United States
Environmental Protection
Agency
Office of Air Quality
Planning and Standards
Research Triangle Park NC 2771.1
EPA-450/5-83-002
April 1983
Air
Analytical
Perspectives
on Setting
Environmental
Standards

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                               ANALYTICAL PEESPECTIVES ON
                            SETTING ENVIRONMENTAL STANDARDS
                                      James W. Vaupel
                                      Duke University
                                           and
                      International Institute for Applied Systems Analysis
               Prepared for:   Strategies and Air Standards Division
                             Office of Air Quality Planning and Standards
                             U.S. Environmental Protection Agency
                             Research Triangle Park, NC
                               Contract Number:  1D2290-NASX
c o c

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This report has been reviewed  by  the  Office  of Air Quality Planning
and Standards,  U.S.  Environmental  Protection Agency,  and approved
for publication as received  from  Dr.  James Vaupel.  Approval  does not
signify that the contents  necessarily reflect the  views  and policies
of the U.S. Environmental  Protection  Agency, nor does mention of trade
names or commercial  products constitute  endorsement or recommendation
for use.  Copies of  this report are available for  a fee  from the
National Technical Information Service,  5285 Port  Royal  Road,
Springfield, Virginia 22161.   Questions  or comments regarding this
report should be addressed to  Harvey  Richmond, U.S. Environmental
Protection Agency, MD-12,  Research Triangle  Park,  North  Carolina 27711
or by telephone (919) 541-5655 (FTS 629-5655).

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    PREFACE AND ACKNOWLEDGEMENTS
    This report was prepared as part of  the "risk analysis program"  of



the Office of Air Quality  Planning  and Standards (OAQPS)  of the  U.S.



Environmental  Protection Agency (EPA).  For the purposes  of this  pro-



gram, risk analysis is divided into two phases—risk assessment and risk



evaluation. As denned by OAQPS, "risk assessment involves the process  of



making  risk estimates that particular adverse events will occur in a given



period of time  and  describing the nature  or severity of harm that would



result if those  events were to occur" (Richmond, 1980).  On the other



hand, the objective of risk evaluation "is to aid or assist decision makers



in grappling with clearly normative, social value  judgements concerning



which standard provides an adequate margin of safety (i.e., an acceptable



level of  risk)" (Richmond, 1981).
                                     - iii -

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    As a first step in the risk evaluation phase of this research program,




OAQPS contracted with me to write a background report that:




    l)   highlights some of the key questions, issues,  and perspectives




         that might be considered in research on risk evaluation,




    2)   develops a typology for  classifying various approaches  to  risk




         evaluation, and




    3)   describes the approaches currently used by the major Federal




         agencies that set health,  safety, and environmental standards.






    The  report is not supposed  to be  (too) prescriptive, but (mostly)




descriptive; it is not supposed to provide answers, but to develop a frame-




work for thinking about some key questions. Furthermore, the report is




not supposed to duplicate existing work—doing so would make it  far too




lengthy;  rather, the  report is supposed  to help guide  the  reader to




relevant  portions of the vast literature on decision-making methods and




approaches.




    Throughout, the  primary  aim is  to contribute to  the risk-analysis




program of OAQPS.




    I would like to acknowledge the important  contributions of three EPA




analysts, Thomas B. Feagans, Harvey M. Richmond, and Thomas McCurdy,




who taught me not only much of what  I know about the EPA, but  also




much of  what I understand about the  appropriate roles of scientists and




analysts  in environmental decision making.  In addition, this report  is




based in part on my work as study director of the Committee on Risk and




Decision Making of the National Academy of Sciences; I owe a particularly




large  intellectual  debt to Howard Raiffa, who was  chairman of that







                                    -  iv -

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       committee,  and to John Graham,  who was research associate.  I would




       also like  to thank Wesley A.  Mag at,  Philip  J.  Cook,  Robert D. Behn,




       Meredith  Golden, Howard Kunreuther, and Joanne  Linnerooth for their




       helpful  comments.  Diane Levin was my principal research assistant in




       preparing this  report;  many  of  the  facts  and examples cited were




       uncovered by her diligent and  probing  research.  The manuscript was




       typed and corrected with speed and grace by Rhonda Starnes.
                                            - v -
0 Q

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       CONTENTS
INTRODUCTION                                                               !

I.    THE NATURAL SCIENCE PERSPECTIVE                                      2

      A.   Zero Risk                                                       5
           Example:  Tris                                                  5
           Example:  Saccharin                                             6
           Example:  Red Dyes No. 1O, 11, 12, and 13                       8
      B.   Natural Levels of Risk                                         1O
      C.   De Minimus Risk                                                11
           Example:  Carcinogens in Animal Feed                           12
      D.   Health Threshold Levels                                        14
           Example:  Non-Carcinogenic Drugs in Food-Producing Animals     15
           Example:  Airborne Lead                                        15
      E.   Comparative Risk                                               2O
           Example:  Pesticide Regulation                                 21
      F.   Judgement of Health Professionals                              25
           Example:  Small Toys                                           26
           Example:  Ambient Water Quality                                28

II.   THE ENGINEERING PERSPECTIVE                                         3O

      A.   Lowest Detectable Levels                                       32
           Example:  Carcinogenic Animal Feeds, Revisited                 33
           Example:  Vinyl Chloride                                       33
      B.   Best Control Technology                                        35
           Example:  Air Pollution from Aircraft                          35
           Example:  Acrylonitrile                       .                 36
      C.   Engineering Judgment                                           38
           Example:  Ladders                                              38
           Example:  Nuclear Reactor Design
                                     - vi -

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III.   THE ECONOMICS PERSPECTIVE                                             41

      A.    Cost-Benefit Analysis, Narrowly Defined                          45
           Example:  Power Lawn Mowers        .                              47
      B.    Cost-Effectiveness Analysis                                      48
           Example:  Emission Standards for New Motorcycles                 49
      C.    Decision Analysis                                                51
           Examples:  Four Illustrative Applications                        55
      D.    Ad Hoc Balancing                                                 57
           Example:  Power Lawn Mowers, Revisited                           58
           Example:.  Noise Labeling                                         6°

IV.   THE POLITICAL SCIENCE PERSPECTIVE                                     62

           Example:  Water-Pollution Effluent Standards                     65
           Example:  Swine Flu                                              ^8

V.    THE POLICY ANALYSIS PERSPECTIVE                                       71

      A.    A Fifth Image                                           •         7"5
      B.    A Suggestive Anecdote                                            76
      C.    The Differences Between Science and Policy Analysis              78
      D.    The Methods of Policy Analysis                                   82

VI.   A DECOMPOSITION OF ROLES                         .                     85

      A.    Scientific Research on Effects                                   85
      B.    Assessment                                                       89
      C.    Research About Preferences                                       95
      D.    Research About Policy Design                                     98
      E.    Interactions Among Roles                                        1OO

VII.   CONCLUDING OBSERVATIONS                                              1O2

REFERENCES                                                                 1O7

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      LIST OF FIGURES AND TABLES
FIGURES
   1.
   2.
   3.
Environmental Standard Seating from the Perspective
of Natural Scientists

Environmental Standard Setting from the Perspective
of Engineers

Environmental Standard Setting from the Perspective
of Economists .
Page


  3


 31



 42
   4.     Environmental Standard Setting from the Perspective
          of Political Scientists

   5.     A Decomposition of Roles in Environmental Standard
          Setting, from a Policy Analysis Perspective
                                                               64
                                                               92
TABLES
   1.     A Typology of Risk-Evaluation Methods

   2a.    How Many People Will be Affected Under Alternative
          Standards .
                                                               72

                                                               94
   2b,    How Much Will People be Affected Under Alternative
          Standards
                                                               94
                                   - viii -

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                    ANALYTICAL PERSPECTIVES ON
                SETTING ENVIRONMENTAL STANDARDS

                                 by
                           James W. Vaupel
                           Duke University
                                and
           International Institute for Applied Systems Analysis
INTRODUCTION


    Natural  scientists, engineers,  economists, political scientists,  and

policy  analysts  tend  to  perceive  the  process of health,  safety,  and

environmental standard setting in radically different ways. Each of these

five perspectives has some validity and value:  the standard-setting pro-

cess is  so multi-faceted that, like sculpture, it can best be understood

when viewed from several vantage points.  In this report, I first view the

standard-setting  process from the  angles  of analytical vision  of natural

scientists, engineers, economists, political  scientists, and policy analysts,

in turn.  Then, I try  to explain how each of these disciplines (and others)

can all  contribute to the process of environmental decision making; in

this concluding part of this report, I lay out a decomposition of appropri-

ate roles for scientists and analysts and suggest some research needs.

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                                -2-





I. THE NATURAL SCIENCE PERSPECTIVE







    Most natural scientists—and probably  most laymen as well—have an




image of the standard-setting process that might be caricatured as shown




in Figure 1.  According to this view, natural scientists do the crucial work




of determining the health and environmental effects  of a hazardous sub-




stance;  once  these facts  are  determined,  the administrator  of the




appropriate regulatory agency has to use his or her judgement to  make a




decision about what level of the  hazardous substance  can be allowed if




public  health  and the environment are to  be  protected.  In some cases,




the scientific facts speak so loudly that the administrator has virtually no




discretion;   in other  cases,   the   uncertainties  are  such  that  the




administrator's judgement  plays a  more  significant role.  In all cases,




however, the standard is  essentially the product of scientific fact.




    This image underlies much health, safety, and environmental legisla-




tion. For example,




    —    The Clean Air Act prescribes "ambient  air quality standards the




         attainment and maintenance of which in the  judgement of the




         Administrator,  based  on (air quality)  criteria and allowing an




         adequate margin of safety,  are requisite to protect  the public




         health".  The air  quality  must "accurately reflect  the latest




         scientific information" concerning "effects  on public health or




         welfare." (42  U.S.C. 740 et seq,  1970,  amended 1977; sections




         108 and 109).

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Figure 1:
         -3-  .
              >
Environmental .Standard Setting from the
Perspective of Natural Scientists
                           NATURAL


                           SCIENCE


                           RESEARCH
                         POLICYMAKER
                           STANDARD

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                                -4-





         Both the Resource Conservation and Recovery Act and the Solid




         Waste Disposal Act require  standards  "as may be necessary to




         protect human health and the environment" (42 U.S.C. 6921 et




         seq.  1976. and 42 U.S.C. 6901 et seg. 1976, amended 1978).




         The Delaney Clause of the Federal Food, Drug, and Cosmetic Act




         (21 U.S.C. 348(c)(3)) prohibits the use  in food of any additive "if




         it is found to induce cancer when ingested by man or animal, or




         if it is found, after tests which are  appropriate for the evaluation




         of  the safety of food additives,  to induce  cancer in  man or




         animals".




         The Federal Aviation Act requires regulation of aircraft  safety to




         provide  the "highest possible degree  of safety in the public




         interest" (49 U.S.C, 1301 et  seq. 1958,  amended 1974, 1977,  and




         1978).






    Furthermore, the natural scientist' image as depicted  in  Figure 1




roughly conforms to the actual division of labor in the EPA and in most of




the other Federal health,  safety,  and environmental  regulatory  agencies




as well:  for a particular standard-setting decision, most of the  available




budget  and most of the hours of effort are devoted to producing  and




assembling natural science facts.




    Consequently, it should not be surprising that there has been consid-




erable  interest in  methods of  decision  making  that  conform to  the




natural  scientists'  image—and that  a  number of  health,  safety,  and




environmental standards have been  justified in terms of such methods.




Six categories of examples follow; I have listed them roughly according to

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                                 -5-





the amount of discretion they permit the administrator, starting with the




methods that allow the least discretion.
A. ZERO RISK







    If something is risky, ban it.  This simple decision rule is so clear-cut




that it hardly seerns to need explanation.  Nonetheless, it is useful to con-




sider  three examples  to gain some  insight into the nature of the  situa-




tions where bans have been proposed.











EXAMPLE: Tris




    In March 1976, the Environmental Defense Fund petitioned the Con-




sumer Product Safety Commission (CPSC) to require a warning label on




children's  clothes treated with Tris, a chemical flame-retardant used in




children's  clothes.  This prompted the Commission to study the  safety of




Tris.  The  Commission also asked the National Cancer Institute to test




Tris.  Tris was found to be a carcinogen at multiple sites in two species of




animals. The CPSC immediately decided to ban the use of Tris under the




Federal Hazardous Substance Act:







    The Commission's Office of  the Medical Director believes  that




    once a substance is established as an animal carcinogen, it can




    never be assured as  a safe substance for human exposure.  (42




    Federal Register 18350).

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                                     -6-


Although  the Commission did  an economic  analysis, this was  not con-

sidered to be relevant to  the decision.  Given the judgement that no level

of Tris  could be considered safe,  the  CPSC apparently concluded that

there was no alternative but to ban.
EXAMPLE: Saccharin

     In a Federal Register notice  on April  15,  1977  (42 Federal Register

19996),  the FDA announced that "the  Commissioner  of  Food and Drugs is

proposing to revoke the interim food additive regulation under which sac-

charin and its salts  (saccharin) are currently permitted as ingredients in

prepackaged foods,  such as  soft drinks  and  as tabletop nonnutritive

sweetners."  The notice explained:
  Having decided to ban Tris, CPSC had to decide how to implement the ban.  The Adminis-
trative Procedure Act requires that a regulation be preceded by a notice of proposed ru-
lemaking that allows for public participation and a delayed effective  date. In this instance,
the CPSC did not propose a rulemaMng but an interpretation of a statutory provision. The
Environmental Defense Fund suggested that the Commission interpret section 2(q)(l)(A) of
the Federal Hazardous Substance Act, which bans "toy(s) or other article(s) intended for use
by children which are hazardous substance(s)", to apply to children's clothes containing Tris.
This sidestepped the complicated and time-consuming procedures normally required for ru-
lemaking.
     In the final notice, the Commission defends this action:

     Even if the rules were to be considered general rulemaking, the Commission for
     good cause finds  that notice and public comment and a delayed effective date
     are contrary to the public interest because the statutory intent and structure of
     the Federal Hazardous Substance Act is that children's articles that present a .
     substantial risk of illness based  on toxicity must be banned without any delay.
     As the legislative  history states, "toys or other articles intended for use  by chil-
     dren which bear or contain a hazardous substance are banned by the language of
     the bill itself." (42 Federal Register 18853).

This method of banning Tris was apparently accepted by the various concerned parties.
Thus, the agency was able to effect a ban of this product without resorting to formal regula-
tory proceedings.

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                                  -7-


    The  Commissioner's  determination  that  saccharin must  be

    banned  as  a food additive is  based on a series of scientific stu-

    dies conducted in accordance with currently accepted methods

    for  determining  whether compounds can cause cancer.  The

    most recent of these studies, conducted by Canadian scientists

    under the auspices of the Canadian government, confirms what

    earlier American studies have suggested:  that saccharin poses a

    significant   risk  of  cancer  in  humans.  Under   these  cir-

    cumstances,  conscientious  concern  for  the  public  health

    requires that FDA prohibit the continued general use of saccha-

    rin in foods.


    This  conclusion is also dictated  by the so-called Delaney clause

    of the Federal Food, Drug, and Cosmetic Act, which prohibits the

    use in food  of any food additive which has been shown, by inges-

    tion  or  other appropriate tests, to cause cancer in laboratory

    animals.
  Congress subsequently considered the issue and, in November 1977, a bill was passed that
required: an 18-month moratorium on the proposed saccharin ban; the Secretary of HEW to
contract two scientific studies with the National Academy of Sciences, one on the risks of
saccharin and the other on the issue of food additives in general, to be completed within 15
months; a provision for warning labels on saccharin-containing products; and warning signs
in retail stores which sell such products, to be supplied by manufacturers (Link, 1977).

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                                -8-





EXMIPLE:  Red Dyes No. 10,  11, 12, and 13







    Color additives in foods, drugs, and  cosmetics are regulated  under




the Federal Food,  Drug, and Cosmetic Act of 1938, as  amended by the




Color Additive Amendments of 1960. The  amendments allow a color addi-




tive to be approved only if the data established that it is safe under the




permitted conditions  of use; if a chemical causes cancer,- it  cannot be




used in any quantity (42 Federal Register 62475).




    An interesting example of regulation  under this act occurred in 1977




when the FDA banned the  use of red dyes no. 10,  11, 12, and 13 because




they possibly might be carcinogenic.  The  four  dyes  are formed with




tobias  acid.  Tobias acid contains beta-naphthylamine,  a suspected carci-




nogen, making the FDA worry that traces  might remain after the produc-




tion of the dye. Unfortunately,







    analysis for free beta-naphthylamine in each of the four colors




    was  hampered by difficulties  with the analytical  methods  and




    has  not shown free  beta-naphthylamine (42 Federal Register




    62476).







