The Limits of Self-Interest: Results from a Novel Stated-Preference Survey to Estimate the Social Benefits of Life-Prolonging Regulations
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THE LIMITS OF SELF-INTEREST: RESULTS FROM A NOVEL
STATED-PREFERENCE SURVEY TO ESTIMATE THE SOCIAL
BENEFITS OF LIFE-PROLONGING REGULATIONS
BY
ADAM M. FINKEL* & BRANDEN B. JOHNSON**
The benefits of health, safety, and environmental regulations wil
be underestimated if regulatory agencies produce risk estimates that
are biased low,' but also if they undervalue the risk reductions that
regulations offer In such cases, regulatory interventions that would
generate social benefits in excess of their costs will mistakenly be
turned down. Conversely, overestimation or over-valuation of benefits
will result in adoption of regulations whose costs exceed their true
benefits. For several decades now, both of the standard methods used
to estimate the value of a statistical life (VSL)-stated-preference and.
revealed-preference desIgns-construe the tradeoffs involved at a
micro scale: individuals are asked to (or observed as they) react to a
very smailprobability of grave harm affecting themselves, and trade off
small changes in economic welfare in response. But regulators then
apply the resulting VSL estimates to a quite different set of
circumstances, wherein society collectively marshals large sums of
money (tens of millions of dollars or more) to avert hundreds or
thousands of statistical fatalities over a large population, rather than
a fraction of a single life.
As part of a larger psychometric survey probing laypemsons'
regulatory cost Eteracy and their attitudes towards uncertain
regulatory costs and benefits, we instead posed questions at a macro
* University of Pennsylvania Law School and University of Michigan School of Public Health.
** Decision Research, Eugene, Oregon. We gratefully acknowledge generous support from the
Human and Social Dynamics of Change Initiative of the National Science Foundation, through
award SES-0756539 from the Decision, Risk, and Management Sciences program. We also thank
a group of law students at the University of Pennsylvania who participated in a focus group to
help us refine the wording of the survey, Adam Lake for programming the survey (including the
sliders featured in Figure 2), Marcus Mayorga for overseeing the online panel and data
collection, Leisha Wharfield and Andrew Quist for creating Figure 1, Laurent Abergel for
research assistance, Nils Axel Braathen for information about the OECD dataset discussed at
length in Section IV, and Paul Slovic for his usual insightful comments.
I See generally Adam M. Finkel, Is Risk Assessment Really Too 'Conservative'.8 Revising
the Revisionists, 14 COLUM. J. ENvrL. L. 427 (1989).
2 Branden B. Johnson & Adam M. Finkel, Public Perceptions of Regulatory Costs, Their
UncertaintyandInterindi vidualDistribution, 36 RISK ANALYSIS 1148 (2016).
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