Notice of Availability: Proposed Draft Guidance for Estimating Value per Statistical Life, 17826-17828 [2023-06081]

Download as PDF 17826 Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices notice on January 11, 2023 (88 FR 1564) under Docket Number: CFPB–2023– 0004. The Bureau is publishing this notice and soliciting comments on: (a) Whether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility; (b) The accuracy of the Bureau’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Comments submitted in response to this notice will be reviewed by OMB as part of its review of this request. All comments will become a matter of public record. Anthony May, Paperwork Reduction Act Officer, Consumer Financial Protection Bureau. [FR Doc. 2023–06113 Filed 3–23–23; 8:45 am] BILLING CODE 4810–AM–P CONSUMER PRODUCT SAFETY COMMISSION [Docket No. CPSC–2023–0013] Notice of Availability: Proposed Draft Guidance for Estimating Value per Statistical Life U.S. Consumer Product Safety Commission. ACTION: Draft guidance; notice of availability. AGENCY: The Consumer Product Safety Commission (Commission or CPSC) is announcing the availability of proposed draft guidance for CPSC’s staff on the application of the Value of Statistical Life in the agency’s cost-benefit analyses, and in particular for its regulatory analyses. CPSC seeks comments on the proposed draft guidance. SUMMARY: DATES: Submit comments by May 23, 2023. You can submit comments, identified by Docket No. CPSC–2023– 0013, by any of the following methods: Electronic Submissions: Submit electronic comments to www.regulations.gov. Follow the instructions for submitting comments. Do not submit through this website: confidential business information, trade secret information, or other sensitive or lotter on DSK11XQN23PROD with NOTICES1 ADDRESSES: VerDate Sep<11>2014 19:18 Mar 23, 2023 Jkt 259001 protected information that you do not want to be available to the public. CPSC typically does not accept comments submitted by email, except as described below. Mail/Hand Delivery/Courier/ Confidential Written Submissions: CPSC encourages you to submit electronic comments by using www.regulations.gov. You may, however, submit comments by mail, hand delivery, or courier to: Office of the Secretary, Consumer Product Safety Commission, 4330 East West Highway, Bethesda, MD 20814; telephone: (301) 504–7479. Instructions: All submissions must include the agency name and docket number. CPSC may post all comments without change, including any personal identifiers, contact information, or other personal information provided to www.regulations.gov. If you wish to submit confidential business information, trade secret information, or other sensitive or protected information that you do not want to be available to the public, you may submit such comments by mail, hand delivery, or courier, or you may email them to: cpscos@cpsc.gov. Docket: For access to the docket to read background documents or comments received, go to www.regulations.gov, and insert the docket number, CPSC–2023–0013, into the ‘‘Search’’ box, and follow the prompts. Alex Moscoso, Associate Executive Director, Directorate for Economic Analysis, U.S. Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; telephone: 301–504–7782; email: amoscoso@cpsc.gov. SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: I. Introduction The Value per Statistical Life (VSL) is a widely used parameter in cost-benefit analysis, including regulatory analysis, which represents an individual’s willingness to pay for reducing their risk of fatality. VSL values a reduction of fatality risk in monetary terms to be used for cost-benefit analysis. VSL is not an attempt to place a value on any individual life. Instead, government economists typically apply VSL in regulatory analysis to measure the welfare impact of policies that reduce or increase fatalities. The CPSC’s Directorate for Economic Analysis (EC) is responsible for conducting all economic analyses for the agency, which includes regulatory analysis. Regulatory analysis may include a cost-benefit analysis of a PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 proposed regulation. EC regularly uses VSL in its regulatory analyses of CPSC regulations. While the U.S. Office of Management and Budget and some executive branch agencies and departments have published guidelines on the application of VSL for their purposes,1 CPSC is not subject to those guidelines. This NOA describes proposed guidelines for CPSC staff on the application of VSL for cost-benefit analysis, and in particular for the Commission’s regulatory analysis.2 Specifically, the draft guidance will establish for CPSC staff a standard source for estimating VSL as well as guidelines for adjusting VSL for inflation, changes in real income (i.e., controlling for inflation), sensitivity analysis, and discounting. Among other elements, the proposed draft guidance document prescribes a VSL estimate specifically for children. Government economists often apply VSL uniformly to all fatalities that fall within the scope of the regulation being