Stated-preference tradeoffs between regulatory costs and benefits: testing unit asking and double framing effects

Abstract

A novel stated-preferences approach to imputing the value of life to estimate regulatory benefits elicits people’s preferred tradeoffs on behalf of the nation between national regulatory costs and nation-wide regulatory benefits, in contrast to the conventional approach of seeking estimates of the ‘value of a statistical life’ (VSL) by asking subjects how much they would be willing to pay personally for a small reduction in their own mortality risk. Two national-preference survey experiments were pursued here. The first U.S. experiment (n = 396) offered a between-person test of the effect of asking people to evaluate a hypothetical single life prolonged by regulation, before assessing the tolerable cost to the national economy of a hypothetical regulation prolonging 100 lives (LF frame). This unit asking task increased imputed means for the social benefit of a life prolonged (SB1LP*) in national tradeoffs. Cautions to respondents about responses that generated particularly low implicit SB1LP* values did not substantively reduce implausible values. The second U.S. experiment (n = 505) had people respond to both the lives-first (LF) frame, preceded by a unit asking task, and the costs-first (CF) frame (i.e. eliciting ‘reasonable’ numbers of lives prolonged if estimated regulatory cost is $1 billion each year). These frames both mimic the kinds of decisions that regulators face, as the VSL stated preference method does not. Higher LF values in earlier between-person studies were replicated in the unit asking within-person design here. A partial order effect occurred for the second experiment: starting with the CF frame yielded a subsequent LF mean four times higher. Open-ended probing found beliefs that regulatory costs are justified only by prolonging many lives may explain lower CF values. Using both frames can inform both conventional stated preference research (which uses only the LF frame) and regulators.

Keywords:

• Value of a statistical life
• social benefit of one life prolonged

Acknowledgments

We appreciate the survey programming and data collection supervision provided by Dr. Marcus Mayorga and Dr. Jeffrey Peterson. Funding for this work was provided by the U.S. National Science Foundation grant number 1629287.

Disclosure statement

There are no conflicting interests.

Ethics approval

The Decision Research IRB approved an exempt designation for this research.

Consent

All participants were presented with an informed-consent form, and indicated their consent by proceeding with the survey.

Notes

1 A few stated-preference VSL estimates concern public-good benefits (e.g., Svensson and Johansson 2010), yet have not entailed macro-risk national-level tradeoffs.

2 The asterisk signaled that the imputed value was not adjusted for any non-paternalistic altruism effects embedded within respondents’ answers (Finkel and Johnson 2018).

3 The CF frame was omitted, as seemingly inappropriate to ask respondents to ‘estimate how much risk reduction makes imposing $1 in regulatory costs acceptable.’

4 The untrimmed control group’s (n = 194) mean was $702,526,409 (25th percentile $44,147, median $921,555, 75th percentile $14, 142,136); the untrimmed UA group’s (n = 202) mean was $399 million (25th percentile $10,000, median $1 million, 75th percentile $15,811,388).

5 Technically this was better characterized as ‘the most reasonable tradeoff between national costs and 100 lives prolonged,’ but we kept the earlier table’s shorter term ‘spend.’

6 Full-sample results appear in the following table:

Table

7 The pooled mean of preferred values is larger than for either frame’s sub-samples despite its sample being smaller than the two sub-samples’ sum. This is because these sub-samples have different proportions of implausible results, and taking the mid-90th percentile of their distribution removes different outlying values.

8 Three-quarters among those with plausible imputed responses (72.1%; 71.3% LF, 70.6% CF) reported no difference in the frames’ difficulty.

9 E.g., the 2015 USEPA ozone standard was estimated to prevent 320–660 premature deaths annually at a yearly cost of $2.9–5.9 billion (McCarthy and Shouse 2018).

10 We omit two other sets of estimates given impossibility of the same trim (reanalysis of Finkel and Johnson 2018) and response quality concerns, respectively (see Johnson and Finkel 2022, for details).

11 Another potential explanation for LF implausible SB1LP* estimates is pseudo-inefficacy, belief that if one can’t save everyone it’s not worth saving anyone (Västfjäll, Slovic, and Mayorga 2015).

Additional information

Funding

Funding for this work was provided by the U.S. National Science Foundation under Grant # 1629287. Data for these studies and the rest of the project are archived at the following: Johnson, Branden, and Finkel, Adam. Estimating the Net Benefits of Environmental, Public Health and Safety Regulations. Ann Arbor, MI: Interuniversity Consortium for Political and Social Research [distributor], 2022-07-30. https://doi.org/10.3886/E175661V1