Cass Sunstein, Risk, Cost-Benefit and OHS

On 26 January 2009, the Los Angeles Times reported on the appointment of Cass Sunstein as the “regulatory czar” under Barack Obama’s presidency.  He is to be appointed the head of The Office of Information and Regulatory Affairs.

In 2003 in the precursor to the SafetyAtWorkBlog, SafetyAtWork magazine, I reviewed Sunstein’s book – Risk & Reason, Safety, Law and the Environment.  Below is the first part of that review

SafetyAtWork magazine Vol 4 Issue 11 - 2003
SafetyAtWork magazine Vol 4 Issue 11 - 2003

So many safety professionals also have responsibility for the environment that Risk & Reason – Safety, Law, and the Environment seemed an attractive read.  This book is unashamedly North American and to some extent that is a discouragement but given that many innovations originated there, the book was worth a look.

From outside North America the issues of most relevance were those concerning risk perception and the role of experts.  Cass Sunstein states that

Before government acts, it should, if feasible, attempt to produce a cost benefit analysis, understood as a detailed accounting of the consequences of the alternative courses of action.  The cost benefit analysis should allow people to see if the problem at issue is small or large.  It should explore the expense of reducing the problem and explain who will bear that expense.  (p. ix)

He says that,

Some people think of cost benefit analysis as a form of cold, barely human calculation, treating health and life as mere commodities and envisioning government as some kind of huge maximizing machine.  On the contrary, I urge that cost-benefit analysis should be seen as a simple pragmatic tool, designed to promote a better appreciation of the consequences of regulation.  (p.ix)

I wondered whether what he considers cost -benefit analysis in the broadest sense.  His concepts fit with risk management and, of course, risk management is supported by various standards such as AS4360.

The trap with cost-benefit analysis is that decisions made are cold and barely human, which he acknowledges.  He uses the fuel economy standard as an example.

If, for example, proposed fuel economy standards will significantly reduce greenhouse gases but also lead to smaller and less safe cars -and thus produce over a thousand extra deaths each year – officials and citizens should be aware of that fact.  (P. ix)

Here is a crucial question for the book – what is the more important, the needs of the many, or the needs of the few.  In his introduction, he surprisingly uses an example of the Hatfield rail crash in the United Kingdom.  Sunstein discusses how people now perceive rail transport as unsafe and began driving to work, a far more statistically dangerous activity.  This example is proceeding well until he stumbles.  He says that

After the crash, people undoubtedly spoke with one another about their fears, creating a kind of cascade of concern about train safety. We shall also see that cascade effects can lead people to large-scale errors about risks. But government regulation, my principal topic here, was not involved. (p 2)

It is clear that Sunstein is not as well informed on Hatfield as is necessary to use the example. Government regulation, or deregulation, of rail transport has never sat well with the English rail traveller.  Hatfield confirmed fears encouraging people to alternative transport methods, ones over which they have direct control.  With train travel, you place your trust in the driver and the system. In automobiles, you feel in more control.

Sunstein makes three recommendations to government on assessing regulation through cost-benefit analysis:

  • “…attempt to assess the magnitude of any problem that it is attempting to solve, through quantitative assessments to the extent possible.”
  • “…attempt to assess tradeoffs, by exploring the costs of regulation, also in quantitative terms if possible.”
  • ”   attempt to use tools that are effective and inexpensive.” (p.5)

This process would be familiar to all safety professionals. We recommend the same process to improve safety:

  • Identify
  • Assess
  • Control

This book shows that there are many parallels between environmental regulation and OHS regulation. Sunstein says

“Properly understood, a cost-benefit state attempts to make people’s lives better. The effort to quantify and to balance is designed not to assess everything in terms of money but to promote close attention to the actual consequences of what government does.” (p.8 )

Chapter 2 is very much about risk perception but suffers from not drawing more on the large amount of safety risk perception analysis and terminology. Sunstein reaches the issue of risk perception from a different point of origin. He asks,

‘What are ordinary people thinking? Can we discern some structure to their judgments? Three beliefs seem to be playing a large role. First, many people believe that risk is an “all or nothing” matter. Something is either safe or dangerous, and there is no middle ground. Second, many people are committed to a belief in the benevolence of nature. They think that the products of human beings, and human activities, are more likely to be dangerous than the products of natural processes. Third, many people subscribe to the “zero risk” mentality, at least in some domains. Such people believe that it is both possible and appropriate to abolish risk entirely, a belief that appears closely connected with the notion that risk is a matter of “all or nothing.”‘ (p.36)

Sunstein discusses Outrage without naming it and by missing this concept narrows the relevance of the book and the authority of his voice. If he had looked at any of Peter Sandman’s work on Outrage, had looked to other scholarly fields, his work would have been more authoritative. Given that Sandman’s works originated from environmental and planning issues it is very surprising that there is no reference to them, particularly given that Sandman is also a United States academic.

Sunstein says that “a possible conclusion is that, with respect to risks, vivid images and concrete pictures of disaster can ‘crowd out’ other kinds of thoughts, including the crucial thought that the probability of disaster is very small.” (p.46) How much more interesting would it have been if he had incorporated Sandman’s Outrage principle and expanded upon it?

The next part of this review will be posted tomorrow.

Categories business, government, Obama, OHS, politics, risk, safety, UncategorizedTags , , ,

3 thoughts on “Cass Sunstein, Risk, Cost-Benefit and OHS”

  1. \”What’s needed is a new, suppler set of not-quite-regulatory tools that can help ameliorate public outrage about risks that are more upsetting than they are dangerous.\”

    I do not agree that we need more government regulation. What is needed is an education system that gives individuals the tools to develop practical critical thinking skills.