assessed. This approach has the advantage of simplicity. However, it systematically underestimates benefits for regulations that reduce fatality risk to children. It is widely observed that society prioritizes the safety of children and invests significantly in child safety. Examples include the large investments made on child safety such as the babyproofing industry,3 safety caps on overthe-counter medicines,4 and the certifications and licensing required for daycare centers and schools to promote child safety. Consistent with this, 1 The U.S. Department of Transportation (DOT), U.S. Department of Health and Human Services (HHS), and U.S. Environmental Protection Agency (EPA) all recommend default VSL estimates in their official guidelines. The Office of Management and Budget provides general best practice guidance (OMB Circular A–4) to Federal executive branch agencies on regulatory analysis, including discussion of issues related to estimating VSL. While Circular A–4 recommends avoiding ageadjustment factors due to mixed evidence on age and VSL, it should be noted that since OMB published Circular A–4 (September 2003) 20 years ago, there has been new research studying an ageadjustment factor for children’s VSL, including Robinson et al. (2019). 2 The Commission voted 4–0 to approve publication of this notice. Commissioner statements in connection with this vote are available at: https://www.cpsc.gov/s3fs-public/RCADraftFederal RegisterNoticeNoticeofAvailability ProposedGuidanceforUsing ValueofStatisticalLife.pdf ?VersionId=5I3jGkZymDY8qdMwPzqMSM_ fim8M49TM. 3 $14.21 billion market in 2022. Business Wire, ‘‘Baby Safety Devices Market Research Report 2022—Global Forecast to 2027’’, May 16, 2022, https://www.businesswire.com/news/home/ 20220516005546/en/Baby-Safety-Devices-MarketResearch-Report-2022--Global-Forecast-to-2027-ResearchAndMarkets.com. 4 Poison Prevention Packaging Act of 1970, Public Law 91–601, (84 Stat. 1670). E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices Congress has provided CPSC special statutory mandates to protect children.5 Research on individuals’ willingness to exchange money to reduce fatality risks to children appears to align with these societal preferences.6 The draft guidance document defines an elevated VSL for children to more accurately assess the benefits of regulations that protect children from deadly outcomes. II. Discussion This notice provides background on relevant work CPSC has done to understand the issue of child VSL; describes the current practice of using VSL in regulatory economics, both at CPSC and in other government agencies; explains CPSC’s reason for issuing VSL guidelines; puts forward draft guidelines for CPSC staff’s use of VSL; and requests public comment on these draft VSL guidelines. The draft guidance does not discuss the valuation or averted costs associated with reducing non-fatal injuries. Some federal agencies and departments estimate their values or averted costs associated with reducing non-fatal injuries as a function of VSL. CPSC, however, determines the averted costs of reducing non-fatal injuries through its Injury Cost Model, independent of VSL.7 Therefore, the draft guidance does not change CPSC’s injury cost estimation approach. lotter on DSK11XQN23PROD with NOTICES1 A. Background VSL is usually derived from willingness to pay studies. These studies either use surveys to investigate individuals’ willingness to exchange their own income for a change in their own risk, or examine real world behavior that reflects this trade-off, such as the change in income associated with a change in job-related risk. Individual willingness to pay estimates from these studies are then converted to a VSL estimate by dividing by the risk change. For example, if a group of 10,000 individuals were willing to pay $900 each to reduce their risk of death by 0.01 percent in a given year, then in the aggregate that group of individuals would be willing to spend $9 million 8 to reduce the risk of one additional 5 See, for example, Title I of the Consumer Product Safety Improvement Act of 2008, Public Law 110–314 (122 Stat. 3016), entitled ‘‘Children’s Product Safety.’’ 6 Robinson, L., Raich, W., Hammitt, J., & O’Keeffe, L. (2019). Valuing Children’s Fatality Risk Reductions. Journal of Benefit-Cost Analysis, 10(2), 156–177. 