Scientists were able to determine that beta-Naphthylamine was  found in




industrial grade lithol red; they concluded;







    Although the exact identity of the lithol reds tested by American




    Cyanamid is unknown, lithol reds are generally sufficiently simi-




    lar to the four colors, D&C Red Nos. 10, 11, 12, and  13 to permit




    a  conclusion that the latter colors would also contain free beta-

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                                       -9-


     naphthylamine (42 Federal Register 62476).



On the basis of this finding, the Commissioner decided that since red dyes

no. 10, 11, 12, and 13



     could   result  in   exposure   of   the   consumer   to   beta-

     naphthylamine...,  use in  drugs  and  cosmetics should be ter-

     minated because such action is necessary to protect the  public

     health. (42 Federal Register 62471).3
  The case of red dye no. 2 may also be of some interest.  As described in an unpublished pa-
per by Elizabeth A. York written under my supervision:

     Before its ban in early 1976, red dye no. 2 was the most frequently used color ad-
     ditive in the United States....  The dye was developed in 1878....  In adherence to
     the Color Additive  Amendments of 1960, the  FDA placed the dye on the "provi-
     sional  approval list".  Through the utilization of  extensions,  red dye  no.  2
     remained on the provisional list until its 1976 ban; its listing was extended fifteen
     times in all.  The first extensions were granted because manufacturers claimed
     that longterm studies were not complete. After 1965, extensions were issued be-
     cause  the FDA could not  decide whether  the submitted  data warranted per-
     manent approval....

     Numerous studies were done after 1965 and three successive review panels were
     appointed. The first, a committee of the National Academy of Sciences, conclud-
     ed in June 1972 that restrictions on the dye's use were unwarranted. Because of
     the controversy surrounding the National Academy of Sciences committee, the
     FDA appointed  a second advisory panel consisting of five outside scientists.... In
     the fall of 1974, the advisory panel reported that a study the panel had designed
     had cleared the dye of all safety doubts.  But soon afterwards, it was revealed
     that the collaborative study had been "mismanaged  and effectively botched". In
     the words of one FDA scientist, "it was the lousiest experiment I've seen in my
     life". He and other agency scientists contested the advisory panel's conclusions
     and urged that  the dye be banned....

     In October of 1975, the FDA appointed a third advisory panel, the Toxicology Ad-
     visory  Committee....  The Committee reviewed all studies of red dye no. 2 and ini-
     tially announced that the dye was probably harmless.

     Alexander Schmidt, Commissioner of the  FDA, appeared on "Face the Nation" in
     late December  , 1975. Schmidt justified the FDA's fifteen year delay by arguing
     that "red dye no. 2 is probably the most studied chemical in the food supply....
     There are no studies that prove red dye no. 2 causes cancer".

     Meanwhile, Dr.  Gaylor, a statistician member of the Toxicology Advisory Commit-
     tee, reinterpreted  the data of the FDA's "botched" study....  His analysis revealed
     that the number of malignant tumors within the total number of tumors had in-
     creased significantly....  The Committee concluded  that neither the  safety nor

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                                  -10-


B. NATURAL LEVELS OF RISK


     As noted in Fischhoff et al. 's excellent compendium of  "Approaches

to Acceptable Risk: A Critical Guide" (I960):



     An early natural  standard was Agricola's  (1556)  philosophy  of

     non-degradation of the environment in De Re Metallica.  He

     advocated  prohibiting human activities that would impose risks

     greater than those experienced in some  "pre-existing  natural

     state".



In commenting on the criteria for radioactive waste proposed in 1978 by

the EPA, the Natural Resources Defense  Council  suggested that



     the entire nuclear fuel cycle  be managed so that the overall

     hazard  to  future  generations would be the same  as those  that

     would have been presented by  the  original unmined bodies util-

     ized in these nuclear operations (Rotow et al., 1979)



A related kind of proposal suggests that
     the danger of red dye no. 2 had been demonstrated and recommended further
     testing.

     Shortly afterwards, Commissioner Schmidt announced the FDA's plans to ban red
     dye no. 2 because its safety had not been proven.

Red dye no. 2 had at that time still only "provisional approval". Section 81.1 of the color ad-
ditive amendments allows a dye to be used on an interim, basis only if there are pending
scientific studies to determine its safety.  Since no further tests of red dye no. 2 were pend-
ing, the dye was banned on this technicality.

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                                -11 -





    rather than trying  to determine the actual damage  caused by



    very low radiation insult, and then setting an allowable dose, one



    instead compares the man-made standard with the background.



    Since man has evolved  in  the  midst of a .pervasive radiation



    background,  the  presumption is that an increment of radiation



    "small" compared to that background is tolerable and ought to



    be set as the standard.   (Adler)  suggests that small, in the case



    of gamma radiation, be  taken as the standard deviation of the



    natural background—about  20  millirads  per year  (Weinberg



    1979).
C.  DE MINIMUS RISK







    The  "de minimus" approach sets exposure  levels  such that risks to




humans  are less than some small value, typically 10~a, but  sometimes




10~8 or 10~5,  usually on a life-time basis, but  sometimes on an annual




basis.  In this approach, "risk" is almost always calculated, on the basis of




a  well-specified  formula that  includes  various  "prudent"  (i.e.,  risk-




overstating) assumptions.  Furthermore, the formula is  usually based




only on objective scientific findings; scientific judgements are not expli-




citly included.  Many  statisticians would argue that  the  "risk" of an




adverse  consequence calculated in this way is only tenuously related to




the "probability" of an adverse consequence (Feagans and Biller 1981, and




EPA 1981).

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                                - 12-





EXAIAPLE:  Carcinogens in Animal Feed




    The FDA's interpretation of the so-called "DES proviso to the Delaney




Clause" (sections  409(c)(3)(A),  5l2(d)(l)(H), and 706(b) (5)(B) of the




Federal Food, Drug, and Cosmetic Act) provides an intriguing  example.




The DES proviso allows carcinogens to be  used in animal feed if "no resi-




due" is "found" in "any edible portion of such animals".  As explained in




detail in a Federal Register notice (44 Federal Register 17070 ff.), the FDA




decided to implement this  proviso by a two-step procedure.  First, the




chemical in question has to  be shown to be a likely carcinogen, according




to a specified procedure. Then, a "no residue" level is set based on a "risk




level" of one in a million. As defined by the FDA:







    (a) The risk level of 1 in 1 million is  an increased risk over the




    entire lifetime of a human being.






    (b)  The upper 99-percent limit on the  response data is used




    throughout the procedure, and the extrapolation is conservative




    by nature.  For these reasons,  the maximum concentration of




    residues of carcinogenic concern that will go undetected in edi-




    ble tissues is expected to increase the lifetime  risk of  excess




    cancer in humans by less than 1 in 1 million.






    (c) This 1 in 1 million lifetime risk is  expected only if the max-




    imum concentration of  residues potentially undetected in edible




    tissues is consumed every day over a lifetime. Because there is




    little likelihood  that these  residues  will be so  consumed by




    humans, the actual risk is likely to be lower than 1 in  1 million.

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                                        - 13-





            (d)  The use of the procedures explained in the proposed regula-




            tions  for deriving  a concentration  of  residues  that  may go




            undetected in edible tissues rests  on the assumption  that the




            only risk to the exposed human population is that  from  residues




            of the sponsored compound. Other causes of disease or death




            are not considered.  Because the population is constantly at risk




            from  a wide range of factors, any increment of risk associated




            with residues subject to this proposed  regulation is  in  com-




            parison with other risks, likely to be vanishingly small.






            (e)  Several other prudent procedures apply to the derivation of




            the concentration  of residues  that will be permitted to go




            undetected.  For these and the above  reasons the most likely




            human risk is expected to be less than 1 in 1 million (44 Federal




            Register 17092).








            In the Federal Register notice, the FDA notes that an earlier (1977)




        proposal suggested that an acceptable level of risk "could be 1 in 100 mil-




        lion over a lifetime":







            Many comments argued that this level of risk was  unnecessarily




            conservative in light of the many  other cumulative, conservative




            restrictions already in the proposed regulations....  the  Commis-




            sioner concluded  that the  1 in 100  million level  of  risk was




            unduly limiting  without substantial compensation  in terms of




            public health. (44 Federal Register 17092).
c ^ <-•

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                                - 14-





    Later, it is noted that







    An increase in the level of risk to 1 in 10,000 might significantly




    increase human risk. It is difficult to choose between 1 in 1 mil-




    lion and 1 in 10,000  but the agency chooses the more conserva-




    tive number in the general interest of protecting human health




    (44 Federal Register 17092).








    An interesting aspect of FDA's procedure is that "no residue" is inter-




preted as "a potential residue  level corresponding to a lifetime risk of 1 in




1 million" (44 Federal Register 17093).











D. HEALTH THRESHOLD LEVELS







    Some  health standards  are set  at a  level  that  falls below  an




estimated "threshold"  that can be defined in various ways,  including "no




adverse health effects  level," "no physiological response level," or "lowest




convincingly demonstrated effect level." Often in this kind of approach a




margin of safety is used to ensure that the standard is set at a level below




the currently observed or estimated threshold.  The essence of this risk-




evaluation method is best explained in the context of a couple of exam-




ples.

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                                - 15-





EXAMPLE: Non- Carcinogenic Drugs in Food- Producing Animals




    The approach used by the FDA to approve non-carcinogenic drugs for




use in food-producing animals differs substantially from  the  approach,




described  above,  used for  drugs suspected of being carcinogens.  As




explained by an FDA scientist:







    Tolerances are established for non-carcinogenic drugs  by first




    selecting  the level demonstrated to have no adverse effect in




    the most  sensitive test species  used in toxicity studies. This




    no-effect level'is  then adjusted to account for the differences in




    food and consumption versus body weight between test  animals




    and humans.






    (When) extensive toxicology testing (has been done), the accept-




    able daily  intake for humans is calculated by applying a safety




    factor, usually 1:100.






    (In cases  of less extensive testing),  a safety factor of  at least




    1:2000 is applied.  (Perez, 1978).
EXAMPLE: Airborne Lead




     A roughly similar kind of health threshold analysis has been used by




the EPA in setting national ambient air quality standards.  Consider, for




instance, the case of airborne lead. The EPA set the lead standard to pro-




tect the "most sensitive group" against the "first adverse health effect".




As explained  in the opinion of  the U.S Court of Appeals (1980), 1 to 4

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                                - 16-





year-old children were selected as the most sensitive group and EP eleva-




tion (a kind of iron deficiency in red blood cells) was selected as the first




adverse health effect. A target blood lead level of 30 micrograms  per




deciliter was then chosen as the level that 99.5% of the sensitive group




should be protected against.  Given the  assumption that blood levels in




the sensitive group were distributed log-normally with a geometric stan-




dard deviation of 1.3,  it  was then calculated that the mean blood  lead




level in the sensitive group would have to be 15  micrograms per deciliter.




Next,  it was estimated that non-air sources of lead contributed 12 micro-




grams per deciliter of lead to the blood and that 1 microgram per cubic




meter of lead in the air would produce 2 micrograms per deciliter of lead




in the blood.  The standard was thus  set at  one half the difference




between 15 and 12, i.e., as 1.5 micrograms per cubic meter.




    It is important to note that a "health threshold," as  used by  the EPA




in setting national ambient air quality standards (NAAQS), is not the same




as a "no-effect" level,  as used by the FDA.  The EPA recognizes that the




precise pollutant level where adverse health effects begin cannot be iden-




tified with certainty for  NAAQS pollutants.  Thus, in the case  of carbon




monoxide, the EPA recognized that no absolutely safe level existed, other




than zero (45 Federal Register 55072).  As indicated in this Federal Regis-




ter and as explained by Jordan, Richmond, and McCurdy (1981):







    This  does  not mean that  there is no threshold for a  suitably




    defined effect and population group for carbon monoxide; it sim-




    ply means that no  clear threshold  can be identified with cer-




    tainty based on existing medical evidence. The best EPA could

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                                - 17-





    do  was to  identify  those  levels  at which scientists  generally




    agreed that adverse  health effects had been convincingly shown.
Discussion




    Health threshold analyses permit a certain amount of discretion and




judgement, considerably more  than permitted by the zero-risk, natural-




level-of-risk, and de-minimus-risk approaches.  In other words, the health




threshold approach requires that some decisions be made. The key deci-




sions  concern:  (1) determining a threshold'level, and (2) determining a




margin of safety. Both these decisions involve what a recent report called




"inherently imprecise concepts" (Jordan, Richmond, and McCurdy 1981).




    Consider  first the question of determining a health threshold.  In the




FDA approach described above,  the threshold is set at "the level demon-




strated to have  no adverse effect  in the  most sensitive test species used




in toxicity studies".  Implicit in  this rule  is the assumption  that "no




adverse  effect"  has been defined. But  how can  harmless  physiological




responses be  distinguished from responses which should be considered




adverse health effects?  Furthermore, the FDA approach is based on test-




ing a number  of  species.  But how many species and which species?




    Similar questions arise with regard to  the EPA approach  described




above.  One to 4 year-old  children were selected as the most sensitive




group and EP elevation was selected as the  first adverse health effect.




The group could,  however, have been defined more narrowly (e.g., one-




year-old urban males) or more  broadly (e.g.,  all children under age 15).




Furthermore,  a  different health effect could have been selected.

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                                - 18-





    Consider now the setting of a margin of safety.  The FDA uses safety




factors of 1:100 and l:2000-why not 1:10 or 1:10,000? The EPA chose, to




protect 99.5% of the sensitive group:  a case probably could  be made for




protecting  99%, or 99.9%, of the group.  In determining the  appropriate




margin of safety, a number of factors might be weighed, including sever-




ity of the health effect, reversibility of the health effect, the number of




individuals affected, the credibility and strength of the health-effect evi-




dence, the lack of testing with multiple pollution exposures, uncertainties




about animal to man extrapolation,  etc.  But how  should  such factors




influence the margin of safety?




    The  FDA and EPA used radically different approaches to the  concept




of margin of safety. The FDA used the traditional approach of applying a




safety factor.  The EPA used the more innovative concept of  protecting y




percent of a distribution of individuals.  But which of these approaches is




superior, under what conditions and circumstances?




    These various  questions about health-threshold approaches .are  not,




to my mind, objections so much as targets of opportunities for systematic




thinking and research. Health-threshold approaches are considered in




this report as just  one of an array of risk-evaluation approaches, for two




reasons: (1)  the primary purpose of this report is to survey the variety




of approaches used by the  major Federal agencies that set health, safety,




and environmental standards, and (2) the sponsors of this report are  inti-




mately  familiar with health-threshold  approaches.   However, it seems




clear that research intended to  develop  and  clarify an  appropriate




health-threshold approach  should be a central part of the continuing




risk-evaluation  program  of  the  Office of Air  Quality Planning  and

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                                - 19-





Standards.




    The  main reason that different risk-evaluation approaches are used




in setting health, safety, and environment standards is that different sta-




tutes govern the regulation of different hazards. As noted earlier, Section




109 of the Clean Air Act requires  that national ambient air quality stan-




dards be set at a level  "requisite to protect public health" with an ade-




quate margin of safety.  Furthermore,







    Both the  dean Air Act and its legislative  history make it clear




    that an ambient air quality standard is to be solely health based,"




    designed  to protect the most sensitive group of individuals—but




    not  necessarily the  most  sensitive  members of that group—




    against adverse health effects. (Jordan, Richmond, and McCurdy




    1981).







Unless the language of the Clean Air Act is amended or the interpretation




of the language is radically changed,  it would seem that health-threshold




methods are perhaps the only kind of approach to risk evaluation legally




open  to  the  EPA  in setting air  quality standards.  The  reason  other




approaches may be of interest is  that these other approaches may shed




light on  how  to resolve  some of the open questions  posed by  health-




threshold approaches.

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                                -20-





E. COMPARATIVE RISK







    Sometimes  it is useful to try to put a risk into perspective by com-




paring the risk with other kinds of risks.  For example, there has recently




been some concern about the fact that peanuts tend to be contaminated




by a potent carcinogen known as aflatoxin.  There also  has been  some




concern that drinking water in some  cities is polluted with chloroform,




which is also a carcinogen.  In thinking about whether to give up peanut




butter and only  drink bottled water, it may be informative to know that




devouring an entire jar of peanut  butter is roughly as hazardous as smok-




ing  a single cigarette and that drinking Miami  drinking water for  a full




year is also only roughly as hazardous as smoking a single  cigarette.




    In  addition  to gaining some sense of perspective, a second use  of




comparative risk analysis is in setting priorities.  Consider, for example, a




person  at high risk of coronary artery disease who chain smokes, has high




blood pressure,  and  eats two or three eggs  a day.  A comparative risk




assessment indicates  that giving up cigarettes  or controlling the high




blood pressure would each be at least  25 times as efficacious in reducing




the chance of a fatal heart attack as giving up all those eggs. (Vaupel and




Graham 1980).