    The human mind, conditioned to handle the activities of daily living, is ill-equipped to handle surprising, shocking events. But with our 24/7 \”Who\’s To Blame\” media, a rare once-in-a-lifetime incident gets a sensationalized center stage focus ad nauseum. It starts with the bobbleheads blurting the story out and repeating it over and over until the empty-headed celebrity newscasters moralize on the evening and weekend news shows.

    Ever seeking a way to garner votes, politicians quickly react with thinly reviewed solutions like bank bailouts, unfunded government giveaways and even invasions of other countries. A collective temporary insanity takes hold, mimicking the temporary loss of memory and reason one might experience after a terrific car crash.

    Stunned individuals hail these responses as necessary to sustain their safety and security, and we continue to pursue the cradle-to-grave nanny state that is making us weaker and less self-reliant.

  2. Cass Sunstein’s recent appointment as Barack Obama’s new “regulatory czar” makes him a key player in deciding which risks to public health and the environment are regulated by the U.S. government, and how they are regulated. So your recent republication of your 2003 review of Sunstein’s book “Risk & Reason, Safety, Law and the Environment” was timely.

    But a few comments in the review, though flattering to me, are misleading about Sunstein. “Sunstein discusses Outrage without naming it,” you wrote, “and by missing this concept narrows the relevance of the book and the authority of his voice. If he had looked at any of Peter Sandman’s work on Outrage, had looked to other scholarly fields, his work would have been more authoritative.”

    I agree that it matters whether Sunstein understands the dynamics of risk perception – the factors (I call them “outrage factors”) that can lead people to anguish over some technically small risks while shrugging off some others that are technically much more serious. I haven’t read the book you reviewed, but much of Sunstein’s work passes that test with flying colors.

    In fact, I believe Sunstein will be the first high-ranking U.S. official who has made significant contributions to the risk perception literature. (A predecessor, John Graham, contributed to other aspects of risk research, but was steadfastly unresponsive to perception issues.)

    Sunstein’s writing has indeed incorporated (and named) outrage over the years, usually in the form of what he calls the “outrage heuristic.” As early as 1998, he collaborated with the most dazzling risk thinker of our age, Nobel Prize-winner Daniel Kahneman, on an article entitled “Shared outrage and erratic awards: The psychology of punitive damages.” A few years later Kahneman and Sunstein published Indignation: Psychology, Politics, Law.

    Sunstein has occasionally drawn on some of my older work, for instance in his 2005 book Laws of Fear: Beyond the Precautionary Principle, and in papers such as “On the Divergent American Reactions to Terrorism and Climate Change” and “Overreaction to Fearsome Risks.”

    I built my original 1986 “Risk = Hazard + Outrage” model on the shoulders of the “psychometric paradigm” developed by Paul Slovic, Baruch Fischhoff, and colleagues. But I focused more attention on the emotional (affective) aspects of how people understand risk, along with the psychometric paradigm\’s cognitive factors. The psychometric paradigm has since broadened to incorporate emotions more explicitly. Slovic wrote about the “affect heuristic” in 2002. In “What’s Fear Got to Do with It? It’s Affect We Need to Worry About” (2004), he wrote:

    As the study of cognition has advanced, however, decision researchers have increasingly recognized the importance of affect…. Evidence of risk as feelings was present (though not fully appreciated) in early psychometric studies of risk perception. Those studies showed that feelings of dread were the major determiner of public perception and acceptance of risk for a wide range of hazards. Sandman, noting that dread was also associated with factors such as voluntariness, controllability, lethality, and fairness, incorporated these qualities into his “outrage model.” Reliance on outrage was, in Sandman’s view, the major reason that public evaluations of risk differed from expert evaluations (based on analysis of hazard; e.g., mortality statistics).

    And in 2003 Daniel Kahneman gave a fascinating interview about how his work has steadily evolved to include the role of emotion in judging risks and making decisions.

    Tracing the genealogy of a set of ideas isn’t always easy. Slovic was a pioneer. Kahneman was a brilliant innovator. I was an extension agent, a popularizer, and an essayist – far less a scholar than the other two. (We’re all still working, and who knows where we’re going next? But that’s where we’ve been.)

    As for Sunstein, he is a good deal younger than the three of us, and he is a prolific legal scholar for whom risk perception is just one of many interests. Yet he hasn’t just read about outrage (as well as other risk perception models). He has thought deeply about it, written about it, and applied it to a wide range of issues, from jury behavior to regulation.

    In his new job, Sunstein will face a dilemma that has perplexed everybody who has considered it: How should regulators in democratic countries address risks that are high-outrage but low-hazard (or at least probably low-hazard)? Refusing to regulate on the grounds that the technical risk is low leaves people feeling abandoned by their government and alone with their fears. Regulating as if the technical risk were high when it’s actually low justifiably enrages the regulated industries, drags down the economy, and may well confirm the public’s technically mistaken fears. What’s needed is a new, suppler set of not-quite-regulatory tools that can help ameliorate public outrage about risks that are more upsetting than they are dangerous.

    This is a less obvious task than rebuilding the U.S. government’s ability to regulate high-hazard risks effectively, an ability that has atrophied during the eight years of the Bush administration. But it is no less important. And Sunstein is better prepared than anyone else I can imagine to move U.S. regulation in this direction.

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