7 For information on how CPSC estimates the cost of injuries, see: https://www.cpsc.gov/s3fs-public/ ICM-2018-Documentation.pdf. 8 $9 million = $900 ÷ 0.01% reduction in fatality = $9 million per expected death averted. VerDate Sep<11>2014 19:18 Mar 23, 2023 Jkt 259001 fatality in that given year. These studies usually estimate the value that adults place on reducing their own risk of fatality. Inherently, individuals’ willingness to pay is a function of their real income, wealth, and other personal factors as well as the characteristics of the risk. This approach cannot be used with children, who do not control financial resources and may not understand or be able to express their willingness to pay for such reductions. Furthermore, assigning the same VSL for adults and children ignores the evidence, noted above, that society values the safety of children more than adults. Failing to acknowledge the importance of child safety within society runs the risk of undervaluing the public benefits of regulations that protect children, potentially resulting in insufficient investment of resources to protect the very lives of those whose safety society values most. CPSC is an independent Federal agency tasked with protecting consumers from unreasonable risk of death and injuries from consumer products. Many of the agency’s regulations reduce the risk to children of death and serious injury. Furthermore, CPSC’s statutory authorities (such as sections 104 and 106 of Consumer Product Safety Improvement Act of 2008, Public Law 110–314, 122 Stat. 3016) and policy statements (such as 16 CFR 1009.8(c)(6)) direct the Commission and its staff to place a higher priority on preventing product related injury to vulnerable populations, which include children. Therefore, CPSC has a statutorily based interest in estimating a VSL for children and ensuring it presents a comprehensive assessment of the benefits from regulation. In 2018, Industrial Economics Inc. (IEc) conducted a literature review of studies estimating a VSL for children and drafted a report for CPSC that described its findings.9 IEc found that ‘‘[t]he number of studies that explore the value of reducing children’s risks has increased substantially in recent years. The results of these studies are diverse, but generally suggest that the value individuals place on reducing risks to children is greater than the value of reducing risks to adults’’.10 In 2019, the group of co-authors, including the authors of this report published an update of the literature review in a peer9 Industrial Economics, Inc. ‘‘Valuing Reductions in Fatal Risks to Children’’, January 3, 2018, https:// www.cpsc.gov/content/Valuing-Reductions-inFatal-Risks-to-Children. 10 Ibid. PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 17827 reviewed journal with some modifications from the 2018 report.11 These studies found five publications that satisfied many of their evaluation criteria, which showed VSL for children exceeds the VSL for adults by a factor of 1.2 to 2.9, with a midpoint of roughly 2.12 Since these studies, CPSC has published three regulations in the Federal Register (FR) aimed at children’s safety that included costbenefit analysis: Safety Standard for Magnets (87 FR 57756), Safety Standard for Operating Cords on Custom Window Coverings (87 FR 73144), and Safety Standard for Clothing Storage Units (87 FR 72598). While all three of the regulatory analyses estimated benefits that came primarily from preventing death and injury to individuals under 18 years old, CPSC used VSL based on adults. However, in the cost-benefit analyses of custom window coverings and clothing storage units, CPSC also used child-to-adult VSL ratios from these studies as part of the sensitivity analyses to evaluate the impact of an elevated VSL for children. B. Federal Agency Practice The EPA, DOT, and HHS each have formal guidelines for estimating VSL within their agency. EPA derives its estimates from 26 studies, of which 21 are wage-risk studies.13 DOT primarily addresses injury-related risks and derives its VSL estimate exclusively from wage-risk studies, which also address injury-related risks.14 HHS bases its VSL estimates on six wage-risk studies and one meta-analysis of these studies, as well as three stated preference studies.15 Table 1 displays the values of all three agencies’ VSL, adjusted to 2021 dollars and income levels for comparison. 11 Robinson, L., Raich, W., Hammitt, J., & O’Keeffe, L. (2019). Valuing Children’s Fatality Risk Reductions. Journal of Benefit-Cost Analysis, 10(2), 156–177. 12 See citation in footnote 9. 13 U.S. Environmental Protection Agency, ‘‘Guidelines for Preparing Economic Analyses’’, 2010, https://www.epa.gov/environmentaleconomics/guidelines-preparing-economicanalyses. 14 U.S. Department of Transportation, ‘‘Treatment of the Value of Preventing Fatalities and Injuries in Preparing Economic Analyses’’, 2021, https:// www.transportation.gov/sites/dot.gov/files/2021-03/ DOT%20VSL%20Guidance%20-%202021 %20Update.pdf. 15 U.S. Department of Health and Human Services, ‘‘Guidelines for Regulatory Impact Analysis’’, 2016, https://aspe.hhs.gov/reports/ guidelines-regulatory-impact-analysis. E:\FR\FM\24MRN1.SGM 24MRN1 17828 Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices TABLE 1—U.S FEDERAL AGENCY CENTRAL VSL ESTIMATES [2021 dollars and income levels] EPA DOT HHS $11.3 million ..... $11.8 million $11.6 million CPSC has routinely used EPA’s VSL estimate in the benefits assessments of its regulatory analyses. Specifically, CPSC adjusts EPA’s base VSL for inflation to the year of the analysis using the Bureau of Labor Statistics’ Consumer Price Index. Then, the inflation adjusted VSL is multiplied by the number of estimated deaths. This generates a monetized value of benefits from the fatality risk reduction associated with the