The cost of time: Haphazard discounting and the undervaluation of regulatory benefits

Research output: Contribution to journalArticlepeer-review

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 languageEnglish (US)
Pages (from-to)1505-1542
Number of pages38
JournalNotre Dame Law Review
Volume85
Issue number4
StatePublished - Jun 1 2010
Externally publishedYes

ASJC Scopus subject areas

  • Law

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