20090928-Risk_Regulation - RiskRegulation:...

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Risk Regulation: Looking After Citizen Welfare
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Background Information US need for health and safety Economic progress Increased education Increased public awareness Level of scientific knowledge National campaigns to reduce risk Allocation of public funds to change public life style  choices (e.g., TRUTH campaign, Strive for 5, seatbelt  use, etc.)
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As a nation we have been seeking  substantially higher levels of  protection against risks that are: 1. Personal 2. Environmental
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For example… In 1980 only 10% of motorists used seat belts,  by 1995 60% were using, and by 2006 72% of  all motorists were using seat belts. Red meat and egg consumption are down BUT, 25% of the population are obese and less  than 10% exercise regularly
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Risk Regulation Fact is, overall  risk of early  mortality and  morbidity has  never been  lower in the U.S.
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Government Regulation When should the  government intervene to  protect citizens against  risk? When is it reasonable  to expect citizens to  protect themselves  against risk?
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Individual Liberties  Right to choose Efficiencies Differential risk preferences Pareto optimality Offsetting behavior Spillover effects Medicine caps and children’s safety Seat belts and driving speed Arguments Against Government  Intervention:
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Risk tradeoffs Life sentences, solid waste, artificial sweetner Regulatory delays FDA and drug approval NTSB and seatbelts Mandates impose a cost Who pays for safety? Impact on the economy Arguments Against Government Intervention:
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Why does the government  regulate risk?
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Externalities: An individual’s ability to control risk Informational failures: Biased risk perceptions Not related to education Why does regulation occur?
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Because……. . Our mental risk
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20090928-Risk_Regulation - RiskRegulation:...

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