proposed rule. When the analysis projects the regulation’s impact into the future, CPSC additionally discounts all monetized future costs and benefits, including the value of prevented deaths, to account for the time value of money. C. Reasons for Establishing the Proposed VSL Guidelines CPSC regularly assesses the costs and benefits of proposed regulations that address safety. By developing and publishing guidelines for its staff’s use of VSL in regulatory analysis, CPSC can: (1) help ensure that its regulatory analyses appropriately measure the benefits from reduced fatality risk, including children’s mortality; (2) improve consistency across regulatory analyses regarding the valuation of benefits for reducing fatality risk; and (3) promote transparency by sharing these guidelines with the public and gathering comments on the guidelines. To further these goals, the proposed guidelines establish the source, base value, and method of application for VSL. The proposed guidelines also establish a ratio of child VSL to adult VSL. III. Summary of the Proposed VSL Guidelines CPSC seeks public comment on its proposed VSL guidelines, which are fully described in the draft guidance. The proposed guidelines state that: 1. CPSC staff will use HHS’s VSL estimate for adults. 2. CPSC staff will double the adult VSL to establish the child VSL. 3. When adjusting the VSL, CPSC staff will account for changes in both the general price index (inflation) and real income using the method in HHS’s Guidelines for Regulatory Impact Analysis. 4. CPSC staff will include in regulatory analyses a sensitivity analysis that use both high and low estimates for adult and child VSLs. 5. When estimating VSL in future years, CPSC staff will discount the resulting benefit values to reflect the time value of money, consistent with its approach for all cost and benefits estimates. These guidelines and their sources are summarized in Table 2. TABLE 2—SUMMARY OF CPSC VSL GUIDELINES Variable Guideline Adult VSL ............................................................ $11.6 million in 2021 dollars as of January 1, 2023. Based on HHS’s VSL Guidance. CPSC will update this value as HHS updates with new VSL value. $23.2 million in 2021 dollars as of January 1, 2023. Double the adult VSL. Doubling the VSL is based on findings from IEc’s ‘‘Valuing Reductions in Fatal Risks to Children’’ and Robinson et al. (2019). Inflate to year where full annual data is available for price (inflation) and real income. Use data and formula in HHS VSL guidance. Apply discount rate to all monetized values that are a function of VSL in future years. Use Current Population Survey Median Weekly Earnings for initial adjustment to year of analysis. For future years, use real earnings per worker growth rate from the Congressional Budget Office’s Long-Term Budget Outlook.16 Use value from HHS VSL guidance. Child VSL ............................................................ Inflation ................................................................ Discount .............................................................. Real income index .............................................. lotter on DSK11XQN23PROD with NOTICES1 Income elasticity .................................................. CPSC seeks public comment on the proposed VSL Guidelines, including specifically the following: • The criteria and studies included in the IEc and Robinson et al. reviews, as well as any new studies; • Alternative approaches for adjusting VSL for age. • The estimation of VSL in these guidelines, especially child VSL. • Any other applications of VSL that CPSC should address in its proposed draft guidance. and • Any other general comments on child VSL and CPSC’s proposed draft guidance. The proposed guidance is available at: https://www.cpsc.gov/s3fs-public/ ProposedDraftGuidancefor EstimatingtheValueperStatistical Life.pdf?VersionId= YZhzsWkIsHuhzNVm8VmT FwxsjbbIuvw0. The staff’s briefing package on this matter is available on CPSC’s website at: https:// www.cpsc.gov/s3fs-public/DraftFederal RegisterNoticeNoticeofAvailability ProposedGuidanceforUsingValueof StatisticalLife.pdf?VersionId=QiWpCy 7L9AvI17U.Mo3s.CyRkUdM2INf. Alberta E. Mills, Secretary, Consumer Product Safety Commission. [FR Doc. 2023–06081 Filed 3–23–23; 8:45 am] BILLING CODE 6355–01–P 16 Congressional Budget Office, ‘‘The 2022 LongTerm Budget Outlook’’, Real Earnings per Worker (2022–2052) in Table B–1, 2022, https:// www.cbo.gov/publication/57971. VerDate Sep<11>2014 19:18 Mar 23, 2023 Jkt 259001 PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 DEPARTMENT OF DEFENSE Department of the Army [Docket ID USA–2022–HQ–0017] Submission for OMB Review; Comment Request Department of the Army, Department of Defense (DoD). ACTION: 30-Day information collection notice. AGENCY: The DoD has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act. DATES: Consideration will be given to all comments received by April 24, 2023. ADDRESSES: Written comments and recommendations for the proposed SUMMARY: E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

