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ECON 225 > Chapter 07: The Safety Standard > Flashcards

Chapter 07: The Safety Standard Flashcards

1
Q

What is the basis of the safety standard

Compared to the efficiency standard

A

Fairness rather than efficiency
WE HAVE THE RIGHT TO BE SAFE

  • Rejects benefit-cost approach to decisions about “correct” amount
  • People = right protection from unsolicited, significant harm immediate environment
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2
Q

What is the efficiency argument for the safety standard?

A

Always willing to acccept certain amount of risk

Therefore: always cost-benefit analysis

  • Many important benefits of protection from pollution often left out benefit-cost analysis = cannot be measured
  • Material growth society feeds conspicuous consumption, fueling rat race, then no one better off
  • Cost protection overstated rat race
    • Benefits understated
    • Safe regulation reality meet benefit-cost test

Is Accepting Some Risk same as Efficiency Approach?
Declaring safety standard > then adopting economic feasily policy = generally result less policy (compared efficiency standard)

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3
Q

Is Accepting Some Risk same as Efficiency Approach?

A

Is Accepting Some Risk same as Efficiency Approach?

Declaring safety standard > then adopting economic feasily policy = generally result less policy (compared efficiency standard)

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4
Q

What is the mandate approach?

A

MC > MB:
Cost to society

**Add graph

Capitalism: profits goods > innovation

♻️ Use of fossil fules overused: not wrong fossil fuels but incorrect (low) pricing to make up for externalities

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5
Q

What is the market approach?

A

**Graph

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6
Q

Who has the “right” to pollute and how is the answer different when considering efficiency and safety?

A

Efficient outcome same (if either consumer or producer pay)

Safety standard: Right to safety
- correct
- Must pay to “violate” safety

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7
Q

How does the safety standard influence environmental policy?

A

Safety Standard stated goal much environmental policy:

Laws covering air, water, and land pollution require cleanup to “safe” levels

  • No mention benefit-cost test
  • Clean-up costs still play role policy determination
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8
Q

How is the safety standard expressed as a social welfare function?

A

Ex: Tyler and Brittany wrangling over smoking in office

  • Smoking bad Brittany and good Tyler
  • Weight given w large enough - justify banning smoking altogether
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9
Q

What are the objections to the safety standard?

A
  1. Inefficient? Often
  2. Not Cost-Efficient? Often
  3. Regressive? Maybe
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10
Q

What other problems does the safety standard have?

Objections:

  1. Inefficient? Often
  2. Not Cost-Efficient? Often
  3. Regressive? Maybe
A
  1. Subjective levels
  2. Environmental damage is not done in the name of environmental damage:
    Done profit incentives
    Therefore, there are benefits (both consumers and producers)
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11
Q

How is the safety standard inefficient?

Objections:
1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

A

By definition, SS, inefficient

♻️ Efficiency advocates claim that saying environmental health is a “right” involves committing too many resources of society to environmental protection

  • Should be: safety per dollar spent (to be more effective)

Ex: Air toxics regulations and Landfill Policy

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12
Q

How do air toxic regulations illustrate the how safety is inefficient?

A
  • 1990 amendments to Clean Air Act designed control emissions
  • Law required frims impose control tech reduce risk below 1 in 10,000 levels

Total Cost: $6 to $10 billion per year

Total Benefit: $4 billion per year

80% Americans still support despire cost-benefit disparity

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13
Q

How do air landfill policy illustrate the how safety is inefficient?

A
  • EPA’s regualtion landfills protect people depend contaminated groundwater were predicted reduce cancer cases 2 or 3 over next 300 years
  • Potential benefits not quantified include:
    1. Increase ease siting landfills
    2. Reduce damage surface water
    3. Fairness future generation
    4. Overall reduction wate generation and related “upstream” pollutoin

Total Cost: $5.8 billion
Total Benefit: $2 billion per cancer case reduced

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14
Q

What is Type I and Type II Error?

