis, John Wiley & Sons, vol. 28(2), pages 387-398, April.
    15. Chong Li & Yingqi Li, 2023. "Factors Influencing Public Risk Perception of Emerging Technologies: A Meta-Analysis," Sustainability, MDPI, vol. 15(5), pages 1-37, February.
    16. Ann Bostrom & Ragnar E. Löfstedt, 2003. "Communicating Risk: Wireless and Hardwired," Risk Analysis, John Wiley & Sons, vol. 23(2), pages 241-248, April.
    17. Patrick Krieger & Carsten Lausberg, 2021. "Entscheidungen, Entscheidungsfindung und Entscheidungsunterstützung in der Immobilienwirtschaft: Eine systematische Literaturübersicht [Decisions, decision-making and decisions support systems in r," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 7(1), pages 1-33, April.
    18. Lekfuangfu, Warn N., 2022. "Mortality risk, perception, and human capital investments: The legacy of landmines in Cambodia," Labour Economics, Elsevier, vol. 78(C).
    19. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    20. Jared LeClerc & Susan Joslyn, 2015. "The Cry Wolf Effect and Weather‐Related Decision Making," Risk Analysis, John Wiley & Sons, vol. 35(3), pages 385-395, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:riskan:v:36:y:2016:i:6:p:1148-1170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1539-6924 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.