Risk-risk analysis

Constraints on the use of benefit-cost tests have generated increased interest in risk-risk analysis as a regulatory test. The effect on individual mortality of the income losses arising from regulatory expenditures can be determined from direct empirical estimates, which this article surveys. The article proposes an alternative formulation based on information on the value of life and the marginal propensity to spend on health, which implies a loss of one statistical life for every $50 million in expenditures. Occupational injury and fatality costs caused by expenditures represent another type of risk tradeoff that could be considered within risk-risk analysis or, more generally, a benefit-cost test.