[Federal Register Volume 88, Number 57 (Friday, March 24, 2023)]
[Notices]
[Pages 17826-17828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06081]


=======================================================================
-----------------------------------------------------------------------

CONSUMER PRODUCT SAFETY COMMISSION

[Docket No. CPSC-2023-0013]


Notice of Availability: Proposed Draft Guidance for Estimating 
Value per Statistical Life

AGENCY: U.S. Consumer Product Safety Commission.

ACTION: Draft guidance; notice of availability.

-----------------------------------------------------------------------

SUMMARY: The Consumer Product Safety Commission (Commission or CPSC) is 
announcing the availability of proposed draft guidance for CPSC's staff 
on the application of the Value of Statistical Life in the agency's 
cost-benefit analyses, and in particular for its regulatory analyses. 
CPSC seeks comments on the proposed draft guidance.

DATES: Submit comments by May 23, 2023.

ADDRESSES: You can submit comments, identified by Docket No. CPSC-2023-
0013, by any of the following methods:
    Electronic Submissions: Submit electronic comments to 
www.regulations.gov. Follow the instructions for submitting comments. 
Do not submit through this website: confidential business information, 
trade secret information, or other sensitive or protected information 
that you do not want to be available to the public. CPSC typically does 
not accept comments submitted by email, except as described below.
    Mail/Hand Delivery/Courier/Confidential Written Submissions: CPSC 
encourages you to submit electronic comments by using 
www.regulations.gov. You may, however, submit comments by mail, hand 
delivery, or courier to: Office of the Secretary, Consumer Product 
Safety Commission, 4330 East West Highway, Bethesda, MD 20814; 
telephone: (301) 504-7479.
    Instructions: All submissions must include the agency name and 
docket number. CPSC may post all comments without change, including any 
personal identifiers, contact information, or other personal 
information provided to www.regulations.gov. If you wish to submit 
confidential business information, trade secret information, or other 
sensitive or protected information that you do not want to be available 
to the public, you may submit such comments by mail, hand delivery, or 
courier, or you may email them to: [email protected].
    Docket: For access to the docket to read background documents or 
comments received, go to www.regulations.gov, and insert the docket 
number, CPSC-2023-0013, into the ``Search'' box, and follow the 
prompts.

FOR FURTHER INFORMATION CONTACT: Alex Moscoso, Associate Executive 
Director, Directorate for Economic Analysis, U.S. Consumer Product 
Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; 
telephone: 301-504-7782; email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The Value per Statistical Life (VSL) is a widely used parameter in 
cost-benefit analysis, including regulatory analysis, which represents 
an individual's willingness to pay for reducing their risk of fatality. 
VSL values a reduction of fatality risk in monetary terms to be used 
for cost-benefit analysis. VSL is not an attempt to place a value on 
any individual life. Instead, government economists typically apply VSL 
in regulatory analysis to measure the welfare impact of policies that 
reduce or increase fatalities.
    The CPSC's Directorate for Economic Analysis (EC) is responsible 
for conducting all economic analyses for the agency, which includes 
regulatory analysis. Regulatory analysis may include a cost-benefit 
analysis of a proposed regulation. EC regularly uses VSL in its 
regulatory analyses of CPSC regulations. While the U.S. Office of 
Management and Budget and some executive branch agencies and 
departments have published guidelines on the application of VSL for 
their purposes,\1\ CPSC is not subject to those guidelines. This NOA 
describes proposed guidelines for CPSC staff on the application of VSL 
for cost-benefit analysis, and in particular for the Commission's 
regulatory analysis.\2\ Specifically, the draft guidance will establish 
for CPSC staff a standard source for estimating VSL as well as 
guidelines for adjusting VSL for inflation, changes in real income 
(i.e., controlling for inflation), sensitivity analysis, and 
discounting.
---------------------------------------------------------------------------

    \1\ The U.S. Department of Transportation (DOT), U.S. Department 
of Health and Human Services (HHS), and U.S. Environmental 
Protection Agency (EPA) all recommend default VSL estimates in their 
official guidelines. The Office of Management and Budget provides 
general best practice guidance (OMB Circular A-4) to Federal 
executive branch agencies on regulatory analysis, including 
discussion of issues related to estimating VSL. While Circular A-4 
recommends avoiding age-adjustment factors due to mixed evidence on 
age and VSL, it should be noted that since OMB published Circular A-
4 (September 2003) 20 years ago, there has been new research 
studying an age-adjustment factor for children's VSL, including 
Robinson et al. (2019).
    \2\ The Commission voted 4-0 to approve publication of this 
notice. Commissioner statements in connection with this vote are 
available at: https://www.cpsc.gov/s3fs-public/RCADraftFederalRegisterNoticeNoticeofAvailabilityProposedGuidanceforUsingValueofStatisticalLife.pdf?VersionId=5I3jGkZymDY8qdMwPzqMSM_fim8M49TM.
---------------------------------------------------------------------------