    As  noted by Fischhoff et al.  (I960),  "properly speaking... comparing




existing hazards is not a decision-making procedure, but merely an aid to




intuition." Nonetheless, if "risk evaluation" is viewed as being designed "to




aid or assist the decision maker(s) in grappling  with the clearly norma-




tive, social value judgement of what standard(s) provide an adequate mar-




gin of safety or acceptable  level of risk" (Richmond, 1980), then com-

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                                -21 -





parisons of risks may be what a decision maker wants, at least in part.











EXAMPLE: Pesticide ReguLation







    The National Academy of Sciences'  Committee on Prototype Explicit




Analyses for Pesticides, chaired, by Robert Dorfman,  proposed a decision




procedure that might be classified as a kind of "comparative  analysis".




The Dorfman  committee  was  established because Dorfman, who  was a




member of the National Academy of Sciences' committee that  wrote the




report on Decision Making in the Environmental Protection Agency,







    wanted to make a  case study of some reasonably manageable




    area  of environmental regulation that would reveal in concrete




    form the  issues and the problems involved. The Environmental




    Protection Agency nominated pesticides and that  seemed as




    good a choice to me  as any other.  So under the sponsorship of




    the National Research Council (of the National Academy of Sci-




    ences) I recruited a team that included highly qualified special-




    ists in most  of the  relevant disciplines and we conducted  a




    detailed review of the kinds of  decisions that had to  be made




    and of how EPA is organized to make those decisions.  (Dorfman




    1981).








    The Committee wound up proposing a subtle decision-making pro-




cedure that takes "advantage  of many of the insights developed in deci-




sion theory" (NAS 1980).  (The essence  of decision  theory and decision

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                                -22-





analysis is described iater in this report.)  The Committee, however, did




not believe that "it is practicable for the Office of Pesticide Programs to




ascertain the 'preference functions' or 'objective functions' required by a




full-blown decision analysis".  They  therefore recommended a "simplified,




more ad hoc procedure".




     The gist of this recommended procedure is  conveyed by'a simple




example given in this report. The Committee asks the reader to imagine




that there are "five available options (labeled A through E) for the regula-




tion of a mythical pesticide called Pesticide". Option A is the most lenient




regulation and option E the strictest. There is







     a mythical  comparison compound, Visolin,  about which  two




     things are known.  First, ... the lifetime dose scale for Visolin is




     one tenth the  scale  for Pesticide indicating,  for example, that




     0.06 IJL moles/kg of Visolin produces an effect comparable  to 0.6




     IJL moles/kg of Pesticide. Second, Visolin was  denied reregistra-




     tion on the basis of  analyses that indicated  that if it  had been




     reregistered, a significant population group would have  been




     exposed to lifetime doses of 0.06 [JL moles/kg of Visolin.







In addition, there is "another mythical comparison compound", which the




committee calls Safex:







     its scale is  the  same as Pesticide's multiplied by 15.  Safex was




     reregistered  and  supporting   risk analyses  showed  that  the




     greatest lifetime dose to which any large population group  would

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                                -23-





    be exposed was in the neighborhood of 3 fj, moles/kg.







The committee suggests that







    the Administrator might reason as  follows: if Pesticide is rere-




    gistered according to Option A,  both the general population and




    the special exposure group would be exposed to lifetime doses




    greater  than the one equivalent to the potential exposure  to




    Visolin that led to the denial of its reregistration.  That is, the




    general  population would receive an estimated lifetime does of




    0.68 /z moles/kg, the special exposure group  would receive 0.86




    fj. moles/kg,  and the Pesticide equivalent of the Visolin  dose




    level at which Visolin was canceled is 0.6 JJL moles/kg.  Since the




    risks at 0.6  IJL moles/kg  (Pesticide equivalent) were  unaccept-




    able in the Visolin case, Option A can be  eliminated (ignoring the




    benefits of Pesticide use  versus those of Visolin use).  Under




    Option B, both groups are exposed to doses below the Pesticide




    cut-off points suggested by the Visolin precedent.  But... suppose




    the special exposure group is not sufficiently below the cut-off




    point and Option B cannot be regarded as entirely  safe for  it.




    Besides, Option C costs only slightly more than B and Provides




    significant reductions in  the doses received by both groups.




    Options  D and E cost considerably more  than C without affording




    substantial reductions in  the doses to  which the special expo-




    sure  group will be exposed.  Although there is greater improve-




    ment in the  exposure of the general population between Option

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                                -24-





    C  and Options D  and E  than  for the  special exposure  group,




    under Option C the general U.S. population is already virtually at




    the level that was found to be acceptable in the Safex case.  So,




    all in all, Option  C  appears to be the wisest course to follow.




    (NAS 1980).








    A  noteworthy aspect of this proposed procedure is that the  decision




maker is not presented with estimates of human mortality or morbidity:




the data  pertain  to  doses.  In a  paper explaining  why,  Dorfman first




presents a







    catalogue  of  the difficulties  that have  to be  surmounted in




    assessing the risks imposed by the use of any pesticide.  It is 6a




    discouraging catalogue. What  we should like to obtain as  as a




    result of all the work is estimates of the number of people who




    are  likely to contract  cancer from exposure to the pesticide




    when it is used in accordance with  any of the available  regula-




    tory  options.  These  estimates,  if available,  would be basic




    ingredients  for  making the  choice   among  the  alternatives




    including, of course, the status quo  alternative.  EPA tries man-




    fully  to make those estimates and, indeed, routinely produces




    figures that  purport to convey the  desired information.  In my




    opinion, based on inspecting a number of such estimates  and




    the  methods  used to derive them,  this practice is  misleading




    and imparts an unwarranted impression of scientific  certitude.




    This opinion is fairly widely shared....

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                                -25-





    The recommendation of the committee on pesticides was to be



    candid about the limitations of scientific  knowledge and to  abs-



    tain from,  making  extrapolations and estimates for which no



    sound scientific basis  exists.  This means in effect, presenting



    the results of the laboratory experiments  and any other hard



    data  (e.g.,  data concerning  doses)  but  not indulging in  any



    guesswork. We felt that the guesswork and the exercise  of judge-



    ment for which science provides little or  no foundation, belongs



    in the province of  the Administrator and his senior staff,  and



    that scientists and  subordinate staff  should not substitute their



    judgements for those of responsible officials. (Dorfman  1981).
F. JUDGEMENT OF HEALTH PROFESSIONALS







    Many health, safety, and environmental hazards are managed by pro-




fessional health experts. Physicians, for example, are responsible for




prescribing hazardous  Pharmaceuticals, and  industrial hygienists  are




responsible for many of the health and safety practices of manufacturing




firms.  As discussed in Fischhoff et al. (i960),







    In balancing risks and benefits, these professionals rely on per-




    sonal  experience,  accepted  professional practice,  and  their




    clients' desires. The method for integrating this assortment of




    facts and values is professional judgement....






    Perhaps the most important codes are unstated; they represent

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                               -36-





    the  implied  standards  of professionalism  inculcated  during




    training  and  apprenticeship.   One  learns  what  a  physician,




    engineer, or  chemist does and does not do; what  are the right




    and wrong ways to do things; what risks one  does  and does not




    take with others' lives; when to defer to higher authorities; when




    to admit defeat; when to call a colleague to task; what is "good




    enough for government work"; what short-cuts are legitimate;




    when one's job is done and a problem can be entrusted  to oth-




    ers.  These implied standards are sufficiently  general to give the




    professional a feel for what might be acceptable actions in all of




    the varied problems that arise.  Since they are  reality-  and




    compromise-oriented,  such  codes may lead to different solu-




    tions to the same technical problem in different economic  and




    political contexts.








    Two  examples follow of health, safety, and environmental regulatory




standards set essentially by the judgment of health professionals.
EXAMPLE: Small Toys




    In 1979, the Consumer Product Safety Commission (CPSC) published




a regulation that







    classifies  as banned hazardous  substances certain toys  and




    other articles intended for use by children under 3 years of age.




    It covers products that the Commission believes present a chok-




    ing,  aspiration or ingestion hazard,  based on  their failure to

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                                -27-





    comply with specified size criteria. (44 Federal Register 34892).








    After considering  a variety of possibilities, the  Commission decided




on a simple test centering on







    a   measuring   device—a  truncated,  hollow   cylinder—which




    separates toys and their components into two classes, according




    to their size and shape.  The Commission proposed that a toy or




    component which fits entirely within the cylinder is too small for




    children under 3  and should be banned.  (44 Federal Register




    34894).








    As explained in the Federal Register notice, the idea of using a trun-




cated,  hollow cylinder  and the measurements of this cylinder—I  1/4" in




diameter and 2  1/4" in length—were  essentially based on the professional




judgement of several groups of experts, including the Toy Manufacturers




of America and the Accident Prevention  Committee of the American




Academy of Pediatrics.  The CPSC had to act under conditions of little




information:







    (little) is known about the  sizes of children's mouths,  throats,




    windpipes  and other critical passages.  No data currently  indi-




    cate even that the passages increase in size  with  age....   the




    Commission believes it would take years to develop a method for




    measuring these passages.... (44 Federal Register 34900).

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                                - 28-





Consequently, the  "test criteria represent  a compromise  between  the




existing  data and practicality", a  compromise resolved by professional




judgement.











EXAMPLE: Ambient Water Quality




     The EPA is required by Section 304(a) of  the  Clean Water  Act to




develop and periodically revise national water quality criteria, According




to procedures published in 1976, no formal assessment process was used




in setting these criteria; instead, the criteria







     represent  scientific  judgements  based   on  literature  and




     research about the concentration-effect relationship of a partic-




     ular aquatic species within the limits  of experimental investiga-




     tion. (Moreau  1980).







These  scientific judgements were  made  by the Criteria  and Standards




division  within the  EPA's Office of Water Planning  and Standards;  the




judgements  were  based on information and  comments  provided  by




numerous scientists working for various federal  and state agencies, cor-




porations, universities, and other organizations.




     In 1978.  the EPA developed a revised  procedure for setting water




quality criteria.  The new guidelines







     provide  a more formalized, systematic approach to deriving cri-




     teria from scientific data.  It is not expected  that the numbers




     derived  using (this approach)... will be very different from those

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                            -29-





which would be derived from the less  formalized  method  EPA




has used in the  past.  It is expected, however, that the  sys-




tematic treatment of all appropriate aquatic data will make the




rationale for the criteria more obvious.  (Moreau,  1980).

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                                - 30-





II. THE ENGINEERING PERSPECTIVE







    The six kinds of "natural science" approaches laid out in Section I—




i.e., setting standards (1) at zero risk, (2) at natural levels of risk, (3) at




de minimus levels of risk, (4) below no-effect levels or health thresholds,




(5) by comparing risks, and (6) by the judgment of health professionals-




all focus on health and environmental effects.  An engineer, in contrast,




might focus on how to  achieve a reduction of some risk and  on related




questions  of feasibility and attainability.  In this view, technological capa-




bilities constitute the crucial information for, and constraint  on, poli-




cymakers, as illustrated in Figure 2.




    A number of health, safety, and  environmental statutes  are written




with this image in mind.  For example,




         Section III of the Clean Air Act instructs the Administrator of the




         EPA to  set performance standards for new stationary sources of




         pollution (e.g., coal-burning power plants) as follows:







         a standard of performance shall reflect the degree of emis-




         sion  limitation and  the  percentage  reduction achievable




         through application of the best technological system of con-




         tinuous emission reduction which (taking into consideration




         the cost  of achieving such emission reduction, any non-air




         quality  health  and  environmental  impact  and energy




         requirements) the Administrator determines has been ade-




         quately  demonstrated.  (42  U.S.C.  740 et  seq.   1979,




         amended 1977, section III).

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                         -31 -
Figure 2;
Environmental Standard Setting from the
Perspective of Engineers
                        TECHNOLOGICAL
                        CAPABILITIES
                         POLICYMAKER
                           STANDARD

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                                -32-





         The Clean Air Act Amendments of 1977 permit the Administrator



         of the EPA  to require any polluting source built within the  last



         ten years that  threaten  to impair  visibility in pristine Class I



         areas to install "best available retrofit technology."




    -   The Federal Water Pollution Control Act of  1972. as amended in



         1977, requires standards for  effluent limitations based on the



         "best practicable control technology"  and the  "best  available



         control technology."




    -   The Occupational  Safety and Health Act of  1970  (29. U.S.C.  651



         et  seq.  1970) requires the Secretary to protect  employees'



         health "to the extent feasible."





    Three  methods  of  standard setting might  be classified as fitting



under this  "engineering perspective." As before. I discuss them in turn,



starting with the method that permits the least discretion and exercise of



administrative judgment.










A. LOWEST DETECTABLE LEVELS






    The  permitted level of a hazardous substance  might be set at the



lowest detectable level, given the best  available—or,  perhaps, some



specified—measurement method.

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                                -33-





EXAMPLE: Carcinogenic Animal Seeds, Revisited




    Consider, again, the regulation by the FDA of carcinogens in animal




feed.   Before  the FDA adopted the  procedure  outlined  earlier—which




essentially defines "no residue" as the  level that according to certain




"conservative"  assumptions produces a  1 in 1 million level of  lifetime




risk—the FDA interpreted "no reside"  as meaning no residue detected.  In




justifying this  interpretation, the FDA noted  that the language of the




relevant statute







    specifies that no residue" may be "found ... by methods of exam-




    ination prescribed or approved by the Secretary ... in any edible




    portion of such animals ..."  This language conspicuously avoids




    such words as "occur" or "remain" and instead,  by  use of  the




    word "found" emphasizes  detectability.   (44  Federal Register




    17073).
EXAMPLE: Vinyl Chloride




    A second informative example  concerns OSHA's regulation of vinyl



chloride in the workplace. As described by Mendeloff (1979):







    After a third worker at its Louisville, Kentucky, vinyl chloride



    plant  died  from  a rare  form  of liver cancer, B.F. Goodrich



    informed NIOSH  (National Institute of Occupational  Safety and



    Health) of the fatalities.- Less than three months later, on April



    5,  1974,  OSHA issued  a  temporary emergency standard  that

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                           -34-





reduced the permissible exposure level from 500 parts per mil-



lion (ppm) to 50 ppm ....  Shortly after ..., a new study revealed



that cancers developed in mice exposed to the proposed 50 ppm



level....  Spurred by this new evidence. ... NIOSH recommended



that "no detectable level"  of exposure  be permitted.   Given



NIOSH's skepticism about the possibility of accurate measure-



ments, this really constituted a 1.5 ppm ceiling on  exposures.



OSHA accepted the NIOSH arguments and  proposed a permanent



standard calling for "no detectable level."






The standard that OSHA promulgated on October 4, 1974, set an



exposure limit of  1 ppm TWA (time weighted average),  with a



ceiling exposure of 5 ppm, not to be exceeded for more than fif-



teen minutes.  Since  NIOSH had  believed (incorrectly, it later



turned out) that exposures  could  only  be measured with an



accuracy of 1 ppm i50 percent, the final standard deviated very



little from the proposed standard.... George Taylor, head of the



AFL-CIO's  Standing  Committee   on  Occupational Health and



Safety, describes the vinyl chloride standard as the  best OSHA



has promulgated.  "It has come closest to what a standard



should be. mainly because it essentially includes the criterion of




'no detectable limit'."

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                                -35-





B. BEST CONTROL TECHNOLOGY






    As  noted above,  several health, safety, and environmental statutes



include  phrases like "best technological system," "best practicable con-



trol technology," best available control technology," or, more vaguely,  "to



the extent feasible." Two examples follow of how agencies have used and



interpreted these provisions.










EXAMPLE: Air Pollution, from. Aircraft




    As  explained in a 1978 Federal Register notice (43 Federal Register



12615):







    In  1973  EPA  promulgated  gaseous  emission regulations for



    several classes of newly manufactured and newly certified air-



    craft engines....  This notice proposes changes to the existing



    rules  and  supersedes the  earlier proposal....  The proposed



    changes  to  the  gaseous emission standards  will require only



    engines of 6,000 pounds thrust (or equivalent power) or greater,



    used in commercial  applications, to comply with gaseous emis-



    sion  standards.   This action will withdraw  emission  control



    requirements from... (among other engines)... auxiliary power



    units (APUs).








    Thus,  in  an interesting contrast to  most  regulations,  this notice



relaxes  a standard. A technological-feasibility argument is used to justify



this reduction:

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                               -36-





    The APU standards  are being withdrawn for several reasons.



    These are:  (l) No NOX control  technology has been developed in



    spite of extensive good faith efforts; (2) only minimal CO control



    is  obtainable,  yet significant costs would be incurred by both



    industry and the government....






