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Regulation of Health, Safety, and Environmental Risks

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  • W. Kip Viscusi

Abstract

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.

Suggested Citation

  • W. Kip Viscusi, 2006. "Regulation of Health, Safety, and Environmental Risks," NBER Working Papers 11934, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11934
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    Cited by:

    1. Vera Angelova & Olivier Armantier & Giuseppe Attanasi & Yolande Hiriart, 2014. "Relative performance of liability rules: experimental evidence," Theory and Decision, Springer, vol. 77(4), pages 531-556, December.
    2. Tomas J. Philipson & Eric Sun, 2008. "Is the Food And Drug Administration Safe And Effective?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 85-102, Winter.
    3. Hiriart, Yolande & Thomas, Lionel, 2017. "The optimal regulation of a risky monopoly," International Journal of Industrial Organization, Elsevier, vol. 51(C), pages 111-136.
    4. Caskey, Judson & Ozel, N. Bugra, 2017. "Earnings expectations and employee safety," Journal of Accounting and Economics, Elsevier, vol. 63(1), pages 121-141.
    5. Alejandro Donado & Klaus Wälde, 2008. "Trade Unions Go Global!," CESifo Working Paper Series 2368, CESifo Group Munich.
    6. Stavros A. Drakopoulos & Ioannis Theodossiou, 2016. "Workers’ risk underestimation and occupational health and safety regulation," European Journal of Law and Economics, Springer, vol. 41(3), pages 641-656, June.
    7. Peter Kooreman & Henriëtte Prast, 2010. "What Does Behavioral Economics Mean for Policy? Challenges to Savings and Health Policies in the Netherlands," De Economist, Springer, vol. 158(2), pages 101-122, June.
    8. Matthew Cole & Robert Elliott & Joanne Lindley, 2009. "Dirty money: Is there a wage premium for working in a pollution intensive industry?," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 161-180, October.
    9. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.

    More about this item

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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