    Among other elements, the proposed draft guidance document 
prescribes a VSL estimate specifically for children. Government 
economists often apply VSL uniformly to all fatalities that fall within 
the scope of the regulation being assessed. This approach has the 
advantage of simplicity. However, it systematically underestimates 
benefits for regulations that reduce fatality risk to children. It is 
widely observed that society prioritizes the safety of children and 
invests significantly in child safety. Examples include the large 
investments made on child safety such as the baby-proofing industry,\3\ 
safety caps on over-the-counter medicines,\4\ and the certifications 
and licensing required for daycare centers and schools to promote child 
safety. Consistent with this,

[[Page 17827]]

Congress has provided CPSC special statutory mandates to protect 
children.\5\ Research on individuals' willingness to exchange money to 
reduce fatality risks to children appears to align with these societal 
preferences.\6\ The draft guidance document defines an elevated VSL for 
children to more accurately assess the benefits of regulations that 
protect children from deadly outcomes.
---------------------------------------------------------------------------

    \3\ $14.21 billion market in 2022. Business Wire, ``Baby Safety 
Devices Market Research Report 2022--Global Forecast to 2027'', May 
16, 2022, https://www.businesswire.com/news/home/20220516005546/en/
Baby-Safety-Devices-Market-Research-Report-2022_Global-Forecast-to-
2027_ResearchAndMarkets.com.
    \4\ Poison Prevention Packaging Act of 1970, Public Law 91-601, 
(84 Stat. 1670).
    \5\ See, for example, Title I of the Consumer Product Safety 
Improvement Act of 2008, Public Law 110-314 (122 Stat. 3016), 
entitled ``Children's Product Safety.''
    \6\ Robinson, L., Raich, W., Hammitt, J., & O'Keeffe, L. (2019). 
Valuing Children's Fatality Risk Reductions. Journal of Benefit-Cost 
Analysis, 10(2), 156-177.
---------------------------------------------------------------------------

II. Discussion

    This notice provides background on relevant work CPSC has done to 
understand the issue of child VSL; describes the current practice of 
using VSL in regulatory economics, both at CPSC and in other government 
agencies; explains CPSC's reason for issuing VSL guidelines; puts 
forward draft guidelines for CPSC staff's use of VSL; and requests 
public comment on these draft VSL guidelines.
    The draft guidance does not discuss the valuation or averted costs 
associated with reducing non-fatal injuries. Some federal agencies and 
departments estimate their values or averted costs associated with 
reducing non-fatal injuries as a function of VSL. CPSC, however, 
determines the averted costs of reducing non-fatal injuries through its 
Injury Cost Model, independent of VSL.\7\ Therefore, the draft guidance 
does not change CPSC's injury cost estimation approach.
---------------------------------------------------------------------------

    \7\ For information on how CPSC estimates the cost of injuries, 
see: https://www.cpsc.gov/s3fs-public/ICM-2018-Documentation.pdf.
---------------------------------------------------------------------------

A. Background

    VSL is usually derived from willingness to pay studies. These 
studies either use surveys to investigate individuals' willingness to 
exchange their own income for a change in their own risk, or examine 
real world behavior that reflects this trade-off, such as the change in 
income associated with a change in job-related risk. Individual 
willingness to pay estimates from these studies are then converted to a 
VSL estimate by dividing by the risk change. For example, if a group of 
10,000 individuals were willing to pay $900 each to reduce their risk 
of death by 0.01 percent in a given year, then in the aggregate that 
group of individuals would be willing to spend $9 million \8\ to reduce 
the risk of one additional fatality in that given year. These studies 
usually estimate the value that adults place on reducing their own risk 
of fatality. Inherently, individuals' willingness to pay is a function 
of their real income, wealth, and other personal factors as well as the 
characteristics of the risk.
---------------------------------------------------------------------------

    \8\ $9 million = $900 / 0.01% reduction in fatality = $9 million 
per expected death averted.
---------------------------------------------------------------------------