    EPA will monitor the further development and refinement of the



    emerging NOX  control technology, and if in the future it appears



    this technology is reasonably capable of being retrofitted addi-



    tional rulemaking will be considered. (43 Federal Register 12615



    and 12616).
EXAMPLE: Acrylonitrile




    In the case of vinyl chloride, discussed above, OSHA set a standard at



the lowest detectable level.  In setting subsequent standards with regard



to cotton dust (43 Federal Register 27350), which may cause byssinosis



(brown lung  disease), and benzene (43 Federal Register 5918), coke oven



emissions (41 Federal Register 46742), and acrylonitrile (43  Federal



Register  43762), all  of which, may cause cancer, OSHA justified  its  pro-



posed standards not in  terms of detectability  but rather in terms of



"feasible  engineering controls"  (43 Federal Register 46742).  in each



case,  OSHA  argued that:  (1)  there was no demonstrated  safe  level of



exposure, (2) the standard proposed was "technologically  feasible." i.e.,



could be  achieved at existing levels of engineering know-how, and (3) the



standard was "economically feasible" in the sense that it could be imple-



mented without imperiling the existence of the affected industry.

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                                -37-





    Consider, specifically, the case of acrylomtrile  (AN), a clear volatile



liquid used primarily in the manufacture of various plastics. OSHA's pro-



posed standard laid out three alternative permissible levels of exposures



(PEL's):




    (l)  2 parts per million, time weighted average (ppm/TWA), with a 10



         ppm ceiling;




    (2)  1 ppm/TWA with a 5 ppm ceiling; and




    (3)  0.2 ppm/TWA with a 1 ppm ceiling.





OSHA justified offering three alternatives as  follows:







    By including  several  sets of  alternative permissible  exposure



    limits in  the  proposal, OSHA acknowledges that there is  much



    data and information yet to be gathered as to what constitutes



    the  lowest feasible level of exposure to  AN in the affected indus-



    tries. It should be noted  that although OSHA has expressly pro-



    posed three alternative sets of permissible exposure limits, the



    PEL in the final rule will  be the lowest feasible levels  based on



    the  entire record of the proceeding, and may differ  from the



    proposed levels.  (43 Federal Register 2610).








    OSHA's  final rule set the  PEL at 2 ppm/TWA with a 10 pprn ceiling-



the highest of the three proposed PEL'S.  OSHA summarized its rationale



for choosing this PEL as follows:

-------
                               -38-





    The technology either exists or can reasonably be developed to



    meet the  proposed 2 ppm standard in most processes most of



    the time through engineering controls.






    The  technology does not exist to retrofit most existing  AN



    processes to  meet  the  proposed 0.2 ppm standard through



    engineering  controls.






    No  one, either in  industry or Government, knows the precise



    extent to  which compliance with the 1 ppm standard is possible



    through the use of engineering controls.  (43  Federal Register



    45775).
C. ENGINEERING JUDGMENT






    A  large number  of  health,  safety, and  environmental standards-



including most of OSHA's safety standards, many of the Nuclear Regula-



tory Commission's (NRC's) standards,  and many  of the National Highway



Traffic  Safety Administration's  (NHTSA's)  standards—are  based  on



engineering judgment reflected in technical, design criteria.
EXAMPLE:  Ladders




    Perhaps OSHA's most frequently castigated set of safety standards



were the more than 140 regulations it issued governing the use and con-



struction of wooden ladders.  One of them reads:

-------
                                -39-





    The general slope of grain and that in areas of local deviations of



    grain shall not be  steeper than 1 in 15 in rungs and cleats. For



    all ladders cross grain not steeper than 1 in 12 are permitted in



    lieu of 1 in 15, provided the size is increased to afford at least  15



    percent  greater  calculated strength  for  ladders  built  to



    minimum dimensions. Local deviations of grain associated with



    otherwise permissible irregularities are  permitted.  (U.S. Code



    of  Federal  Regulations,  Section 1910. 25 (b)(3)(ii), quoted  in



    Smith 1976).








In late 1977, then Secretary of Labor Kay Marshall announced that more



than 10% of the safety regulations OSHA had issued would be  eliminated,



included "10 of the current 12 pages of complex specifications for wooden



ladders." (New York Times, December 6, 1977).










EXAMPLE: Nuclear Reactor Design




    As noted in Fischhoff et al. (1980),







    the federal code known as 10 CFR 50 specifies the criteria for a



    minimally acceptable nuclear power generating reactor design.



    Some  parts were created  specifically for the code,  in other



    instances, it defers to standards like those published  by ASME



    (American Society of Mechanical Engineers) ...  (whose) Boiler



    and Pressure Vessel Code gives technical specifics for that sub-



    system of nuclear power generating facilities....

-------
                           -40-





For example, 10 CFR 50 offers design parameters like "materials




for bolting and other fasteners with nominal diameters exceed-




ing 1 inch shall meet the minimum requirements  of 20 mils




lateral expansion and 45 ft. Ibs. in terms of Charpy V-notch tests




conducted at the preload temperature or at the  lowest service




temperature, whichever temperature is lower."

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                                -41 -





ID.  THE ECONOMICS PERSPECTIVE






    Most  economists believe  that the natural science and  engineering



images of health,  safety,  and environmental regulations are inadequate



because in these  two images costs  are  not explicitly balanced against



benefits.   Economists have a different image, as caricatured  in Figure 3.



In this view, natural scientists (with the help of some economists who do



epidemiological research) do part of the  work—essentially, they estimate



an exposure-response curve that describes the health and environmental



effects of any particular level  of exposure to  a hazardous substance.



Economists, perhaps with the help of some engineers, estimate how much



it would  cost to  achieve  any particular level of exposure.  Economists



then put the costs and benefits together in an analysis that  informs the



decision maker about the incremental costs of achieving the incremental



benefits of stricter standards.  Since it  is not clear how much we as a



society are willing to pay for health, safety, and environmental protec-



tion, the decision maker has some discretion.  Most economists, however,



think that in most cases they would be able to roughly agree on a reason-



able standard. Hence,  the discretion in setting standards  is  not per-



ceived as being large.




    This narrow "cost-benefit analysis" point of view lies at one end of a



continuum of methods; at the other end of the continuum, "cost-benefit



analysis"  is very  broadly  defined as meaning a balancing of advantages



and disadvantages. For  the .most part,  the various methods along this



continuum are formal, analytical methods developed by economists and



such kindred souls as decision analysts, systems analysts, operations

-------
                              -42-
Figure 3;
         Environmental  Standard Setting  from the

         Perspective of Economists
                       o
                       o
RESEARCH ABOUT

HEALTH AND

ENVIRONMENTAL  /EFFECTS

      .*'
    *
/
9
8
a
•
*
 THE DOMAIN

 OF ECONOMISTS
                                        RESEARCH

                                        ABOUT

                                        COSTS
                                                        0
                                                         t
                                                         *
                                                          f
                                                          8
                     COST-BENEFIT ANALYSIS
                          POLICYMAKER
                                                          la


                                                          6
                                                          0
                                                          6
                                                         a
                                                         e
                                                         a
                            STANDARD

-------
                                -43-





researchers. and management scientists.  The distinguishing characteris-



tic of all these  methods is that  they explicitly address the  problem of



making trade-offs among various kinds of costs and benefits.




    If the  phrase "cost-benefit analysis" is broadly defined, then  a



number of health, safety, and environmental statutes might be  classified



as being,  at least in  principle, congenial with the "economics perspec-



tive." For instance:




    —   The Toxic Substances Control Act calls on the Administrator of



         the EPA to explicitly consider various costs and  benefits.  Sec-



         tion 5(c)(l) reads





              ... the  Administrator  shall consider  and  publish  a



             statement with respect to --






             (A) the effects  of such substance or  mixture on health



             and the magnitude  of the exposure of human beings to



             such substance or mixture,






             (B) the effects of such  substance or  mixture  on the



             environment  and the magnitude of the exposure of the



             environment  to such substance or mixture.






             (C) the benefits of such substance or mixture for vari-



             ous uses and the availability of substitutes for  such



             uses, and






             (d)  the  reasonably  ascertainable  economic  conse-



             quences of the rule, after consideration of the effect on

-------
                       -44-





    the national economy, small business,  technological



    innovation,  the  environment, and public health.  (15



    U.S.C. 2601 etseq. 1976).





The Federal Insecticide, Fungicide, and Rodenticide Act, as sup-



plemented by the Federal Environmental Pesticide Control Act,



requires EPA to refuse to register a pesticide unless it is deter-



mined that





    when used  in accordance with widespread  and com-



    monly accepted practice it will not cause unreasonable



    adverse effects on the environment.





The phrase "unreasonable adverse effects on the  environment"



is defined as





    any unreasonable risk to man or the environment, tak-



    ing into account the economic, social, and environmen-



    tal costs  and benefits  of  the use of any pesticide.  (7



    U.S.C. 135 etseq. 1972, sections 3(c)(5) and 2(bb)).





The  Surface  Mining  Control  and Reclamation  Act of  1977



instructs the Secretary of the Department of the  Interior to set



standards and issue permits to protect  the  environment from



the effects of surface mining.  The regulations must





    protect  society  and  the  environment from  adverse



    effects of surface coal mining...,

-------
                                -45-





         but they must also





             strike  a balance between protection of the environ-




             ment and agricultural productivity and the Nation's




             need for coal.... (30 U.S.C. 1201 et seq.  1977).







    As noted above,  "cost-benefit analysis" is a slippery phrase since it is




sometimes used  very broadly to mean any kind of attempt to balance




advantages and disadvantages and it is sometimes used narrowly to  refer




to a particular method developed by some economists. The four sections




that follow distinguish among: (l) cost-benefit analysis, narrowly defined;




(2) cost-effectiveness analysis;  (3) decision analysis; and (4) ad hoc




balancing.  Since there are a vast variety  of analytical methods  arranged




along a continuum here, this breakdown  does not capture the  full  rich-




ness of possibilities.  The breakdown does, however, suggest the general




nature of the range of possibilities. As before, these methods are ranked




in order of the degree of increasing discretion they permit the decision




maker.  In addition to the references  given, an excellent guide  to useful




analytical methods is Raiffa,  Schwartz, and  Weinstein  (1977); Jennergren




and Keeney (1979) may also be of considerable value,











A. COST-BENEFIT ANALYSIS, NARROWLY DEFINED







    The classic description of cost-benefit  analysis, narrowly defined, is




that given by Mishan (1976).  The  two central principles underlying




Mishan's exposition are:

-------
                                -46-





    (1)  The Potential Pareto Criterion, also called the Kaldor-Hicks Cri-



        terion.  According to this criterion, a public policy is acceptable



        if and only if the gainers gain enough that they would theoreti-



        cally be willing to compensate the losers  for their  losses.  This



        criterion implies that the best policy alternative is the one that



        maximizes the difference between aggregate benefits and aggre-



        gate  costs,  regardless  of  their  distribution among  different



        members of society.




    (2)  Compensating Variation. The monetary values  of  many costs



        and benefits  are determined by  the market.  But how should



        costs and benefits  that  do not have  a market price be valued?



        Mishan's answer involves a concept  known  as  "compensating



        variation." Essentially,  a potential benefit  to  some  person is



        worth the maximum monetary amount that person would be wil-



        ling to pay for that benefit,  and a potential cost to some person



        is worth the  minimum monetary amount the  person would have



        to be paid to induce him or her to bear that cost.





    Given  these two principles, a cost-benefit analysis theoretically can



be done to compute  the net benefits, in dollar equivalents, of any pro-



posed public policy. In practice, there are great difficulties in. for exam-



ple, determining appropriate monetary-equivalents for lives and limbs



saved and for discounting future  costs and benefits into current dollars.



Freeman (1979)  and Thompson (1980) contain informative discussions of



some  of  the issues  here;  Graham and  Vaupel  (1981) may also be of



interest.

-------
                                -47-





    Because of  these  practical difficulties  and (more importantly,  I




think) because of fundamental disagreements with the theory of cost-




benefit   analysis—in   particular,    the   neglect    of   distributional




consequences—no agency, to the best of my knowledge, has used a cost-




benefit analysis,  narrowly defined, as the sole basis for setting a health,




safety,  or environmental  standard.  There have,  however,  been  some




instances where  cost-benefit analyses have played a role in  an agency's




deliberations. As a result of Executive Order 12291 such use of cost-




benefit analysis may substantially increase during  the Reagan adminis-




tration.
EXAMPLE: Power Lawn Mowers




    In  1974.  the CPSC  "accepted the  offer of Consumers  Union...  to



develop a  consumer  product safety  standard applicable to power  lawn



mowers."  (44  Federal Register 9990).  As part of its report to the CPSC,



Consumers Union prepared a cost-benefit analysis. This analysis was the



subject of a detailed critique  by the Regulatory Analysis Review Group



(Lenard 1979). Subsequently, the CPSC's economic division did a number



of cost-benefit calculations, some of which were included in the final stan-



dard proposed by the CPSC in the Federal Register.




    The flavor of these various cost-benefit calculations is captured by



the following excerpt from the Federal Register justification for the final




standard:

-------
                               -48-





    The foot probe and related requirements are expected to reduce



    the number of blade contact injuries to the foot by 13,000 each



    year.... The cost of these requirements is estimated to be about



    84.00 per mower....






    Since 5.4 million mowers are sold, and since the average injury



    expected to be eliminated by the standard costs approximately



    83,500, these foot probe requirements should  result in a  cost



    increase of about $22,000,000 and undiscounted injury savings of



    about 846,000,000, exclusive  of any  allowance  for  pain  and



    suffering.  (44 Federal Register 9996).
B. COST-EFFECTIVENESS ANALYSIS






    As explained by Fischhoff et al.  (1980):







    In some problems, all alternatives have the same benefits.  For



    examples,  a chemical firm  may have several ways to reduce



    workers' inhalation of a  toxic  substance  by a fixed amount.



    Since the benefits of the methods are equal, cost  becomes the



    only issue.  In other  problems, all alternatives may have the



    same cost.  For example, the chemical plant may allocate a fixed



    sum  of  money  for protecting workers.  The problem  then



    becomes choosing  the  alternative that  achieves  the greatest



    reduction in toxic inhalation for that amount of money.






    In neither case is there any need to reduce  costs and benefits to

-------
                                -49-





    a  common  metric.  Cost-effectiveness analysis  is designed  to




    reveal which  alternative  produces the greatest effect for the




    amount  of  money one has to spend or which  produces the




    desired  effect with the smallest expenditure. As  a result,  it




    avoids the sticky task of  directly assessing the economic value




    of a given reduction in exposure.  Of course, the value placed on




    workers' health enters the analysis indirectly,  through the deci-




    sion about how much to reduce exposure or how much to spend.
EXAMPLE: Emission Standards Jar New Motorcycles




    As described in an article (Mallet 1979) that was edited from a report



of the Council on Wage and Price Stability:







    In October  1975, EPA proposed regulations for all new motorcy-



    cles designed for street or highway use that would eventually set



    permanent  standards for  crankcase and  exhaust emissions of



    carbon monozide,  nitrogen oxides, and hydrocarbons equivalent



    to those already established for automobiles and small trucks....






     ...   the proposal  will  produce  significantly  different  cost-



    effectiveness results for different classes of motorcycles....






     ...  the proposed 1980 standard would be most  effective for  the



    large two-stroke motorcycles, for which the costs per ton on



    hydrocarbon controlled would range from $77 to S386.  On  the



    other hand, the class of motorcycles least effectively regulated

-------
                            -50-





by the 1980 standard would  be the small four-stroke  motorcy-



cles.  In  this case, it would cost between 81,777 and  89,060 to



regulate  a ton of hydrocarbons.






(Furthermore) the  EPA  proposal is significantly less  cost-



effective  for motorcycles than for light-duty vehicles (that is,



automobiles  and light-duty trucks.)  EPA currently estimates



that the  average cost of control  per ton of hydrocarbons for



light-duty vehicles under the  interim 1977 standards to be S303,



with the  cost increasing to $437 when the new federal  statutory



standards are implemented.  These figures are substantially less



than  those  estimated for every class of motorcycle  for I960,



except perhaps the large two-stroke cycle.  Similar cost figures



(can be calculated) for control of  motorcycle emissions of  car-



bon monoxide....






Moreover, ... it can be shown that—at least for the four-stroke



motorcycles—EPA's proposed standards for 1980 would be a less



cost-effective means of controlling hydrocarbon emissions than



several alternative technologies that  have  been employed for



controlling automobile and gasoline station hydrocarbon emis-



sions....






EPA should  reconsider its proposed emission control standards



for motorcycles (since) the estimated 1980 costs for controlling



emissions from certain motorcycles appear to be very high com-



pared with the cost-effectiveness of regulation other sources of

-------
                                -51 -





    air pollution.









