The Price of Life

Federal regulations impose huge costs but save few lives-even in theory.

The federal government is requiring school districts to remove asbestos insulation from approximately 110,000 school buildings across the country. A study from the Washington, D.C., environmental think tank Resources for the Future finds that the $6 billion school districts must spend might save 125 lives.

In their study, economists Maureen Cropper of the University of Maryland and George Van Houtven of East Carolina University examined regulations under three environmental laws: the asbestos ban under the Toxic Substances Control Act; pesticides regulated by the Federal Insecticide, Fungicide and Rodenticide Act from 1975 to 1989; and air pollutants governed by the Clean Air Act from 1975 to 1990. They used Environmental Protection Agency estimates of the number of people who would develop fatal cancers from involuntary exposure to the substances and the costs those regulations imposed.

Preventing involuntary exposure to avoid the theoretical additional case of cancer costs plenty: The authors estimate that the asbestos ban cost consumers $49 million for each life saved; the 19 pesticides examined cost $51.5 million per life saved. By contrast, concludes a 1989 article from the Journal of Policy Analysis and Management, workers who voluntarily deal with hazardous substances demand only about $5 million in higher wages per statistical death to compensate for their risks—a substantial sum but a tenth of the regulatory costs.

The Clean Air Act prohibits the EPA from even considering the cost of regulations. Cropper and Van Houtven, however, suggest that prior to 1987 the agency was indeed considering costs before issuing regulations. Inhaling polluted air tends to be toxic only when the pollutants are heavily concentrated; it poses little risk at low levels. The EPA was not regulating such toxic substances as benzene and vinyl chloride unless exposure to them would cause more than one additional cancer death per 10,000 persons exposed. The authors estimate that regulations before 1987 cost $15 million per life saved. Since then, however, a court decision has required tighter controls. The result: Each cancer case now costs $194 million to avoid, money that could almost certainly save more lives elsewhere.