Category: business

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

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.