A postscript to the article notes:









    In adopting the final motorcycle  emission regulation, EPA stated



    that  ... "statutory standards were not technically  feasible as



    early as 1960, and that control  to that level would not be cost



    effective".... The agency made it clear that it may propose more



    stringent controls in the future if ...  cost-effectiveness relation-



    ships between motorcycles and various other sources of air pol-



    lution change.
C. DECISION ANALYSIS






     As described by Fischhoff et a.1.  (i960):







     Decision theory is an axiomatized theory for making choices in



     uncertain conditions.  It is also a prescriptive  theory; if you



     accept the axioms  and their interpretations in practice, you



     ought to make the  recommended choices.  Decision  analysis



     implements decision theory  with the  aid  of techniques drawn



     from  economics,  operations research,  and management sci-



     ence....

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                            -52-





A thorough decision analysis has five main steps:







(l)  Structuring  the problem. The analyst  defines the decision



problem by identifying the relevant alternatives, the set of pos-



sible consequences, and the  sources of uncertainty.  Structural



models  are  used to express the interrelationships among these



elements;  the  construction  and  application of  such  models



requires both technical expertise and good judgment.






(2)  Assessing probabilities.   Uncertainties about the  present



and future  state  of the world  are quantified as  probabilities.



Decision analysts view probabilities as expressions of individual's



beliefs,  not characteristics of things. As a result, probabilities



are elicited as  judgments from  the decision maker or  from



experts.






(3)  Assessing preferences.   Unlike cost-benefit  analysis, which



quantifies  preferences by analysis  of  market  data, decision



analysis uses subjective value judgments, that is, utilities. Thus,



decision analysis can, in principle, accommodate any considera-



tion that the decision maker deems appropriate.  Values  for



such "soft" considerations as aesthetics or "satisfying  Senator



X" can be judged and included as easily as "hard" considerations



like monetary cost. In this  process attitudes toward risk are



also accommodated....






When a particular outcome has several kinds of values associ-



ated with it (e.g., a  successful  operation  can lead  to  both

-------
                             -53-





reduced pain and  prolonged life),  cost-benefit analysis  simply



adds  together  the various  costs and benefits.   In  decision



analysis, other combination rules are also available  (e.g., a mul-



tiplicative  rule when the utility  of one  aspect  of value depends



on the level of another).






(4-)  Evaluating alternatives. The attractiveness of each alterna-



tive is summarized by its expected utility, which is  equal to the



sum of the utilities of each possible outcome, weighted by their



probabilities of occurrence.  The alternative with the  greatest



expected utility is the indicated  choice.






(5)  Sensitivity analysis and value of information. The analysis is



reexamined from two perspectives.



     (a)  Can it  be simplified by omitting components that do not



     affect the final decision? For  example, an alternative that was



     inferior to another in all aspects could be dropped.






     (b) Are there places where a reasonable change in the structure,



     a utility or a probability could lead to the selection of a different



     alternative? Two tools are used for this reexamination ... sensi-



     tivity  analysis ... (and)  value-of-information analysis.






Since the key elements in a decision analysis (probabilities, utilities,



problem structure) are subjective, they must come from someone.



However, in societal decisions, there is  rarely one entity (i.e., indivi-



dual, organization) that is the final arbiter of these questions.  When



more  than one set of utility  or  probability  judgments  must be

-------
                               -54-





    considered. decision analysis may be  used in one of several ways to



    guide acceptable-risk decisions.






    For a start, the analyst can prepare several complete analyses, each



    reflecting the perspective of one party....






    Another approach is to try to generate agreement on the judgments



    needed to produce a consensual analysis.... That consensus could be



    seen  as  representing the views  of a hypothetical  Supra-Decision-



    Maker.






     ... a Supra-Decision-Maker (might also be used) even when the vari-



    ous  parties cannot  agree  ....  Integrating different values would



    require the assumption, often  made  by public policy makers,  that



    they can accurately reflect an entire society's values....








    Extended discussions of various aspects of the theory and practice of



decision analysis may be found in Raiffa (1968), Keeney and Raiffa (1976),



Howard.  Matheson,  and  Miller  (1976). and  Behn and Vaupel  (1982).



Fischhoff et al.  (1980) discuss the advantages and limitations of decision



analysis—and  other  approaches to decision-making—in setting  health,



safety, and environmental policies.

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                                 -55-





EXAMPLES: Four Illustrative Applications




    I know of no instance of "thorough decision analysis,"  as  described




above, being used  to set a health,  safety, or environmental  standard.




There  have,  however, been  a number of illustrative  applications.  Two




often-cited examples are (l) an analysis  of the  decision to seed hurri-




canes  (Howard.  Matheson, and North 1972),  and (2) an analysis of the




problem of chronic oil discharges in the North Sea (von Winterfeldt 1978).




    In addition,  a  report to the Assistant Secretary for Environment of




the U.S. Department of Energy describes a "methodology for evaluation of




intertechnology tradeoffs" that is essentially a kind of decision analysis




(Buehring  et  al.   1980).  A  follow-up report  (Whitefield  et al.   1980)




presents "an illustrative  case study":







    The problem is to  select the best R&D strategy for developing




    long-term, energy technologies that use coal. Best is defined in




    terms of 11 attributes, or measures of performance. Uncertain-




    ties were determined for the many, complex outcomes that may




    result from  each strategy, and  the information was systemati-




    cally structured  for evaluation. Preferences for the various out-




    comes were  quantified by assessing a multiattribute utility func-




    tion  over  the  11 single attributes.   The best  alternative was




    chosen  using  maximization  of  expected utility  as  a guide.




    Extensive sensitivity analyses showed that one  strategy, evolu-




    tionary development, was  best  over a wide  range of plausible




    assumptions.  This is partly because the alternative coal techno-




    logies are quite similar. However, the insights gained justify the

-------
                                 -56-


    extra effort spent in doing the utility analysis.




The 11 attributes were:



    1)   R&D costs,

    2)   Electricity costs,

    3)   Coal-mining  health and safety  impacts  (measured  by person-

         days lost),
                                              i
    4)   Coal transportation accidents (measured by person-days lost),

    5)   Premature deaths from air pollution,

    6)   Solid waste production,

    7)   Water  consumption,

    8)   SOZ pollution,

    9)   NO, pollution,

    10) Participate  air pollution,

    11) Global climatic effect of COZ (measured by tons of COZ emitted).


    A  fourth   noteworthy  study was  written  by  Dyer  (1976).   Dyer

prepared an evaluation of "several decision analysis  techniques as poten-

tial aids in managing  the occupational health and safety activities  of the

U.S. Navy."  In his  report, "a  hypothetical  example"  of how decision

analysis "might be applied  to a specific problem, the exposure of workers

and others to asbestos fibers" is discussed, in general terms.
 Dyer later served as a consultant in the design of a "Management Procedure for Assessment
of Friable Asbestos Insulating Material (U.S. Navy 1980). Although the procedure reflects the
wisdom of decision analysis, no description is given of how decision analysis was used in

-------
                                -57-





D. AD HOC BALANCING






    Many health, safety, and environmental standards are set by ad hoc



procedures that balance multiple objectives, using quantitative methods



to some extent, but ultimately relying on judgments.  Calculation of vari-



ous kinds  of costs and of benefits  and some comparison of costs  and



benefits are a  part, but only a part, of such methods:  decision makers



are given a vector of information rather than a single net  benefit esti-



mate.




    The EPA endorsed this kind of procedure in its document (44 Federal



Register 58642) on "National Emission Standards for Identifying, Assess-



ing and Regulating Airborne Substances Posing a Risk of Cancer" (1979):







    In  contrast  to   the  zero-oriented  and  fixed-decision  rule



    approaches...,  "judgmental" approaches posit that the degree of



    control which is appropriate  for airborne carcinogens cannot be



    predetermined in the abstract for all cases and, to some extent,



    depends on the particular circumstances. Circumstantial fac-



    tors which might be considered, in addition to the risk to public



    health, include the costs of further control, the benefits of the



    activity, the distribution of risk versus benefits, and the availa-



    bility of substitutes.






    The  use of a  judgmental approach appears  desirable  to  the



    Administrator  because it permits him  to take advantage of the



    strong  points of various available approaches without suffering
designing the procedure.

-------
                                -58-





    their drawbacks...






    Although protection of public  health must be paramount,  the



    relative importance of other factors can vary. Society may be



    willing to pay more for control  or accept higher health risks



    associated with activities viewed  as important or essential.  The



    distributional aspect of a control situation can differ even when



    the magnitude of risk, costs and benefits are similar. Moreover,



    differing  degrees   of  certainty in  the  cancer  incidence,



    economic,  and benefits estimates can call for different regula-



    tory responses.  Given this variety of circumstances and the  fre-



    quent  uncertainty  of analyses, the Administrator believes that



    such responsibility, while heavy,  is unavoidable if protection of



    public health is  to be  maximized  within the  constraints of  a



    world of finite resources.
EXAMPLE: Power Lawn Mowers, Revisited




    As  discussed  above,  a variety of cost-benefit analysis calculations



were done as part  of the CPSC's deliberations concerning its "safety stan-



dard for walk-behind power lawn mowers."  The Commission, however, did



not justify its standard on the basis of these calculations; rather the Com-



mission followed the more  general  "ad hoc  balancing  approach."  As



reported in the  Federal Register  (44 Federal Register 9990 ff), the Com-



mission considered:

-------
                                -59-





    (1)  The degree  and nature of the risk  of injury (the  standard)  is



         designed to eliminate or reduce.




    (2)  (The nature of) consumer products subject to the rule.




    (3)  Need of the public for the products subject to the rule.




    (4)  Probable effect of the rule upon the utility of the product.




    (5)  Probable effect of the rule upon the cost of the product.




    (6)  Probable effect of the rule upon the availability of the product.




    (7)  Alternative methods ... for achieving the  objective of the stan-



         dards.





The Commission then justified its decision as follows:







    Therefore, after considering the anticipated costs and  benefits



    of (the standard) and  the other factors  discussed  above, and



    having taken  into account the  special needs of elderly  and han-



    dicapped persons to determine  the extent to which such per-



    sons may  be adversely affected by the rule, the Commission



    finds that (the standard) is reasonably necessary to eliminate or



    reduce the unreasonable risk of  injury associated  with walk-



    behind power lawn mowers and that promulgation of the rule is



    in the public interest. (44 Federal Register 9990).







No explicit tradeoff analysis of the kind used in decision analysis or the



kind implied by cost-benefit  analysis is mentioned; the tradeoffs were



apparently made by the Commissioners using their "judgment."

-------
                                -60-





EXAMPLE: Noise Labeling




    Labeling requirements were included as part of the Noise Control Act



of 1978 (42 U.S.C. 4901 et seq.). Section 3:







    states that the  Administrator of the Environmental Protection



    Agency shall promulgate regulations  designating  and labeling



    products or  classes  of products  which emit noise  capable of



    adversely affecting the public health or welfare or which  are



    sold wholly or  in part on  the  basis  of  their  effectiveness in



    reducing noise. (42 Federal Register  31722).








    The EPA wanted to create a label that was a simple as possible.  How-



ever, the  issue of whether a noise level  had an adverse affect on health



had to be approached on  a product-by-product basis.  The EPA devised a



set of twenty criteria for selecting initial  candidates for noise labeling,



including:




    —    Is  the product  noise level sufficiently high  to be potentially



         capable of producing an adverse health or welfare impact?




    —    Dose the product noise  affect a large  number of people?




    —    Is the noise from the product likely to impact  more non-users



         (i.e., third parties) than purchasers and/or  users?




    —    Is there a high frequency of purchase so that purchasers have



         the opportunity  to use the labeled  noise  information  often in



         making a purchase decision:

-------
                                 -61 -





         Would  Federal labeling  be  a significant improvement  on any



         existing product noise labeling:




         Is  there  a readily available measurement methodology for the



         products types? (44 Federal Register 56122).





Despite the long and complex list of criteria, the Federal Register notice



implies that the EPA did not believe that this would be an expensive regu-



lation^to implement; rather, the EPA believed that only a relatively small



staff  was required and that  enforcement  would be  relatively  simple.



Apparently, reliance was to be placed on ad hoc balancing and the judg-



ment of the responsible officials  in synthesizing and making tradeoffs



among the various criteria.

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                                -62-





IV. THE POLITICAL SCIENCE PERSPECTIVE






    Most political scientists—and  most politicians as well—believe that all



three of the images discussed so far, from the natural science, engineer-



ing,  and  economics  perspectives, are  over-simplified because these



images  do not emphasize the dynamics of political  interaction. •  Like



other major social decisions, health, safety, and environmental standards



are set by a complex, iterative process involving numerous players  con-



tending in the political arena.  The EPA Administrator,  for instance, has



severely circumscribed decision-making powers since he or  she has to



perform a complex balancing act to avoid antagonizing too many other



power-holders, both within the Agency and outside.  Congress determines



budgets and can change statutes:  Congress as a whole, the relevant over-



sight  committees, and the key members and staff of these committees



represent  various levels of Congressional authority.   The  White House,



represented by  the  domestic policy  staff of the  President  and by the



Office Management and Budget  can wield great power when the President



decides to exercise it. Various business, labor, environmental,  and consu-



mer interest groups gain leverage through  their influence on Congress,



the courts, and the White House, exerted through the  press, through lob-




bying, and through campaign support.




    Most  political scientists agree that the process not only does but also



should work this way in a liberal, pluralistic democracy. Natural scien-



tists,  economists, and other experts are seen as actors in the on-going



political process, partially affecting environmental standards with their



judgments, but in turn, being influence  by  the other actors and by the

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                                 -63-





changing climate of opinions.  Figure 4 caricatures this image: an assidu-



ous political scientist would include many more boxes  and arrows and



would attempt to convey the continuing flow of the evolving process.




    Natural  scientists, engineers, economists, and  other experts often



slip unintentionally into an undemocratic arrogance.  If reminded, how-



ever, of the severe short-comings of their knowledge  and methods, and of



the many advantages of a liberal society, at least the more realistic and



judicious experts would have to agree that it would be a mistake to place



health,  safety, environmental policymaking  in the hands of a scientific



elite insulated from  politics.  Even  if experts could determine all the



necessary  facts about health, environmental,  and economic effects with



precision and  consensus, and  even if experts  could  be trusted to be



honest, unbiased  and disinterested, social  value  judgments would still



have to be made  in  setting standards.  Different standards will benefit



some people more than others and will be more consistent with some eth-



ical beliefs and ideological perspectives than with  others.  In  a  demo-



cracy,  such conflicts  among  competing interests  and objectives are



resolved by political process in which many individuals have a voice.




    Given this perspective, political scientists tend to do research that is



largely descriptive: how are health, safety, and environmental standards



actually set?; what factors explain the standards set?  Often the descrip-



tive research is justified not only as  being interesting per se, but also  as



being a necessary basis for efforts to reform decision-making procedures



and institutions.

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                           -64-

Figure U;   Environmental Standard  Setting  from the
           Perspective  of Political  Scientists
                      SCIENTIFIC RESEARCH
   NON-
   GOVERNMENTAL
   ACTORS:
                                               GOVERNMENTAL
                                               ACTORS:
                                                  CONGRESS
BUSINESS
                     -
                                                  OTHER
                                                  AGENCIES
    ENVIRONMENTAL
                                                  WHITE HOUSE
                               EPA
                          ADMINISTRATOR
CONSUMER
    JOURNALISTS
                                                  STATE AND
                                                  LOCAL
PUBLIC
OPINION
                                                  GOVERNMENTS
                          INTERNAL EPA

                          OPINIONS AND

                          PRESSURES
        STANDARD

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                                -65-





    Political science research often requires painstaking and systematic



detective work, since health, safety, and environmental standards are the



resultant of a multitude of decisions made by numerous individuals.  This



process may  be so intricate and  involuted that even  the most  savvy



insider within the agency and the most astute observer outside only par-



tially  understand it. Often it turns  out that certain factors that play a



major role  only appear "obvious" after some deep thinking has uncovered



them. For  example, McKean (i960) conjectures







    that the  CPSC gives high priority to several projects  with low



    benefit-cost ratios—power mowers,  gas space  heaters,  uphol-



    stered furnitures,  and  television sets—because  the products



    appear to be comparatively easy to regulate, requiring the mon-



    itoring of relatively few producers.







It  may be  that even the commissioners of the CPSC do not realize how



important  this factor has actually been in  their decisions.










EXAMPLE:   Water- Pollution Effluent Standards




    An on-going research project at Resources for the Future, Inc., seeks



to develop  a theory "which possesses explanatory and predictive power"



concerning "rulemaking in a regulatory agency." (Magat  1979). As a case



study, the  project  focuses on how EPA in the period from  1973 to  1976



"promulgated effluent  standards for industrial (water) discharges based



on 'best practicable control technology currently available (BPT)'":

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                                -66-





    The BPT rulemaking process at EPA was selected as an example



    for several  reasons.  EPA is  perhaps the most important new



    "social"  regulatory  agency,  while the  BPT  water  standards



    affected much of American industry.  Also the rulemaking pro-



    cess developed  to promulgate BPT standards has  served as a



    model for other rulemaking activity at EPA, both in  water and



    air, and at  other federal regulatory agencies that promulgate



    technology-based standards.  In addition, the  data on BPT stan-



    dards are rich enough to allow the use of statistical analysis to



    test empirically the hypothesis about the rulemaking  process



    generated (by this project).