    This approach cannot be used with children, who do not control 
financial resources and may not understand or be able to express their 
willingness to pay for such reductions. Furthermore, assigning the same 
VSL for adults and children ignores the evidence, noted above, that 
society values the safety of children more than adults. Failing to 
acknowledge the importance of child safety within society runs the risk 
of undervaluing the public benefits of regulations that protect 
children, potentially resulting in insufficient investment of resources 
to protect the very lives of those whose safety society values most.
    CPSC is an independent Federal agency tasked with protecting 
consumers from unreasonable risk of death and injuries from consumer 
products. Many of the agency's regulations reduce the risk to children 
of death and serious injury. Furthermore, CPSC's statutory authorities 
(such as sections 104 and 106 of Consumer Product Safety Improvement 
Act of 2008, Public Law 110-314, 122 Stat. 3016) and policy statements 
(such as 16 CFR 1009.8(c)(6)) direct the Commission and its staff to 
place a higher priority on preventing product related injury to 
vulnerable populations, which include children. Therefore, CPSC has a 
statutorily based interest in estimating a VSL for children and 
ensuring it presents a comprehensive assessment of the benefits from 
regulation.
    In 2018, Industrial Economics Inc. (IEc) conducted a literature 
review of studies estimating a VSL for children and drafted a report 
for CPSC that described its findings.\9\ IEc found that ``[t]he number 
of studies that explore the value of reducing children's risks has 
increased substantially in recent years. The results of these studies 
are diverse, but generally suggest that the value individuals place on 
reducing risks to children is greater than the value of reducing risks 
to adults''.\10\ In 2019, the group of co-authors, including the 
authors of this report published an update of the literature review in 
a peer-reviewed journal with some modifications from the 2018 
report.\11\ These studies found five publications that satisfied many 
of their evaluation criteria, which showed VSL for children exceeds the 
VSL for adults by a factor of 1.2 to 2.9, with a midpoint of roughly 
2.\12\
---------------------------------------------------------------------------

    \9\ Industrial Economics, Inc. ``Valuing Reductions in Fatal 
Risks to Children'', January 3, 2018, https://www.cpsc.gov/content/Valuing-Reductions-in-Fatal-Risks-to-Children.
    \10\ Ibid.
    \11\ Robinson, L., Raich, W., Hammitt, J., & O'Keeffe, L. 
(2019). Valuing Children's Fatality Risk Reductions. Journal of 
Benefit-Cost Analysis, 10(2), 156-177.
    \12\ See citation in footnote 9.
---------------------------------------------------------------------------

    Since these studies, CPSC has published three regulations in the 
Federal Register (FR) aimed at children's safety that included cost-
benefit analysis: Safety Standard for Magnets (87 FR 57756), Safety 
Standard for Operating Cords on Custom Window Coverings (87 FR 73144), 
and Safety Standard for Clothing Storage Units (87 FR 72598). While all 
three of the regulatory analyses estimated benefits that came primarily 
from preventing death and injury to individuals under 18 years old, 
CPSC used VSL based on adults. However, in the cost-benefit analyses of 
custom window coverings and clothing storage units, CPSC also used 
child-to-adult VSL ratios from these studies as part of the sensitivity 
analyses to evaluate the impact of an elevated VSL for children.

B. Federal Agency Practice

    The EPA, DOT, and HHS each have formal guidelines for estimating 
VSL within their agency. EPA derives its estimates from 26 studies, of 
which 21 are wage-risk studies.\13\ DOT primarily addresses injury-
related risks and derives its VSL estimate exclusively from wage-risk 
studies, which also address injury-related risks.\14\ HHS bases its VSL 
estimates on six wage-risk studies and one meta-analysis of these 
studies, as well as three stated preference studies.\15\ Table 1 
displays the values of all three agencies' VSL, adjusted to 2021 
dollars and income levels for comparison.
---------------------------------------------------------------------------

    \13\ U.S. Environmental Protection Agency, ``Guidelines for 
Preparing Economic Analyses'', 2010, https://www.epa.gov/environmental-economics/guidelines-preparing-economic-analyses.
    \14\ U.S. Department of Transportation, ``Treatment of the Value 
of Preventing Fatalities and Injuries in Preparing Economic 
Analyses'', 2021, https://www.transportation.gov/sites/dot.gov/files/2021-03/DOT%20VSL%20Guidance%20-%202021%20Update.pdf.
    \15\ U.S. Department of Health and Human Services, ``Guidelines 
for Regulatory Impact Analysis'', 2016, https://aspe.hhs.gov/reports/guidelines-regulatory-impact-analysis.

[[Page 17828]]



            Table 1--U.S Federal Agency Central VSL Estimates
                    [2021 dollars and income levels]
------------------------------------------------------------------------
                  EPA                         DOT              HHS
------------------------------------------------------------------------
$11.3 million.........................   $11.8 million    $11.6 million
------------------------------------------------------------------------

    CPSC has routinely used EPA's VSL estimate in the benefits 
assessments of its regulatory analyses. Specifically, CPSC adjusts 
EPA's base VSL for inflation to the year of the analysis using the 
Bureau of Labor Statistics' Consumer Price Index. Then, the inflation 
adjusted VSL is multiplied by the number of estimated deaths. This 
generates a monetized value of benefits from the fatality risk 
reduction associated with the proposed rule. When the analysis projects 
the regulation's impact into the future, CPSC additionally discounts 
all monetized future costs and benefits, including the value of 
prevented deaths, to account for the time value of money.