A

TYPE I ERROR: Not accept claim but it is true
TYPE II ERROR: Accept the claim but it is false

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15
Q

How does the claim “drug is safe” illustrate that the safety analysis could be wrong?

A
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16
Q

How does the claim “person is a nice guy” illustrate that the safety analysis could be wrong?

A
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17
Q

What are inefficient regulations?

A
  1. Regulations protect small groups from risk - ALWAYS inefficient (high risks not generate many casualties)
  2. Air and EPA’s landfills regualtions classic situations which efficiency and fairness conflict

Economics often efficiency advocates:
Find economists leveling normative criticisms at safety-based enviornmental protection laws

18
Q

How is the safety standard not cost effictive?

Objections:
1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

A

Lack of cost-effectiveness - goal at the lowest possible cost

If “safety” is goal - extreme measures taken attack minimal risk situations instead high risk situation

19
Q

How does superfund and asbestos illustrate the lack of cost-efficiency?

A

Ex: Superfund and Asbestos

Millions dollars spent purify seldom used groundwater at toxic stills

  • Critics argued redirecting functions better use of resources:
    1. Children about 5 in 1 million chance contracting lung cancer from attending school built w asbestos
    2. Redirecting functions superfund clean-up asbestos removal could save more lives

Safety proponents response:

  • Limits deal problems = not limited resources > lack political will
  • Funds freed up from “overcontrol” in pollution arena more likely devoted affluent consumption
20
Q

Risk-Benefit Analysis

A
  • Authorities use risk-benefit studies compare cost-effictiveness different regulatory options
  • Common measure used appraoch lives saved per dollar spent
  • Helps avoid devoted resources to an intractable problem, not mean backing way safety as a goal
21
Q

How is the safety standard regressive:

Objections:

  1. Inefficient? Often
  2. Not Cost-Efficient? Often
  3. Regressive? Maybe
A
  1. Safety standards more restictive than efficiency standards:
    greater sacrifice goods and services
  2. Concered people fall below decent standard of living - overregulation
  3. Suppose switched from a safety standard to an efficiency-based standard: Would be poor be better off?
22
Q

Do lower income people generally benefit more/less from environmental regulations?

A

Lower income people generally benefit less environmental regulations:

Do not have the resource to avoid engading in dirty industry

  • cant buy a Tesla - cars inefficient

Change regulation: cannot afford new car
Therefore, impose costs on lower income people

Ex: GST

5% sales tax

  • Low income person: spends all of their income > all of their income affected by tax
  • High income person: not spend all their income (%) > paying GST on practically non of their income
    Try compensate marginalized communities:
    • Some goods not taxed (milk) and chocolate is taxed
    • GST money back programmes

Same principle would apply to pollution tax

  • LIP spend more on their income on dirty goods

Hence: Safety standard also not inherently fair

23
Q

Regressive impact on income distribution:

A

Regressive impact income distribution:

(Unless compensated for) higher prices consumer goods induced regulations take bigger percentage bite income poor than rich people

Much pollution generated production of necessity - cost environmental regulations borne unevenly

24
Q

Progressive Beneftis from Pollution Control:

In relation to regressive influence of the safety standard

A

Poor people live more polluted areas
- benefit more from clean-up
- Harmed more when standards relaxed

25
Q

Define Environmental Racism:

A

Racial inequality exposure pollution (eg. Flint 2015)

♻️ Policys for environmental regulation disproportionatly affect marginalized communities

Environmental Justice Movement in response

Exposure due to low income or race?
- Poor, working-class, and minority people pay more, relative to income, for pollution control (Also benefit more)

  • Hard determine whether it results in net benefits or net costs
26
Q

How does socio-economic influence influence the placement of LULUs?

A

“Locally unwanted land uses” or (LULUs) refer sites for disposal waste

  • LULUs impose negative externalities on neighbors from potential hazards exposure to decreased land values
  • By def, communities nnot want LULUs and wealthier community, higher level of safety community will demand
  • Located poorer communities:
    • Based efficiency/safety/both?
    • WTA larger

Summers Memo: Internal memorandum to staff, then chief economist at World Bank

27
Q

How does safety “need time?”

