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).
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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
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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.
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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
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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
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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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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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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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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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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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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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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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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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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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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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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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(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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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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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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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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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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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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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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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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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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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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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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Figure 2;
Environmental Standard Setting from the
Perspective of Engineers
TECHNOLOGICAL
CAPABILITIES
POLICYMAKER
STANDARD
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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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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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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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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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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:
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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:
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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....
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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
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-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
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-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
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-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...,
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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:
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(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.
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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:
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-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
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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
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-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
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-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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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
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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
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-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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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
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-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
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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.
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-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:
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-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."
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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:
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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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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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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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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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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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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).
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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:
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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
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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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— 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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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.
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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.
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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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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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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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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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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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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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— 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):
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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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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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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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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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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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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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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.
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-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
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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
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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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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
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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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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:
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— 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.
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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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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.
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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.
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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
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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.
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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
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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.
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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.
-------
- 106-
and (3) that different decision makers will have different informational
and analytical needs.
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- 107-
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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.
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Duke University
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1D2290-NASX
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U.S. Environmental Protection Agency
Research Triangle Park, North Carolina 27711
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Final
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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.
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Decision-making
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Standard-setting
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