C. Reasons for Establishing the Proposed VSL Guidelines

    CPSC regularly assesses the costs and benefits of proposed 
regulations that address safety. By developing and publishing 
guidelines for its staff's use of VSL in regulatory analysis, CPSC can: 
(1) help ensure that its regulatory analyses appropriately measure the 
benefits from reduced fatality risk, including children's mortality; 
(2) improve consistency across regulatory analyses regarding the 
valuation of benefits for reducing fatality risk; and (3) promote 
transparency by sharing these guidelines with the public and gathering 
comments on the guidelines.
    To further these goals, the proposed guidelines establish the 
source, base value, and method of application for VSL. The proposed 
guidelines also establish a ratio of child VSL to adult VSL.

III. Summary of the Proposed VSL Guidelines

    CPSC seeks public comment on its proposed VSL guidelines, which are 
fully described in the draft guidance. The proposed guidelines state 
that:
    1. CPSC staff will use HHS's VSL estimate for adults.
    2. CPSC staff will double the adult VSL to establish the child VSL.
    3. When adjusting the VSL, CPSC staff will account for changes in 
both the general price index (inflation) and real income using the 
method in HHS's Guidelines for Regulatory Impact Analysis.
    4. CPSC staff will include in regulatory analyses a sensitivity 
analysis that use both high and low estimates for adult and child VSLs.
    5. When estimating VSL in future years, CPSC staff will discount 
the resulting benefit values to reflect the time value of money, 
consistent with its approach for all cost and benefits estimates.
    These guidelines and their sources are summarized in Table 2.

                 Table 2--Summary of CPSC VSL Guidelines
------------------------------------------------------------------------
             Variable                             Guideline
------------------------------------------------------------------------
Adult VSL.........................  $11.6 million in 2021 dollars as of
                                     January 1, 2023. Based on HHS's VSL
                                     Guidance. CPSC will update this
                                     value as HHS updates with new VSL
                                     value.
Child VSL.........................  $23.2 million in 2021 dollars as of
                                     January 1, 2023. Double the adult
                                     VSL. Doubling the VSL is based on
                                     findings from IEc's ``Valuing
                                     Reductions in Fatal Risks to
                                     Children'' and Robinson et al.
                                     (2019).
Inflation.........................  Inflate to year where full annual
                                     data is available for price
                                     (inflation) and real income. Use
                                     data and formula in HHS VSL
                                     guidance.
Discount..........................  Apply discount rate to all monetized
                                     values that are a function of VSL
                                     in future years.
Real income index.................  Use Current Population Survey Median
                                     Weekly Earnings for initial
                                     adjustment to year of analysis. For
                                     future years, use real earnings per
                                     worker growth rate from the
                                     Congressional Budget Office's Long-
                                     Term Budget Outlook.\16\
Income elasticity.................  Use value from HHS VSL guidance.
------------------------------------------------------------------------

    CPSC seeks public comment on the proposed VSL Guidelines, including 
specifically the following:
---------------------------------------------------------------------------

    \16\ Congressional Budget Office, ``The 2022 Long-Term Budget 
Outlook'', Real Earnings per Worker (2022-2052) in Table B-1, 2022, 
https://www.cbo.gov/publication/57971.
---------------------------------------------------------------------------

     The criteria and studies included in the IEc and Robinson 
et al. reviews, as well as any new studies;
     Alternative approaches for adjusting VSL for age.
     The estimation of VSL in these guidelines, especially 
child VSL.
     Any other applications of VSL that CPSC should address in 
its proposed draft guidance. and
     Any other general comments on child VSL and CPSC's 
proposed draft guidance.
    The proposed guidance is available at: https://www.cpsc.gov/s3fs-public/ProposedDraftGuidanceforEstimatingtheValueperStatisticalLife.pdf?VersionId=YZhzsWkIsHuhzNVm8VmTFwxsjbbIuvw0. The staff's briefing package on 
this matter is available on CPSC's website at: https://www.cpsc.gov/s3fs-public/DraftFederalRegisterNoticeNoticeofAvailabilityProposedGuidanceforUsingValueofStatisticalLife.pdf?VersionId=QiWpCy7L9AvI17U.Mo3s.CyRkUdM2INf.

Alberta E. Mills,
Secretary, Consumer Product Safety Commission.
[FR Doc. 2023-06081 Filed 3-23-23; 8:45 am]
BILLING CODE 6355-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.