Criteria for Cost Effectiveness of Safety Measures

Abstract

The paper demonstrates that a simple method exists, by which easily accessible information aggregated in national statistics can be used to derive acceptance criteria for use in cost effectiveness evaluations. Cost effectiveness assessment is normally used for risks that should be made as low as reasonably practicable. These are risks, which are neither intolerably high nor negligible. Examples of users of such criteria are the national and international regulators that implement safety related regulations and industrial companies that operate in an industrial self-regulation regime and therefore define and implement their own risk control strategies. The criteria are derived by combining societal indicators published by the United Nations development program and national statistics. It is observed that in an unregulated market, individuals invest in their own safety or in the safety of their own family. In the same way as the societal indicators indicate how much the regulator should use on safety, the data on how much individuals spend on safety when the decision is up to them indicate when the regulator should not regulate. The idea is then that when individuals make better use of the available resources there is no reason to regulate. As a last point, when it comes to cost effectiveness, the paper demonstrates that situations may well occur for which a wealthy country should invest in safety and a poor country should not.