Abstract
When performing cost-benefit analyses, regulators typically use willingness-to-pay studies to determine how much to spend to avert risks. Because money has a time-value, when a risk is valued is inextricable from how much it is valued. Unfortunately, the studies on which regulators rely are insensitive to this fact: they elicit people's willingness to pay for risk reductions without identifying the time at which the risk reduction will occur. Relying on these time-indeterminate studies has led to a systematic skew in regulatory cost-benefit analysis, toward the undervaluation of risks to human lives. Insofar as cost-benefit analyses inform regulation, this suggests that the current system systematically under regulates against risks to health and safety.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1505-1542 |
| Number of pages | 38 |
| Journal | Notre Dame Law Review |
| Volume | 85 |
| Issue number | 4 |
| State | Published - Jun 1 2010 |
| Externally published | Yes |
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ASJC Scopus subject areas
- Law
Cite this
The cost of time : Haphazard discounting and the undervaluation of regulatory benefits. / Rowell, Arden.
In: Notre Dame Law Review, Vol. 85, No. 4, 01.06.2010, p. 1505-1542.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - The cost of time
T2 - Haphazard discounting and the undervaluation of regulatory benefits
AU - Rowell, Arden
PY - 2010/6/1
Y1 - 2010/6/1
N2 - When performing cost-benefit analyses, regulators typically use willingness-to-pay studies to determine how much to spend to avert risks. Because money has a time-value, when a risk is valued is inextricable from how much it is valued. Unfortunately, the studies on which regulators rely are insensitive to this fact: they elicit people's willingness to pay for risk reductions without identifying the time at which the risk reduction will occur. Relying on these time-indeterminate studies has led to a systematic skew in regulatory cost-benefit analysis, toward the undervaluation of risks to human lives. Insofar as cost-benefit analyses inform regulation, this suggests that the current system systematically under regulates against risks to health and safety.
AB - When performing cost-benefit analyses, regulators typically use willingness-to-pay studies to determine how much to spend to avert risks. Because money has a time-value, when a risk is valued is inextricable from how much it is valued. Unfortunately, the studies on which regulators rely are insensitive to this fact: they elicit people's willingness to pay for risk reductions without identifying the time at which the risk reduction will occur. Relying on these time-indeterminate studies has led to a systematic skew in regulatory cost-benefit analysis, toward the undervaluation of risks to human lives. Insofar as cost-benefit analyses inform regulation, this suggests that the current system systematically under regulates against risks to health and safety.
UR - http://www.scopus.com/inward/record.url?scp=77956366645&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=77956366645&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:77956366645
VL - 85
SP - 1505
EP - 1542
JO - Notre Dame Law Review
JF - Notre Dame Law Review
SN - 0745-3515
IS - 4
ER -