Implementing the Commission's risk-management framework and using information on both risks and economics to make decisions require some consistency between risk-related and economics-related assumptions and conclusions. At present, risk assessors operate in a world essentially isolated from that of economists, and economists often have little knowledge of risk assessment. This section highlights some of the incompatible and contradictory approaches that will have to be reconciled if risk assessment and economic analysis are to be used together to support effective risk-management decision-making.

FINDING 4.3.1: Risk assessors are unfamiliar with the information about risks that is needed for economic analysis. As a result, the questions asked and the results of risk assessments often do not match the needs of economic analysis.

RECOMMENDATION: Risk assessors and economists who must rely on the results of risk assessments should collaborate more to minimize the inconsistencies between scientific and economic approaches to characterizing risks and risk-reduction alternatives. Risk assessors and economists should expand their methods to reduce mismatches.

RATIONALE

The results of risk assessments are used in economic analysis to estimate benefits, but risk- characterization end points are often inconsistent with economic-valuation starting points. The traditional methods of evaluating health effects for use in health risk assessment can conflict with the needs of economists who are asked, at least implicitly, to provide information on individual preferences for avoiding health risks. For example, a 10% improvement in lung function is not meaningful to most people. They do not demand greater lung function; they want fewer sick days. Health risk assessments seldom evaluate risks in terms of sick days, and no available economic studies can be used to value a 10% improvement in lung function. In addition, adverse effects other than cancer are generally regulated by comparing a chemical's exposure concentration to its standard, or "safe," concentration, not by calculating an estimate of risk based on probability (such as 10^-6). Economists have not yet developed methods for evaluating risks that are not expressed as probabilities. Closer collaboration between economists who are familiar with the valuation literature and scientists who are estimating concentration-response functions could help to avoid such mismatches and perhaps lead to the development of new methods, by seeking end points that can be evaluated in terms of both their risk and their economic value.

Another conflict between the needs of economists and the results of risk assessments is that health risk assessments generally focus on individual risk estimates rather than population risk estimates. Economic analysis focuses on estimating benefits for the population at large, for two reasons. First, if costs are to be compared with benefits, it would make no sense to compare total costs with benefits experienced by only one (hypothetical "maximally reasonably exposed") person. Second, even if one were performing a CEA in which abatement costs per risk to the maximally exposed person were being estimated, the resulting estimates could be very misleading. Suppose that two abatement strategies had equal cost, but one was related to a very high individual risk and low population risk (because few people were exposed to the pollutant of concern), and the other associated with exposing many more people but with low individual risk. A CEA based on individual risk would lead to adoption of the first strategy instead of the strategy based on the population risk, which could be considered the more relevant measure.

Inconsistency also results from the traditional risk-assessment practice of relying on conservative assumptions when there is uncertainty about aspects of exposure or toxicity. That tradition purposely skews risk estimates upward to build in a margin of safety that is intended to protect a population from health risks (estimating average risk reductions instead might result in protection of only part of a population), and provides only one point in the upper end of a risk distribution. According to BCA standard practice, an analyst attempts to describe the distribution of risks (or the distribution of risk reductions) in the population and leaves it to a decision-maker to decide what is an acceptable level of protection and which strategies deliver that level of protection. Current trends away from expressing risk-assessment results in terms of upper-bound point estimates and instead using distributions of risks might overcome this inconsistency and should be pursued further.

Finally, inconsistency can result from the tendency of risk assessment to rely more on expert opinion and the tendency of economic analysis to rely more on the perceptions of nontechnical people. An economist's job is to characterize individual preferences for products or activities associated with risks where those preferences are conditional on individual risk perceptions; economic estimates of damages are based on individuals' willingness to pay to avoid risks. Individual risk perceptions are often inconsistent with expert opinion (see section 5.1), so using one as the basis for evaluating the other is also inconsistent. Resolving these inconsistencies will require judgments regarding the appropriate weighting of the opinions of experts and of informed, nonexpert people.

The use of margins of exposure by EPA to compare cancer and noncancer risks (see section 3.1 and 5.1) has been criticized as being unsuited to economists' needs for specified, extrapolatable (but not necessarily linear) dose-response curves down to very small exposures. That problem has always existed for any effect thought to exhibit a threshold, no effect below a particular dose. Putting aside the issue of defining that threshold, economists could use their "willingness-to-pay" methods to put values on the range of margins of exposure. Having the margins decline due to increases in emissions and exposures would be a negative effect. Taking action to increase margins of exposure between exposures known to have adverse effects and exposures actually experienced in various occupational and environmental settings would be a benefit. Presumably, relative values or monetized estimates could be generated. It would be important to use the risk-reduction presentation captured in figure 5.1 to guide assessment of the amount of risk reduction gained as exposure levels were reduced progressively.