A

To create safety: MUST NEED TIME

  • Safety standard: must determine safety standard at the time y want to impliment policy (moving policy)
28
Q

Define moving policy?

A

Must determine safety standard at the time you want to impliment the policy

29
Q

How does Compensation for LULUs work?

A
  • Society whole benefit greatly having toxic facilities
  • One solution - monetarily compensate communities with LULUs

Compensation could pay schools, libraries
Poorer communities accept lower compensation levels than wealthier communities

trade in LULUs

30
Q

How does LULUs create a (unfair) global marketplace for garbage disposal?

A
  • Society whole benefit greatly having toxic facilities
  • One solution - monetarily compensate communities with LULUs (Compensation could pay schools, libraries)
  • Poorer communities accept lower compensation levels than wealthier communities(trade in LULUs)

Global marketplace garbage disposal

Still unfair: Poor countries do not choose to be poor

  • Poorly governed
  • Might not be effective at disposing garbage
31
Q

What is the efficiency argument behind toxic trade?

A
  • Lower income - poor country has marginal benefit of cleanup schedule lying below that of rich countries
    Rich countries: rich enough to care about environmental problems
  • Current pollution levels lower poor countries > MB of cleanup also lower
  • Transferring 10% waste of rich country to poor country reduces monetary damages in rich country more than it increases damages in poor country
  • Poor countries then compensated for its damages and overall monetay damages will reduced by trade

**Graph

32
Q

How does the toxics trade create winners and losers?

A

Winners:
- Wealthy countries no longer exposed waste
- Around world can buy cheaper products
- People (poor) in dump sites
Losers:
- Poor country individuals (now and future generations) contract diseases
- Rely natural resources may damage transport and disposal process

Everyone Wins?

  • Dumping toxics = efficient, total monetary gains to winner outweight total monetary loss to losersTheory: winners compensate losers (tho complete compensation unlikely)
33
Q

What are some problems with the toxic trade?

A
  • Majority benefit from dumping flow to relatively wealthy while poor will bear the burden of costs
  • Political structure in many developing countries is far from democratic, highly susceptible to corruption
  • Few poor countries have resource for effective regultion
  • Still regulation or high taxes increase rate illegal dumping; unregulated trade waste may thus lower welfare of recipient country
34
Q

What does the safety standard say about the siting of LULUs?

A

Politically acceptable definition “safety” - not worked out

why: small group bears burden risks - nobody wants in backyard

Compensation thus play role in stiting of hazardous facilities

  • Firms and governments seek poorer communities and less political power
    Thus: less compensation package
35
Q

How to ensure the majority benefits from sitting LULUs?

A
  • government capable providing effective regulation
  • open political process and democracy
36
Q

Compare Safety and Efficiency:

Social Goal?

A

Efficiency: MB = MC
Safety: Danger to health and environment “minimized”

37
Q

Compare Safety and Efficiency:

Social Goal?

A

Efficiency: MB = MC
Safety: Danger to health and environment “minimized”

38
Q

Compare Safety and Efficiency:

Implied social welfare function:

A
39
Q

Compare Safety and Efficiency:

Advantages and Disadvantages:

A

Efficiency: Maximizes measurable net monetary benefits; relies heavily on assumptions of benefit-cost analysis

Safety: Seems consisted with public opinion; often cost-ineffective and may be regressive

40
Q

Compare the safety and efficiency standard:

A

(1)Safety Standard**:

  • Relies liberty argument: weight welfare

Stricter pollution standard than efficiency standard

  • Still subjective
  • Still unfair
  • Overmake case for safety = weakens argument

Not want to get to point of no return (say 5°) - overstate line (to make sure not get point)

(2)Efficiency Standard:

  • Attack “fairness” argument of safety: regressive
    • difficult prove/refute in general

Both have the same problems - at least the efficiency standard (cost-benefit analysis) better understood

ECON 225 (22 decks)

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