One study completed as part of this research project notes:







    The  effluent guidelines rulemaking process provides an  excel-



    lent example both  of  the  discretionary power conferred  on



    rulemakers in implementing  legislation and of the relationship



    between the degree of economic impacts and  the specifications



    of the rules.  EPA administrators  found it necessary to  define



    and extend critical elements of the Water Pollution Control Act



    Amendments of 1972 to make the policy operational. The par-



    ticular way in which "best" and "practicable" were defined, for



    example, as well as the administrative structure of the rulemak-



    ing process, unquestionably affect the success of the program



    and its efficiency and equity  impacts on industry.  (Magat et  al.



    1980).

-------
                                -67-





    As part of the study, a model of EPA decision making developed:









     ... let us assume that EPA attempts to maximize the strength of



    the  external  signals it receives from  political pressure  of ail



    types.  In (the) stylized version where citizens vote  either for



    regulators or for elected officials who directly control the regu-



    latory decisions, EPA would be assumed to select decisions to



    maximize votes. Two groups primarily determine the  level of



    external signals or the vote margin, M~ the n water  users who



    benefit from clean water and the m polluting firms in  the indus-



    try which discharge wastes into the water.  Clearly groups other



    than water users  benefit  from clean water  (e.g., abatement



    equipment suppliers) and groups besides polluting firms benefit



    from dirty  water (e.g.,  customers of  the polluting  firms pay



    lower product prices). All such groups are combined  into these



    two  categories to simplify  the analysis of the problem.  EPA is



    assumed to  maximize the level of external support, or votes,



    rather than to  be  satisfied with gaining a "sufficient" number



    (e.g.. fifty-one percent) because the  level of support or votes it



    receives is highly uncertain. More support or votes allows more



    assurance  of maintaining  the  members' jobs,  expanding  the



    agency's  powers,  being allocated higher  budgets  and larger



    staffs, and the like. (Magat et al.  1980).









The authors argue that:

-------
                                -68-





    Such a theory is  a logical first step for reform in the rulemak-



    ing process, for it helps us predict how specific changes in the



    process would  affect the outcomes, e.g.,  the stringency of the



    standards. Regulatory rulemaking  reform is difficult without a



    good model to provide an understanding of the process because



    the  model links  the inputs (e.g., information  from  various



    sources) and the  time  of those inputs to the outcomes of the



    process (e.g., decisions about which pollutants to  regulate, how



    finely to divide up each industry  into subcategories,  and the



    effluent discharge standards for  each pollutant  in each sub-



    category) (Magat et al.  1980).
EXAMPLE: Swine Flu




    In the  example  discussed  above,  a mathematical model is  being



developed; regression analysis is being used toJit the model to the avail-



able data and to test the explanatory power of the model.  Although the



research is  largely being done by individuals trained in economics, it is



political science research, albeit of a somewhat more mathematical and




formal kind than customary.




    Another useful kind of political research presents an "analytical nar-



rative" of some decision or decision process.  Excellent  examples are



Allison (1971)  and Redman (1973).  More  directly relevant to health,



safety, and environmental decision making is a superbly-researched



report, commissioned by then Secretary of HEW Califano,  that "anatom-



ized the swine flu affair—in search of lessons for the future" (Neustadt and

-------
                                -89-





Fineberg 1978). As noted in the forward to that report:







    The swine flu program of the Federal government was launched



    in March 1976 with a White House announcement by President



    Gerald R. Ford....






    The National Influenza Immunization Program, the official title



    for this venture, was unprecedented in intended timing and in



    scope among American immunization efforts.  It aimed  at inno-



    culating everyone before December 1976 against a new flu strain



    that might conceivably become as big a killer as the flu of 1918,



    the worst ever ...






    The killer never came.  The fact that it was feared is one of the



    many things to  show how little experts understand the  flu,  and



    thus  how shaky  are the health initiatives launched in its name.



    What  influenza needs, above all. is research.






    Decision-making for the swine flue program had seven leading



    features. To simply somewhat, they are:






    — Overconfidence by specialists in theories spun  from meagre



    evidence.






    — Conflict fueled by a conjunction of some preexisting personal



    agendas.






    — Zeal  by health professionals to make their  lay superiors do



    right.

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                            -70-





—  Premature commitment to deciding  more  than had to be



decided.






— Failure to  address uncertainties in such a way as to prepare



for reconsideration.






— Insufficient questioning of scientific logic and of implementa-



tion prospects.






— Insensitivity to media relations and the  long-term credibility



of institutions.

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                                 - 71 -





V. THE POLICY ANALYSIS PERSPECTIVE







     It is time to shift gears. So far. I have tried to be descriptive—to fac-




tually  explain four different kinds of perspectives on health, safety, and




environmental standard setting and to provide the reader with some gui-




dance  to the relevant literature.  My  descriptions have been brief and are




more sketches  and caricatures  than detailed portraits. Nonetheless, I




have tried to be even-handed and non-judgmental, in order to  give some




insight into four different mind-sets.




     The natural science, engineering,  and economics  perspectives are




consistent in that they all  envision a  health, safety, or environmental




standard as being a decision. Thus, it is natural from these perspectives




to imagine the  decision being made  by  a single "decision maker" who is




given some facts and then decides what to do. Sometimes this "decision




maker" is thought of as a person who has some discretion and can exer-




cise some judgment; sometimes  the  "decision maker" is, in effect, a for-




mula or rule; sometimes the "decision maker" is a reification of the con-




sensus of a group of individuals.  In any  case, the implicit image is that of




a decision rather than that of a decision process.  Table 1 summarizes the




various approaches discussed in  this  report that  fit  into this  single-




decision mode.




     Fischhoff et al. (1980) offer an excellent "critical analysis  of the via-




bility of various approaches as guides to acceptable-risk decision." They




consider most  of the approaches listed in Table 1. and although  their




implicit focus is more on the needs of the Nuclear Regulatory Commission
 Cf. the discussions of "supra-decision-makers" in section E.A. above.

-------
Table. 1.  A Typology of Risk-Evaluation Methods
                                              METHODS  PROM:*
Methods that Allow
the Decision Maker:
  Little
  Discretion
  Some
  Constrained
  Discretion
  Considerable
  Discretion
Natural Science
Perspective
Engineering
Perspective
Economics
Perspective
+ Zero Risk
+ Natural Level
of Risk
+ De Minimus
Risk
+ Health
Threshold
Levels
t Comparative
Risk.
+ Judgment of
Health
Professionals

+ Lowest
Detectable
Levels
+ Best
Control
Technology
+• Engineering
Judgment


+ Cost-Benefit
Analysis,
Narrowly
Defined
+ Cost-
Effectiveness
Analysis
t Decision
Analysis
+• Ad Hoc
Balancing

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                                 -73-





than on the needs of the EPA. they have much to say that is relevant to



standard setting.  One of the most useful aspects of their report is that



they critique various decision-making methods in terms of seven distinct



criteria:




    —   comprehensive,




         logically sound,




    —   practical,




         open to evaluation,




         politically acceptable,




    —   compatible with institutions, and




    —   conducive to learning.





    I do not think it is worthwhile for me to summarize this report more



than  1 have, for two reasons.  First  the  report  is so excellent  that it



should be carefully read in full by anyone seriously interested in methods



of health, safety, and environmental decision-making.  Second, the report



fails to consider the political science perspective and thus, to my mind at



least, is only indirectly relevant to the decisions that have to be made by



the Office of Air Quality Planning and Standards of the  EPA.




    This second  argument implies a criticism not only of the Fischhoff et



al. report, but also of all the various methods listed in Table 1.  There are



a  vast variety of health, safety,  and environmental decisions that are



essentially made by a single  decision maker. Consider, for example, all



the personal decisions about whether to fasten a seat belt, whether to eat



eggs,  whether to install  a smoke detector in  a home, whether to jog,  etc.

-------
                                -74-


And consider all the social decisions that are delegated to professionals,

eg.g., decisions made  by architects,  engineers,  physicians, industrial

chemists, and  so  on.   But  I  do not think that the setting of  national

ambient air quality standards by the EPA can usefully be viewed as being

made by a single decision maker; these standards are so important that,

as any political scientist could predict, they are the resultant of a com-

plex process of interplay among many actors.


     This by no means implies that the various methods listed in Table  1

are  of no  interest or  value, even for decisions embedded in  political
                                 »
processes. At the very least,  they may be useful in justifying standards.

Federal regulatory agencies are required by law to explain most of their

regulations in the Federal Register. In addition, most important regula-

tions are taken to court: the agencies then have to defend  their regula-

tions in judicial review. The rationales used in the Federal Register and in

court do not have to detail exactly how the regulatory decision was

reached; the rationales merely have to justify the regulations in  terms of

existing  law. The  natural science,  engineering, and economics  perspec-

tives may be appropriate for  this kind of regulatory justification, since  a

regulatory standard,  once reached, is, in effect, a decision that can be

envisioned as having been made by a single decision maker.


     Given, however, the reality  (and desirability) of complex, democratic

political processes, can the standard-setting insights of natural scientists.

engineers, and economists be  used in actually setting air  quality and

other major standards.  I think some of them can, to some extent.  My

thinking here is based on a fifth perspective—the policy analysis  perspec-

tive.  The following part of this report explains this point of view.

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                                -75-





A. A FIFTH IMAGE






     A follower of the small and relatively new discipline known as policy



analysis would not begrudge natural scientists and engineers  credit for



their key roles in health, safety,  and environmental standard setting. A



policy analyst would also sympathize with the economists' concern about



costs and tradeoffs.  And a policy analyst would agree with political scien-



tists that most important health,  safety,  and environmental decisions are



and  should be produced by the interaction of  a  large number of actors



who jointly determine the trajectory of a policy.




     The  policy analyst, however,  would view this  interactive process not



descriptively,  but prescriptively from the following perspective. Consider



one of the actors in the process-not necessarily the Administrator of the



EPA,  but  perhaps  a deputy assistant administrator,  or perhaps a



Congressman,  an official in the  Office of Management and Budget,  the



leader of an environmental organization,  or the  Vice President for govern-



mental relations of a large corporation. Furthermore, consider this actor



at some specific time when he or she has some  discretion and thus has to



make a choice about what to do.  The choice  does not have to concern



which environmental standard to recommend—decisions also have to be



made about how  to influence, constrain, persuade, and educate others,



about how to enforce decisions, about what kinds of authority to delegate



and  to whom,  about what new information to gather, if any. about how to



monitor  and evaluate current policies, about how to defend policy deci-



sions before  courts,  legislatures, superiors, outside interests, and  the



public and so on. The policy-analysis question is: What kinds of informa-

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                                -76-





tion and analytical assistance might this decision maker find useful in



helping him think about his particular decision problem?




    This question constitutes a good, short definition of what is often



meant by "policy  analysis."  Moore  (1980) gives a similar, if somewhat



broader, definition; he equates policy analysis with "the task of providing



Information useful in making  policy choices."  In this  paper,  "policy



analysis" will be used in the narrower sense of "the tasks  of providing



information (and analytical assistance) directly useful to particular deci-



sion makers in making particular choices that influence the trajectories



of public policies."  The tasks included in Moore's definition but excluded



from mine might be called "policy-relevant analysis."










B. A SUGGESTIVE ANECDOTE






    That the policy-analysis perspective is far from obvious or trite  was



brought home to me at a doctoral examination.  I was asked to help ques-



tion a student who was studying environmental policymaking in a gradu-



ate department of environmental studies.  The student, whom I had not



met beforehand, had several years practical  experience as  a  former



employee of the EPA. I asked aim the following question. The Administra-



tor of the EPA has to make a decision shortly concerning which national



ambient air quality standard to recommend for ozone. He has asked you



to prepare him a memo to help him make this decision.  How would you



organize the memo and what would you include in it?

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                                -77-





    The student had three days to prepare an answer to this question, as



well as  some other questions  posed by other examiners. He came back



with ari outline of his memo to the EPA Administrator. This outline, which



ran on and on for ten  pages,  was largely  devoted to an impressively



detailed breakdown of the results  of  various  scientific studies of the



health effects  of ozone;  a brief final section summarized the results of



studies of "methods of control and costs."




    Later, I asked an economics student, who had some familiarity with



environmental issues, the same  question. Her  reply essentially was that



she would do a cost-benefit analysis. She would first estimate the costs of



a fairly broad range of standards. Then she would estimate the monetary



value  of the health and environmental benefits of this range of standards.



Finally, she would calculate the  standard such that the estimated margi-



nal costs just equaled the estimated marginal benefits.




    Still later, I posed the same question to  a group of students, in a



policy-analysis seminar, who  had done some  reading about the  ozone



issue.  The gist of their proposed memo ran roughly as follows:







    Currently, the national ambient air quality standard for ozone is



    0.08 parts per million. Business is pushing for a  relaxation to



    0.16  p.p.m.;  environmental groups want  to maintain or even



    tighten the  current standard.  As discussed in section A,  the



    available  scientific and economic evidence, the weight of pre-



    cedent, the balance of political pressures, and the protection of



    the agency's  political base  and internal  morale constrain you to



    three possible, recommendations—0.08. 0.10, or 0.12 p.p.m.  The

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                                -78-





    nature, distribution, and uncertainty surrounding various health



    and environmental benefits, economic costs, and political bene-



    fits and costs of 0.10 vs. 0.08 and of 0.12 vs. 0.10 are described



    in sections B and C.  If you propose  0.08, you will probably be



    forced to retreat to 0.10 or even 0.12:  strategic considerations



    of this sort are discussed in Section D.
C.  THE DIFFERENCES BETWEEN SCIENCE AND POLICY ANALYSIS






    This example is idiosyncratic, and like Figures 1, 2, 3, and 4, a carica-



ture.  And, of course,  none of the students I questioned had a detailed—or



entirely  accurate—understanding  of the  ozone  issue.   Nonetheless, I



believe the anecdote is suggestive.  Many natural scientists have a ten-



dency to  view policy problems in  terms of a listing of  the facts rather



than a listing of the decision alternatives and the consequences of those



alternatives.  Many economists are willing to march  relentlessly to a sin-



gle cost-benefit comparison, rather than presenting  an array  of different



kinds of advantages and disadvantages. Any many scientists and econom-



ists confuse the general question  of what  is the  socially optimal policy



concerning ozone with the very specific question of what kinds of informa-



tion a particular  decision maker,  with particular  responsibilities  and



interests, at a particular moment in history and in a particular political



context,  might want to have to help him think about his particular deci-



sion problem.

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                                 -79-





    Policy analysts are second-cousins to product designers, architects-



-and engineers.  But they are not social engineers who envision them-



selves  as supra-decision-makers maximizing the public  interest; rather,



they are client- oriented engineers who are helping some particular  deci-



sion maker play his specific role in a complex  political process. Policy



analysts are thus related to physicians who care for patients but have lit-



tle in common with biomedical researchers. Policy analysis is more  craft



and art than science, albeit it is an analytical craft and an art informed



by research.




    Some of the main contrasts between  scientists and policy  analysts



might be summarized as follows:




    —    Scientists-and this includes not only natural scientists but also



         economists and other social and behavioral  scientists in  their



         role  as scientists—seek  to  discover the truth;  policy  analysts



         seek to marginally improve the  consequences of particular  deci-



         sions.




    —    Scientists worry about statistical significance;  policy  analysts



         worry about social significance.




    —    Scientists are descriptive; policy analysts are prescriptive.




    —    The agenda for  scientific research is set by the location of the



         points on the frontier  of knowledge where breakthroughs are



         believed likely:  the  agenda of  a policy analyst is  set by the



         dilemmas faced at the moment by a  specific  decision-making



         client.

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                                -80-





    —    Scientists  rarely have  to  confront  tradeoffs among  conflicting



         objectives; such tradeoffs are the meat of policy analysis.




    —    Science  aims for objective results; policy analysis is  fundamen-



         tally subjective and deeply embedded in politics.




    —    Scientists  strive for generalization, parsimony of theory, and



         elegance of formula; policy analysts focus on the specific details



         of unique problems.




    —    Scientists persevere in their research until the results are pub-



         lishable; policy analysts attempt to do the best they can in the



         all-too-short time available.




    —    Scientists  rejoice  in research projects  of breathtaking scope



         and grandeur—a theory of gravity,  say,  that governs atoms  as



         well as galaxies or  a theory of market transactions that explains



         the price of wine in 1920 in Canada  as well as the price of wheat



         in  1990  in Portugal; policy analysts, to  conserve their meager



         analytical  resources, frugally tailor their highly selective and



         incomplete studies to focus  on those few elements of a specific



         dilemma about which a particular decision maker is uncertain



         or perplexed.





