July 30, 2014

In a democracy, citizens expect their government to enact laws that protect their health and well-being. Starting with the Progressive Era in the early 1900s, this meant ensuring that unsafe drugs and food could not be marketed to unsuspecting consumers and that workers in industrial settings were not being forced to labor in unhealthy or high-risk workplaces. With the growth of the consumer and environmental movements of the 1960s and 1970s, government responded to citizen concerns about industrial pollution and chemical toxins with rules limiting the emissions and contaminants that businesses are allowed to produce in their operations. As our knowledge of the health risks of new substances has grown, so has public pressure to regulate their use.

However, the rules requiring private industry to reduce worker exposure to toxic substances or reduce emission of hazardous contaminants are usually contested by affected industries. There are costs to complying with new health and safety rules and some firms in some industries bitterly fight these additional costs. In response to the arguments over regulatory standards, a new analytic tool came into use. Benefit-cost analysis attempts to quantify and monetize the societal value of new restrictions on corporate behavior (such as the use or emission of potentially hazardous or poisonous materials), and to simultaneously estimate the costs of compliance with these new rules by private commercial interests. We agree with many of the criticisms of benefit-cost analysis, but since it has become enshrined as a key practice in the public policy rule development process over the past 30 years, we use it in this report as a tool to help assess the benefits of the rules discussed below.

This report examines the public health, worker safety, and environmental benefits projected from ten proposed or final rules issued between 2009 and 2014 by five federal agencies (the U.S. Environmental Protection Agency, Occupational Safety and Health Administration, National Highway Traffic Safety Administration, Food and Drug Administration, and Department of Agriculture’s Food Safety and Inspection Service). These rules range from reducing toxic air pollutants from power plants and other large industrial sources, to reducing workers’ exposure to disease-causing silica, and to making vehicles safer.

When fully implemented, results from benefit-cost analyses estimate that these rules will save over 10,000 lives and prevent 300,000 cases of disease, illness, or injury each year. Using standard benefit-cost analysis methodology (which consistently underestimates social benefits and overestimates compliance costs), nine of the ten significant public health and environmental standards examined here were estimated to have monetary social benefits that exceeded estimated monetary compliance costs – even before taking into account the substantial qualitative, unquantifiable improvements in public health and the environment that accrue from these rules. Combined, traditional benefit-cost analyses for these ten rules projected net benefits of between $46 billion to $122 billion per year. None of the rules were projected to have a significant negative impact on the economy; in fact, three of the rules are projected to create net new jobs.

In our modern, globalized world, innovations in science and technology will continue to occur at an accelerating pace. In a democracy, it is government’s role to weigh the risks and rewards to the public interest and society as a whole from the introduction of new products and enterprises. The role of the public sector is to protect the common good and prioritize the public’s interest over particular private interests. Rules to safeguard the public are an integral part of our democratic process and are essential to providing an appropriate balance between public health and safety and private profits.