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Economics of Health Risk Assessment

Author

Listed:
  • Erik Lichtenberg

    (Department of Agricultural and Resource Economics, University of Maryland, College Park, Maryland 20742-5535)

Abstract

The methods that scientific and technical experts have developed for constructing quantitative assessments of health and safety risks have major shortcomings as tools for decision analysis. We use a model of cost-effective risk management under uncertainty to discuss shortcomings of standard risk assessment methods as decision support aids, including problems of (a) comparability of risk estimates and costs of saving statistical lives from compounded conservatism and (b) lack of flexibility in modeling regulatory intervention. Offsets and risk shifting due to regulation-induced changes in firm and household behavior show that risk assessments need to incorporate economic and behavioral science models. Empirical studies demonstrate that the tools of economic analysis can help risk assessments generate much richer information sets both at the overarching level of embedding risk assessments in decision-theoretic frameworks for risk management decisions and at the internal level by giving risk assessments the capacity to capture the effects of behavioral changes on risk.

Suggested Citation

  • Erik Lichtenberg, 2010. "Economics of Health Risk Assessment," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 53-75, October.
  • Handle: RePEc:anr:reseco:v:2:y:2010:p:53-75
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-040709-135045
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    Citations

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    Cited by:

    1. Wen-Jui Tseng & Chien-Chang Chou & Fu-Ting Hsu & Yu-Meng Wang & Yi-Wen Wu Nai-Wen Chang Ya-Ning Liu, 2012. "Risk Analysis of Cargos Damages for Aquatic Products of Refrigerated Containers: Shipping Operators’ Perspective in Taiwan," Information Management and Business Review, AMH International, vol. 4(2), pages 86-94.
    2. Horeh, Marziyeh Bahalou & Elbakidze, Levan, 2022. "Produce Tracing from Farm to Wholesale and Food Safety in the U.S," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322357, Agricultural and Applied Economics Association.
    3. Bahalou Horeh, Marziyeh & Elbakidze, Levan, 2020. "Economic Efficiency of Food Safety Modernization Act: Preventing Illnesses from Contaminated Water," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304637, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    risk analysis; exposure assessment; dose-response estimation; compounded conservatism; cost of saving a statistical life; averting behavior; offsets; risk shifting;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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