    Economists  and other social  scientists often  enter into political



debates—and think of themselves as policy analysts.  But economists and



other social scientists are also scientists. This dual role is the cause of



much confusion.  As penetratingly  described in an essay  on "Social Sci-



ence and Policy Analysis: Some Fundamental  Differences" (Moore 1980):

-------
                                -81 -





    In the typical social science publication, elaborate efforts are



    made to establish some relationship among some variables—say



    drug abuse and crime. The  discussion of the data and methods



    of investigation is careful and restrained. The current investiga-



    tion is placed in the context of other theories and  findings.  All



    this is  consistent with  the  desire  to  build firm structures  of



    knowledge slowly and carefully.  Once  the  author has painstak-



    ingly established the existence (or non-existence) of a relation-



    ship, however, he turns to the "policy  implications" of his find-



    ing. At this  moment all the  caution that characterized his



    analysis often leaves  him, and he rushed  toward conditionally



    .prescriptive propositions at a pace that would make a serious



    policy analyst blush.  Suddenly, goals  are  being suggested and



    governmental action conditionally prescribed all on the basis  of



    one more or less firmly established empirical finding.








    The author of this essay concludes that social scientists, if they were



more aware of the nature of policy analysis,  could be more constructive



policy analysts. A more pessimistic conclusion seems at least equally jus-



tified: the differences in methods, perspectives, and concern for truth vs.



consequences between (social) science research and policy analysis are



so profound that only rare ambidextrous geniuses will excel at both.

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                                -82-


D. THE METHODS OF POLICY ANALYSIS


    Most policy analyses are at least as qualitative as quantitative.  The

analyses suggest a framework of thought,  they structure the decision

alternatives,  they describe the  most important impacts of the alterna-

tives,  and they provide some guidance as to the most important tradeoffs

that have to be  made.  Sometimes  the  impacts and uncertainties  sur-

rounding the impacts are summarized  numerically; other times,  crude

qualitative  rankings suffice  (e.g., do asthmatics fare  better,  about the

same,  or worse with policy A vs. B).  Partial  simplification of the array of

costs  and benefits may be made by collapsing sets of similar costs and

benefits—not necessarily collapsing 20 different cost figures and 20 bene-

fit figures down to one cost and one  benefit figure, but, say. collapsing 20

cost figures  into 4  cost indices  and 20 benefit  figures  into 6 benefit

indices.  By simplifying a morass  of  data down into "a manageable  set of

summary indices, the decision maker may be in a better position to con-

centrate his or her attention on the  crucial tradeoffs among a few incom-

mensurable indices.  The choice is not between no collapsing of costs and

benefits and a mindless drive to a single number: Partial analyses can be

used  to highlight just where political and social  judgments have  to be

made.

    How. then, does "policy analysis" differ from some of the decision-

making  methods described  earlier?  Clearly  policy analysis involves

balancing competing objectives; clearly  it gives a decision maker consid-
   is paragraph is based on a draft, unpublished report prepared by the Committee on Risk
and Decision Making of the U.S. National Academy of Sciences.

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                                 -83-





erable discretion and relies heavily on a decision maker's judgment.  Con-



sequently,  policy analysis can be compared with the kind of comparative



risk analysis recommended by Dorfman's pesticide committee, with deci-



sion analysis, and with ad hoc balancing.  It is hard to draw sharp boun-



daries  here.  Nonetheless, the  spiritual  heartlands   of  these three



methods, as described above, are distinct from the spiritual heartland of



policy analysis. The key difference is that the three methods—again, to



avoid misunderstanding, let me emphasize the three methods as described



above --focus on the general problem of what is the socially optimal policy



with regard to some health, safety, or environmental problem, whereas a



policy analysis focuses on the specific problem faced by some particular



decision maker who is part of a complex political process.




    This distinction means, in large part, that policy analyses include



idiosyncratic political  considerations, whereas the other kinds  of analyses



do not. For example,  neither the comparative risk analysis suggested by



Dorfman's  committee, nor any of the four illustrative applications of deci-



sion analysis to hurricane seeding, North Sea oil spills, asbestos, or coal-



energy research,  nor the ad hoc  balancing  examples involving  lawn



mowers and noise labeling-none of these include any mention of specific



political factors and constraints,  not even on so abstract a level as how



many  Congressional districts will be adversely affected,  let alone on so



specific a level as "how will Kennedy react?"




     Decision analysis, both in its more and less formal variants, can take



into account idiosyncratic, political factors.  Indeed, I have co-authored a



book (Behn and Vaupel  1982) that is largely about how to apply  decision



analysis to the kinds of specific problems faced by policymakers.  But this

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                                 -84-





kind of decision  analysis is quite distinct in flavor from the "thorough,"




"full-blown", "societal" decision analysis described in,  e.g., Fischhoff st al.




(1980).  The underlying methods  are similar; the outlook, however, is that




of a radically different mind-set.  In short, decision analysis (and related




analytical methods) can usefully be applied  in policy analysis; but "full-




blown" decision analysis should not be confused with policy analysis.




    The relationship of policy analysis to comparative risk analysis or ad




hoc balancing is of a different nature. In these two cases, policy analysis




essentially takes  over where the other two  methods leave off.  Policy




analysis helps the decision maker after he or she has received the infor-




mation provided by a comparative risk analysis.  Similarly, policy analysis




helps the decision maker think about the balancing of the various pieces




of information requested by ad hoc balancing procedures.

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                                -85-





VI.  A DECOMPOSITION OF ROLES






     "Policy analysis," as defined above, is clearly only a small part of the



work of the EPA; it is a highly specialized task to be done by a relatively



small number of individuals.  Furthermore, policy analysis is, I think, only



one  aspect of  "risk evaluation." In other words, the  dichotomy I have



drawn between policy  analysis  and  scientific research by no means



implies that natural and social scientists do not have crucially important



roles to play in the process of health, safety, and environmental standard



setting.  Policy analysts are  the people  who  help  the various  decision



makers pick up the  pieces and  make do:  if they had better and more



appropriate information to work with, they could be of more help.




     In the following sections of this report, I briefly lay  out some of the



various ways scientists and analysts can contribute to improving the qual-



ity of environmental (and other health and safety) decision making.










A. SCIENTIFIC  RESEARCH ON EFFECTS






     When asked to suggest useful research topics to inform environmen-



tal decision making, natural  scientists and social scientists tend to think



about the hottest  topics in their  own disciplines.  They usually fail to con-



sider research needs in terms of the information a policymaker might



want, and they also tend to be far too narrow in the  range  of topics they



suggest. In setting an  environmental standard, a policymaker  might be



interested in a broad range of human health effects, including:

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                                 -86-





    1.   How many people are or will be affected:




         a.   in the entire population?




         b.   in sensitive groups?




    2.   How much are they affected by




         a.   mortality,




         b.   morbidity,




         c.   severe pain and suffering.




         d.   discomfort.




         e.   anxiety




    3.   Who are they?




         a.   age distribution.




         b.   income distribution.




         c.   race/ethnic background/sex.




         d.   occupation.




         e.   geographical location.




         f.   quality of life/health status.




    4.   When will they be affected?




         a.   now.




         b.   with some time lag.




         c.   future generations.





In addition,  the decision maker may be interested in various impacts on



plant  and animal life and on the aesthetic quality of the environment.

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                                 -87-



    Similarly,  a  policymaker might value  input from social science


research about a wide range of policy effects,  such as:


    1.   Economic costs (and to whom),


    2.   Effects on economic growth, productivity, and innovation.


    3.   Effect on business competition.


    4.   Economic and political effects on other countries.


    5.   Effects on the distribution of income,


    6.   Effects on public satisfaction with government,


    7.   Legitimacy/fairness/symbolic importance as perceived by pub-


         lic,


    8.   Level and nature of political support and opposition.


    9.   Effects on the quality of business and personal decision making,


    10.  Ease or difficulty of justification


         a.  in court,


         b.  in Congress,


         c.  to the President,


         d.  to the public.


    11.  Enforcement costs,  including  costs of disrespect for the  law

                                              >7
         engendered by unpunished violations.



    Because many natural scientists fail to  appreciate the  nature and


value of social science, and because many social scientists confuse their


role as scientist with their role as political participant and policy advisor,
 These two lists of considerations are based on a draft, unpublished report of the Committee
on Risk and Decision Making of the U.S. National Academy of Sciences.

-------
                                -88-





it is worth emphasizing that the role of social scientists in doing research



about policy effects is exactly parallel to the role of natural scientists in



doing their  empirical research. This research is descriptive and predic-



tive, rather than prescriptive  and normative; it is the factual study of



what is. rather than the evaluative study of what should be. As Max Weber



(1946) painstakingly  explained more than  half a  century ago, factual



research is by no means value free:  "the choice of the object of investiga-



tion and the extent or depth to which investigation attempts to penetrate



into the infinite casual web, are determined by the evaluative ideas which



dominate  the  investigator and  his age."  However, although the choice of



topic  and depth of study are subjective, the methods and results of fac-



tual study are objective in the  sense that they are not "valid for one per-



son and not others" but rather they are "valid for all who seek the truth."




    Thus, the results of  scientific  research should be valid  for all  the



various parties interested in environmental decision making—in Congress,



the Courts,  other agencies, state  and local government, business, labor,



public interest groups, academia, and the general public—regardless of



their  preferences,  moral values, political beliefs,  or ideological perspec-



tives.  A good piece of policy analysis, on the other hand, will incisively



and concisely focus  on  the particular  concerns  of  a  specific decision



maker.




    Most  scientists are not only parochial in their views about the nature



and range of policy-relevant research on health effects, economic effects,



social effects, and so  on, but they also fail to appreciate that three  other



kinds of research can be as useful to policymakers in setting environmen-



tal standards  as  research on effects. This blindness is reflected in the

-------
                                -89-





fact that hardly any of the EPA's internal research or sponsored research



lies in these three areas  and, indeed, relatively  little research is being



conducted here by anybody anywhere.  Consequently, a few dollars  of



research support—by EPA, NSF, other agencies, or private foundations~in



these three areas will almost surely yield disproportionately large  har-



vests.




    The three areas involve assessment, research about preferences, and



research about policy design. Figure 5 lays out the relationships of these



three kinds  of  research to each  other,  to scientific  research about



effects, and to policy analysis.










B. ASSESSMENT






    The need for assessment arises because it so often turns out that the



various facts uncovered by natural  science and social science research



are only indirectly relevant to the decision at hand, are in partial conflict



with other facts,  and are not sufficient  or well enough established  to



remove uncertainty. For instance, evidence  may be available about the



effect of high doses of some environmental pollutant on rats, whereas the



decision maker is concerned about the effect of low doses on humans. A



number of rat  experiments may have been done, some showing little  or



no effect and others a substantial effect.  Evidence from epidemiological



investigations of human populations  may be so weak as to only suggest a



wide probability distribution on the possible effects.  Experts may have



formed judgments about  the possible effects,  not on the basis of some



single,  objective  experiment, but on the  basis of their wide experience

-------
                                -90-





with related phenomena: these judgments, although subjective, may be



highly informative.  Consequently,  assessment involves the synthesis  of



disparate and indirectly relevant evidence, both objective  and judgmen-



tal, in order to assess estimates or probability distributions of the quanti-



ties of primary concern in the decision problem. Assessment is not a sub-



stitute for evidence, but a systematic synthesis of the available evidence.



Although assessment is partially judgmental, the judgment here is scien-



tific judgment rather than moral or political judgment about what ought



to be.  Thus, like scientific research, assessments should, given this defin-



ition, be valid for all parties concerned about environmental policymak-




ing.




     The process of eliciting scientific  judgments, of synthesizing these



judgments with the available array of  disparate  and indirectly-relevant



information, and of expressing the results, when necessary, in probabilis-



tic terms requires specialized skills and methods that have largely been



developed (to the extent they have  as yet been developed) by mathemati-



cal statisticians,  decision analysts,  and cognitive psychologists.  That the



methods  of assessment are,  as yet, weak, that  few people understand



them, and that a great deal of research, development, and training is



required cannot be denied.  In any logical scheme  of environmental policy



analysis, however, it seems to me to be undeniable that the assessment



phase plays a crucial role.  Whether done well or  poorly, assessment has



to be done, even if it simplistically involves selecting the "best"  study and



making some extrapolations from it.

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                                -91 -





    Since the EPA's Office of Air Quality Planning and Standards is con-



ducting a major research prospect that focuses on the methods of assess-



ment, it is not necessary to review those methods here. Nonetheless, the



task of  assessment is so crucial but so neglected that it seems appropri-



ate to briefly point out four especially important but largely unrecognized



research needs.




    First, as indicated  in Figure 5, assessment is required not only  for



natural science facts but also for social science facts, such as. for exam-



ple, the cost of a regulation.  Much  of what research is being done  to



develop better methods of assessment focuses on natural  science assess-



ment; parallel research  is needed on social science assessment.




    Second, given that  decision makers do not want to be inundated with



information, a key set of issues in assessment involves how to aggregate



and summarize information, including:




    —   How to summarize over different kinds of health and non-health



         effects (e.g., over different states of morbidity),'




    —   How to summarize over effects on different individuals,




    —   How to aggregate and  synthesize different experts' judgments,




    —   How to indicate the range of  uncertainty,




    —   How to indicate the volatility of the estimates (i.e., how much



         new information might change the estimates), and




    —   How to indicate the degree of expert confidence,  consensus, and



         disagreement.

-------
 Figure 5;
                  -92-
     A Decomposition of Roles in Environmental
     Standard Setting, from a Policy Analysis
     Perspective
RESEARCH ABOUT EFFECTS
                                     RESEARCH ABOUT
 NATURAL
 SCIENCE
            SOCIAL
            SCIENCE
                                     PREFERENCES
                                            RESEARCH ABOUT
                                            POLICY DESIGN
ASSESSMENT
    fi SOCIAL
NATURAL
SCIENCE
                        DECISION  MAKING
         POLICY MAKERS-
                                 POLICY ANALYSIS
                                 STAFF
                           STANDARD

-------
                                -93-





    Third, beyond the fact that policymakers tend to be busy, they also,



like the rest of us, have  limited cognitive abilities.  For example, some



policymakers may not have a good intuitive feel for what a gamma distri-



bution with a  shape parameter of 2 and a scale parameter of 3.5 looks



like. Thus, in addition to pruning and synthesizing information, an assess-



ment should present information in a way that is meaningful and intelligi-



ble to the intended audience.  Tables 2a and  2b illustrate one  way to



present information in a fairly simple way  on the morbidity effects of



three alternative environmental standards.  The tables are not intended



to be an example to be followed, but rather an example of how much syn-



thesis and simplification might be required to make the available factual



information useful to some of the numerous decision makers who may be



involved in setting a standard.  Clearly, different kinds of presentations of



information may  be  appropriate  for  different  decision makers  and



members of their staffs.




    Fourth and finally, although an important and widely used approach



to the task of assessment is to convene a panel of experts—e.g., a National



Academy  of Science's committee or a panel of  the  EPA's  Scientific



Advisory Board—little  is  known about  how to bring out the best of an



expert committee. The  internal dynamics  of  group behavior, coupled



with external pressures, can lead to group reports that fail to capture the



various  experts'  true judgments and  uncertainties and disagreements



about these judgments.   It would be  useful to do  research on how an



appropriate staff  could  be trained to help expert committees better



understand the statistical methodology of assessment, the intricacy and



subtlety involved in the  elicitation of  judgments, and the peculiar pat-



terns of group behavior.

-------
Table 2a.  How Many People Will be Affected Under Alternative Standards
               Percentage of U.S. population
               suffering one or more EDRA' 3*  per year ;
                                       Percentage of most sensitive 1% of
                                       U.S: population suffering one or
                                       more EDRA's per year;	
Standard
   A
   B
   C
Best
Estimate
   5%
   9%
  12%
       98%
Credence Range

     1-3O%
     2-41%
     4-49%
Best
Estimate

  20%
  35%
  5O%
       98&
Credence range**

     3-50%
     5-62%
    10-74%
Table 2b.  How Much Will People be Affected Under Alternative Standards
                                                                                             CO
               Average number of EDRA's per year
               suffered by U.S. population;	
                                       Average number of EDRA's per year
                                       suffered by most sensitive 1% of
                                       U.S. population:   	
Standard

   A
   B
   C
Best
Es timate

  0.3
  O.6
  0.8
       98%
Credence range

   0.1-0.8
   O.2-1.0
   0.4-1.2
Best
Estimate

  2.3
  3.9
  5.7
       98%
Credence range

   0.4-5.2
   O.6-6.5
   1 .1-7.8
*An EDRA is an "Equivalent Day of Restricted Activity."

