Death by Regulation: How Regulations Can Increase Mortality Risk

Mercatus Working Paper, Mercatus Center at George Mason University, Arlington, VA, 2017

48 Pages Posted: 5 Dec 2017

See all articles by James Broughel

James Broughel

George Mason University - Mercatus Center

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2017

Abstract

This paper updates the cost-per-life-saved cutoff, which is a cost-effectiveness threshold for lifesaving regulations, whereby regulations costing more per life saved than this threshold level are expected to increase mortality risk on net. Two competing methods of deriving the cutoff exist: a direct approach based on empirical observation and an indirect approach grounded in economic theory. Both methods build from the assumption that changes in income lead to changes in mortality risk. The likely mechanisms driving this relationship are discussed, with support from recent empirical studies. The indirect approach is preferable in that it avoids the problems of endogeneity of health status and income found with the direct approach. The cost-per-life-saved cutoff value at which regulations increase mortality risk is estimated to have a lower bound value of $75.4 million and an upper bound value of $123.2 million, with a midpoint value of $99.3 million. This cutoff value range is compared with cost-effectiveness estimates for a series of recent policies, including several state expansions of the Medicaid public insurance program in the first few years of the 21st century, an early version of the “travel ban” executive order that restricted refugee admissions into the United States, and nine recent air pollution regulations from the Environmental Protection Agency. The paper concludes that the mortality risk test is an important and underutilized tool in the policy analyst’s toolkit, both as an overall test of regulatory efficacy and as an integral component of calculations of net risk effects of policies.

Keywords: Cost-Per-Life-Saved Cutoff, Value of a Statistical Life, Benefit-Cost Analysis, Cost-Effectiveness Analysis, Health-Health Analysis, Welfare Analysis

JEL Classification: D6, I1, K2, K3

Suggested Citation

Broughel, James and Viscusi, W. Kip, Death by Regulation: How Regulations Can Increase Mortality Risk (November 30, 2017). Mercatus Working Paper, Mercatus Center at George Mason University, Arlington, VA, 2017. Available at SSRN: https://ssrn.com/abstract=3080360 or http://dx.doi.org/10.2139/ssrn.3080360

James Broughel (Contact Author)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

W. Kip Viscusi

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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