Professor Sunstein's fuzzy math

Georgetown Law Journal, Jul 2002 by McGarity, Thomas O

INTRODUCTION

For many years, Professor Sunstein has been one of academia's most persistent and persuasive advocates of federal agency use of cost-benefit analysis in health, safety, and environmental decisionmaking. A cost-benefit balancing approach to governmental decisionmaking squares nicely with civic republican values that acknowledge the important role that government must play in achieving a fair distribution of resources. At the same time, it urges informed and fair-minded professionals to decide, after due deliberation, what is best for the rest of us.1 Professor Sunstein has always preached a "soft" version of cost-benefit analysis that takes an honest stab at quantitative assessment of the costs and benefits of major health, safety, and environmental regulations, but does not necessarily allow the result to dictate the ultimate outcome of any given rulemaking effort. Agencies should, in Professor Sunstein's view, use the knowledge gained from cost-benefit analysis for guidance in setting regulatory priorities and defining the outer bounds of rational decisionmaking.

In The Arithmetic of Arsenic,2 Professor Sunstein goes beyond the theory of cost-benefit analysis to examine in some detail an important application of that approach to regulatory decisionmaking in the real world. This altogether commendable exercise leads Professor Sunstein to what, apparently for him, is the surprising conclusion that quantitative risk assessment and monetization techniques yield a very broad range of plausible benefits for nearly all of the available regulatory options. Rather than shake his faith in the value of quantitative cost-benefit analysis as a decisionmaking tool in risk regulation, this revelation leads Professor Sunstein to lessons that are fully consistent with the soft cost-benefit approach that he has always advocated, with the additional caveat that courts should give agencies a great deal of leeway in reviewing health, safety, and environmental regulations. Ultimately, the source of Professor Sunstein's unwillingness to abandon the paradigm altogether is his profound and abiding lack of confidence in the capacity of an uninformed and simpleminded public to make wise decisions about the magnitude of health, safety, and environmental risks, and the steps that should be taken to reduce those risks.

Parts I and II of this Response will examine the EPA's arsenic risk assessment and benefits analysis in light of Professor Sunstein's "Questions and Doubts" about the proper shape of the dose-response curve at low levels and his observations on the proper monetary sum that the EPA should assign to statistical life and limb. Part III consists of an in-depth critique of what Professor Sunstein characterizes as a "peer review" of the EPA's benefits assessment by an economist and a research associate at the American Enterprise Institute. The point of this exercise is to demonstrate that leaving the benefits assessment function to the professionals, as Professor Sunstein is inclined to do, will, in practice, bestow large amounts of regulatory discretion on self-proclaimed experts who lack expertise in matters about which they freely opine and who have sharp ideological axes to grind.

In Part IV, I highlight some of the curiosities and contradictions that adhere to Professor Sunstein's continued commitment to the synoptic paradigm despite his clear understanding of the huge uncertainties that necessarily attend attempts to quantify and compare the costs and benefits of health, safety, and environmental regulation. For example, after fully acknowledging that the benefits of the EPA's arsenic standard could vary over an extraordinarily wide range, Professor Sunstein insists on carrying some of the numbers to the point of meaningless precision. Although he declines to provide his own best estimate of the benefits of the regulation on the ground that it would be "too speculative,"3 he makes it clear that he believes that the EPA's estimate was too high. Professor Sunstein believes that the numbers that lack the precision to inform decisions about which communities should receive government subsidies for treating drinking water are precise enough to support a "sliding scale" of regulations capable of protecting some communities more than others.

Part V addresses Professor Sunstein's claim that quantitative cost-benefit analysis is useful, despite its severe limitations, as a cure for the "intuitive toxicology"4 that guides an uninformed and simple-minded public to demand bad government policies that lead to irrational health, safety, and environmental standards. Put simply, I believe that Professor Sunstein places too much faith in professionals like the individuals critiqued in Part III and he does not give enough credit to the common sense of ordinary citizens.

Finally, Part VI examines some solutions to the dilemma posed by large uncertainties in the decisionmaking process. Agreeing with Professor Sunstein that "soft glance" judicial review is appropriate in this area, I suggest that he think twice before abandoning informational solutions, technology-based approaches, and the margin-of-safety concept in favor of a cost-benefit balancing approach that is dominated by experts and inaccessible to the lay public.