**The 98% credence range is the range such that there is a 98% chance that the true value
  falls within the range.  Statisticians differ widely about how to define such ranges and
  how to assess them--and, indeed, many statisticians would dismiss such ranges as meaningless.
  I merely want to suggest here that a policymaker might be interested in some information about
  the uncertainties surrounding an estimate; whether this information is conveyed by a
  "credence range," "confidence interval" or some other device is, for
  crucial.
                                                     my purposes here,  not

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                                -95-





    It would, I believe, be highly productive for the EPA to devote a small



fraction of  its research  budget—a few million  dollars  a  year, say—to



research on these four issues in assessment,  as well as some of the  sta-



tistical issues.  Even when natural science and social science facts  are



plentiful, if  these  facts and  resulting scientific judgments are not syn-



thesized and presented adequately, decision makers are  forced to make



their choice in a dense fog of confusion and ignorance. Although, in some



theoretical sense,  a decision-maker's discretion .may not be affected by



the way a risk is assessed and presented, it seems clear  that the nature



and quality  of the decision may be affected by how well  the assessment



procedure meets the decision maker's informational needs.










C. RESEARCH ABOUT PREFERENCES






    Although neglected, objective research about subjective preferences,



including  ethical  beliefs,  political  judgments, and ideological perspec-



tives, is not a paradox but an activity highly  useful and relevant to poli-



cymaking.  The two fundamental sources of complexity and controversy



in making  environmental decisions are pervasive uncertainty and per-



plexing tradeoffs.  The tradeoff problem is probably the more basis prob-



lem since continuing scientific research will  tend to reduce the  uncer-



tainties and, in doing  so, clarify—and hence  heighten—realization of the



competition between  different objectives. Even if there  were  no uncer-



tainty and the  future could be foretold perfectly,  decision makers would



still have to wrestle with such puzzling questions as:

-------
                                -96-



    —    How much  of our limited  resources should be allocated to life-


         saving activities versus other, pressing social concerns?


    —    How important is  the psychological well being associated with


         clean air and blue skies?


    —    How much weight should be placed on an asthma attack  suffered


         by a thirty-year old compared with a bout  of emphysema suf-


         fered by a sixty-year old?


    —    How should our society react to saving  the  lives of 100 Ameri-


         cans a millenium from now versus 100 starving Africans today?


    —    Do we  have the  responsibility for maintaining  ecological bal-


         ances, for nature's sake rather than—or in addition to—for man's


         sake?


    —    Should we as a society be willing to impose costs  and risks on a


         few members  of  society in order to benefit most  members of


         society?


    —    What are the occasions when paternalism is  a legitimate stance

                                   a
         for governmental agencies?



    Since  questions  like these complicate all  important  environmental


decisions, it is absolutely clear that there  can and will never be an objec-


tively scientific  method for environmental  decision  making.  Neverthe-


less, researchers may be able  to help policymakers grapple with tradeoff


problems, in several ways.
 This list is based on a draft, unpublished report of the Committee on Risk and Decision Mak-
ing of the U.S. National Academy of Sciences.

-------
                                -97-





    First, researchers can trace  out the consequences of adherence to



different systems of preferences and values.  More specifically, research-



ers can formulate persuasive systems of ethical axioms and then logically



derive various normative conclusion.  Three recent and widely read philo-



sophical books, by Rawls (1971). Nozick (1974). and Ackerman (1980) do



this starting from three different sets of basic axioms.




    Second,  researchers  can  check  for  consistency and  coherence



between different ethical beliefs.  In particular, -they can check whether



some normative position (e.g.,  all  carcinogens should be banned)  is con-



sistent with another ethical belief (e.g., that no policy  should be  under-



taken that makes the worst off group in society even worse off).  Arrow's



impossibility theorem is a famous example of this line of research.




    Third, researchers can  describe and measure how various  people



view specific tradeoff problems, e.g.,  how much the general public  and



different interest groups are willing  to pay  for some aspect  of environ-



mental quality.




    Fourth, researchers can develop methods to facilitate the sharing of



different points of view among the various parties interested in some  pol-



icy problem.




    Fifth, researchers can develop formal analytical methods for struc-



turing tradeoff  problems.  The most  notable example  is Keeney  and



Raiffa's book on Decisions with  Multiple Objectives:  Preferences  and



Value Tradeoffs (1976).

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                                 -96-



D. RESEARCH ABOUT POLICY DESIGN




    A diverse array  of strategies can be employed to cope with health,


safety, and environmental hazards, including:


    — '  medical care,


    —   insurance and compensation,


    —   consumer demand.


    —   regulatory standards or bans,


    —   labeling.


    —   tort liability.


    —   tax penalities


    —   restrictions on behavior,


    —   collective bargaining,


    —   effluent fees.


    —   personal protective action.


    —   economic progress,


    —   biomedical research,


    —   safety engineering research, and

                              Q
    —   risk analysis research.



Although each of these strategies is, on occasion, useful, all of them suffer


from  serious limitations and deficiences. Consequently, it is useful to try


to devise improved strategies, including better variations of existing stra-
 This list is based on a draft, unpublished report of the Committee on Risk and Decision Mak-
ing of the U.S. National Academy of Sciences.

-------
                                -99-





tegies and multiple, combined strategies.




    Within narrower policy areas, policy design may also be useful.  Con-



sider for example, the setting of national ambient air quality standards.



Such standards have to be defined







    in such a way that compliance  with the standards can be opera-



    tionally  determined.  [The  standards] are stated  in terms  of



    time averaged pollutant concentrations and expected number of



    exceedences of those concentrations  allowed per unit of  time.



    (Feagans and Biller 1981).







Thus the "design" of a standard requires that choices be made about



three  inter-related  quantities—averaging  times,  pollution  levels,  and



allowable exceedences.




    Policymakers usually want to be provided with a set of options that



they can choose amongst.  They do not want to be told what to do or to be



constrained  by  an overly limited  range  of  alternatives. By providing



options,  policy  designers can   play  a  valuable   role  in policymaking



processes.




    Architecture  and engineering  demonstrate  that the endeavor  of



design is a complicated but rewarding  pursuit. It is somewhat surprising.



then, that policy design, as an analytical pursuit in its own right, has been



so neglected, although some politicians, arbitrators,  and mediators  have



acquired great skill at it.  In any case, policy design is  conceptually dif-



ferent from the other tasks diagrammed in Figure  5.

-------
                               - 100 -





    Policy design starts with an understanding of why various given alter-



natives are relatively strong or weak along different dimensions in order



to fuel creativity about devising new alternatives.  The understanding of



pro's and con's can be gained, in part, by listening carefully to the vari-



ous points of view expressed in a policy debate.  Since these points of view



are seldom diametrically opposed, with equal and opposite weight given to



all objectives, it is often possible to design solutions  that go considerably



further  than halfway in meeting each interested group's desires and



demands. The policy debate might not thereby be resolved, but instead



of a raging  dispute between lackluster policy alternatives A  and B,  the



debate could be raised to a more  cordial disagreement between the inno-



vative and superior alternatives C  and D.










E. INTERACTIONS AMONG ROLES






    Two-way communication  will clearly be required among  individuals



engaged in the various roles sketched above and in Figure 5.  If scientists



are to provide  policymakers  with relevant  factual information—whether



about natural science effects, social science effects,  or preferences—they



have to have some idea of  what the policymakers' interests are.  This is



true to  an even greater extent for the assessors and for  the  policy



designers who serve  as bridges between the  research community and the



policy community.  To the  extent, however, that the reported results of



the scientific endeavors of research and assessment become distorted by



scientists'  subjective preferences about the social  good and the public



interest  they will  cease  to be the  descriptive and objective truths that

-------
                                 - 101 -


constitute "science."

    Scientific experts  cannot and  should not be  disenfranchised from

the political process.  They hold value  opinions and are entitled to have

their  voices heard.  Indeed, it can be argued  that scientists who can

understand the biological, physical,  or economic subtleties of complex

policy questions have a special obligation to serve society by speaking out

on controversial issues.  Such scientists do society and the endeavor of

science a disservice, however, if they fail to try to make clear where their

scientific expertise ends and  their non-expert value judgments  begin.

Otherwise, in the  short run their personal opinions  will receive too much

weight and, in the long run, scientific research will become tainted, mis-

trusted, and discounted.
 ^"his paragraph is based on an unpublished draft report prepared by the Committee on
Risk and Decision Making of the U.S. Rational Academy of Sciences.

-------
                               - 102-





    CONCLUDING OBSERVATIONS
    "Risk evaluation" is an umbrella phrase that encompasses a variety



of concepts.  A  crucial distinction can be  drawn  between  the risk-



evaluation processes that produce health, safety, and environmental stan-



dards.  and the risk-evaluation justifications  that  are  used to explain,



defend  and advocate  the resulting standards.  The justifications  are



clearly not independent of the standard-setting process; the justifications



are based,  in large  measure, on fact-finding and analysis done as part of



the process.  The justifications, however, do not have to  recount, docu-



ment, and defend all the details of the standard-setting process. The  pri-



mary purpose of a risk-evaluation justification is to  demonstrate that the



standard meets the requirements of the relevant statutes; a secondary



purpose may be to  persuade various interested people that the standard



is reasonable.  On the  other hand, the purpose of a risk-evaluation pro-



cess is to produce a  standard that is  legally defensible and publicly



acceptable.




    The first three parts of this report surveyed a variety of approaches



to risk-evaluation justification.  The approaches were classified under the



rubrics of  the  "natural science perspective," the "engineering perspec-




tive,"  and  the "economics perspective";  in  each category,  various



approaches were distinguished depending on how much discretion they



allowed and how much judgment  they  demanded.  The survey strongly



suggests that there is  no ideal approach to justifying a  standard; rather,



the approach that  is appropriate  depends on the  nature  of the hazard




being regulated and on the details of  the relevant statutes,  including

-------
                                - 103-





their legislative history and judicial interpretation.




     In  the  specific case of national ambient  air quality  standards,  it



appears that the  only kind of justification that currently would be accept-



able has to be based on some variant or other of the category of methods



I  have called "health-threshold  approaches."   Consequently,  an impor-



tant part of the program of research on risk evaluation  that is being



sponsored by the  EPA's Office of Air Quality  Planning  and  Standards



should probably focus on developing and refining an appropriate health-



threshold approach. Three issues seem especially significant:




     (1)  How should  the distinction be drawn between  physiological



         responses of no health significance  and responses  deemed to be



         adverse health effects,




     (2)  How should the sensitive population be  defined, and




     (3)  How should a margin of safety be determined?





     Even though other kinds of approaches to risk evaluation may not be



as appropriate in justifying national ambient air quality standards as a



health-threshold  approach, some of these other approaches may suggest



ways to resolve these three open questions.




     The  second  half of this  report essentially  focused  on the  risk-



evaluation process that produces a standard. The essence of the research



problem here is systematic study of how the capabilities of various kinds



of scientists and analysts can be better harnessed to provide more



relevant and helpful  information, and analysis to the  various actors who
  See Section I.D.

-------
                               - 104-





play a role in interactively influencing the evolving trajectory of a policy.




    Since the  various actors play different roles, come  from different



backgrounds, and hold different values, it seems clear that it would be



useful to produce a variety of different kinds of information and analysis.



Furthermore, the problem  of determining a reasonable  standard is so



complex that it is undoubtedly the  case that an array  of natural and



behavioral scientists,  engineers,  economists, applied  mathematicians,



statisticians, decision analysts, policy  analysts,- and  others, could all



make a contribution.




    The interactive character of  risk-evaluation processes  implies that



the contribution of any particular kind of scientist  or analyst will—and



should—be limited. On the  one hand, scientists  who do not understand



the complexities of policy formulation should not be permitted to usurp



the legitimate  role of policy analysts  and policymakers. On the  other



hand, policy analysts and policymakers need to  be informed  by  science



and should be constrained by scientific and analytical findings. Further-



more, the risk evaluation process should be designed such that the policy



analysts and policymakers are harnessed to serve  the  public interest



rather than maximizing their private interests in  a socially harmful way.




    To clarify the nature of risk evaluation processes, the  sixth section of



this report developed a decomposition of roles—scientific  research on



effects, assessment, research about  preferences, research  about policy



design, policy analysis, and decision making.  The process of risk evalua-



tion embraces all of these roles and their interactions.

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                                - 105-





    Some aspects of  this overall process  of risk evaluation are  better



understood than others. I believe that  a particularly important but rela-



tively neglected  field  of inquiry  concerns the question of what  kinds of



information  should be  generated,  how  should this  information  be



presented, and what kinds of analytical assistance should be available in



order to help the key policymakers responsible for proposing a standard.



In the case of national ambient air quality standards, these policymakers



would be the Administrator of the EPA  and  his or, her leading policy advi-



sors on air pollution.




    A research program focusing on the information and analytical needs



of policymakers  clearly should be conducted with the  close involvement



of people  with  policymaking experience.  Furthermore, it would seem



appropriate to involve researchers from a  number of disciplines, includ-



ing decision analysis,  policy analysis, cognitive psychology,  and political



and organization behavior.




    In sum. my  overall conclusions from this investigation of the  theory



and practice of standard setting is that  a research program on  risk



evaluation organized by EPA's Office of Air Quality Planning and Standards



could fruitfully focus on either improving the process by which standards



are determined or on  strengthening the logic of the justifications used to



defend the standards.  A  program with sufficient funding might  do both.



In any  case,  it  is important  to distinguish process from  justification.



Furthermore, it is  important to bear in mind:   (l) that different kinds of



processes  and justifications  will be appropriate depending on the hazard



and the relevant statute,  (2) that there are a variety of useful but limited



roles to be played by several different types  of  scientists and analysts.

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                                - 106-





and (3) that different decision makers will have different informational




and analytical needs.

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                               - 107-
    REFERENCES
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Behn. Robert  D., and James W. Vaupel.   1982.  Analytical Thinking for



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Buehring. W.A.. R.G.  Whitfield, and  T.D.  Wolsko.  1980.  "Methodology for



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-------
                               - 108-





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                               - 109-



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    Rulemaking  in  Theory  and  Practice",  (Durham.  North Carolina:


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Mallet, Roger J.  1979. "Emission Standards for New Motorcycles" in Miller


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McKean, Roland.  1980.  "Enforcement Costs in Environmental  Safety


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Mendeloff,  John,  1979.  Regulating Safety.   (Cambridge, Massachusetts:


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Mishan, Ezra.  1976.  Cost-Benefit Analysis.  (New York: Praeger).

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                               -110-





Moore, Mark H.  1980.  "Social Science  and Policy Analysis: Some Funda-



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                               - Ill -





Rawls.  John.  1971.  A  Theory of Justice.  (Cambridge,  Massachusetts:



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U.S. Navy.  1980.  "Management Procedure for Assessment of Friable

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                                -112-


    Asbestos Insulating Material." (Washington, DC: US Navy).


von Winterfeldt. D.  1978.  "Modeling Standard Setting Decisions: An Illus-


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                       i
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                                                                      i
                                                                      i
York, Elizabeth A.  1978. "Red Dye No. 2," (unpublished paper. Institute of


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    Carolina).

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                                    TECHNICAL REPORT DATA
                             (Please read Instructions on the reverse before completing}
1. REPORT NO.
 450/5-83-002
                              2.
                                                             3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
 Analytical Perspectives  on Setting
 Environmental Standards
                            5. REPORT DATE

                             Ann'1  1QR3
                           6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
 James W. Vaupel
                                                             8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
                                                             10. PROGRAM ELEMENT NO.
  Duke University
  Institute for Policy Sciences
  Durham, North Carolina
and Public  Affairs
11. CONTRACT/GRANT NO.
                                                              1D2290-NASX
12. SPONSORING AGENCY NAME AND ADDRESS
  Office of Air,  Noise,  and Radiation
  Office of Air Quality  Planning and  Standards
  U.S.  Environmental  Protection Agency
  Research Triangle Park, North Carolina  27711
                            13. TYPE OF REPORT AND PERIOD COVERED
                             Final
                            14. SPONSORING AGENCY CODE
15. SUPPLEMENTARY NOTES
16. ABSTRACT


         Natural scientists,  engineers, economists, political  scientists,  and
   policy analysts view the  process of health, safety, and  environmental  standard
   setting from diverse analytical perspectives.  This report describes these
   five  perspectives;  indicates why, how,  and when each  is  useful; annd suggests
   a decomposition of  appropriate roles  in the standard-setting process for scientists
   and analysts with different interests  and skills.
17.
                                KEY WORDS AND DOCUMENT ANALYSIS
                  DESCRIPTORS
              b.lDENTIFIERS/OPEN ENDED TERMS  C.  COSATI Field/Group
  Decision-making
  Policy Analysis
  Risk Evaluation
  Standard-setting
18. DISTRIBUTION STATEMENT

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