Explain the concept of standards and cost-benefit analysis. Discuss the advantages of cost-effectiveness as against the cost-benefit analysis.

Question

What will be an ideal response?

Answer 1

In 1970, the U.S. Congress established the Occupational Safety and Health Administration (OSHA) and charged it with establishing workplace health and safety standards. The "feasibility" approach allows OSHA to make trade-offs between health and economics, but it is prejudiced in favor of health and safety by placing the burden of proof on industry to show that high standards are not economically feasible. Some critics charge that this approach does not go far enough and unjustly sacrifices employee health and safety. From that perspective, industries that cannot operate without harming the health and safety of its employees should be closed. But the more influential business criticism has argued that these standards go too far. Critics in both industry and government have argued that OSHA should be required to use cost-benefit analysis in establishing such standards. From this perspective, even if a standard is technologically and economically feasible, it would still be unreasonable and unfair if the benefits did not outweigh the costs.
Using cost-benefit analysis to set standards, in effect, returns us to the goals of the market-based, individual bargaining approach. Rejecting cost-benefit analysis in setting standards is not the same as rejecting cost-effective strategies in implementing those standards. A commitment to cost-effectiveness would require that, once the standards are set, we adopt the least expensive and most efficient means available for achieving those standards. Cost-benefit analysis, in contrast, uses economic criteria in setting the standards in the first place. It is cost-benefit, not cost-effectiveness, analysis that is ethically problematic. The use of cost-benefit analysis in setting workplace health and safety standards commits us to treating worker health and safety as commodity, another individual preference, to be traded off against competing commodities. Cost-benefit analysis requires that an economic value be placed on one's life and bodily integrity.