How ‘mortality analysis’ can promote equity for the poor and vulnerable

Last month, the Office of Management and Budget (OMB) released a “Study to Identify Methods to Assess Equity.” The report was a response to an executive order aimed at advancing racial equity and supporting underserved communities. It tasked OMB with examining obstacles to public participation across the federal government, as well as identifying barriers inhibiting access to government programs. OMB’s report finds that administrative burdens such as applications, other paperwork, and time spent traveling to in-person meetings disparately impact the people who need access to federal services the most.

Yet, absent from the report is one of the most consequential burdens that regulations can impose on Americans: increased risk of death. This seemingly controversial idea is a simple outgrowth of the fact that when we spend resources to comply with regulations, some private spending to reduce risk falls. 

Of course, regulations impose costs in an attempt to achieve some other social good. Energy and fuel standards, for instance, increase the price of cars and appliances, but might reduce air pollution. On this basis, one could conclude that spending billions on these standards is worth it. However, OMB’s report is not the first to document the regressive nature of regulatory costs, so taking into account the distribution of benefits and costs can muddy the picture. 

For example, higher-income individuals are generally willing to pay more for cleaner air and whatever reductions in risk accompany it. But studies also suggest that the cost of energy and fuel efficiency restrictions hits people with low incomes hardest. And when those with tight budgets have to spend more on fuel- or energy-efficient devices, they devote fewer resources to other items they value — including things that could possibly save their life one day. This could be healthier food, preventative medical care, a safer vehicle, exercise equipment, or countless other things.

Even well-designed regulations, those with more benefits than costs, don’t affect everyone equally. Regulatory burdens — whether paperwork, business compliance costs, or the headaches of dealing with a complex bureaucracy — are easier to handle for people with resources who can take a morning away from work, rely on an employee, or hire a lawyer. And so it’s easy to see how the higher prices and lower wages that accompany regulations are not equally distributed across society.

Regulations that reduce fatalities among one subpopulation can increase them among others. Regulations that impose a high enough cost on the public can even reduce people’s private spending on risk to the point where they increase rather than decrease overall mortality.

Fortunately, economists have developed methods to judge how public policies affect mortality. Analysis that compares the lives saved and lost from regulations is called a mortality analysis, and the federal government has used it before — although not always without controversy.

In 1992, for example, OMB reviewed a regulation from the Occupational Safety and Health Administration and recommended the agency consider the results of a mortality analysis. In response, legislators chastised OMB because they could not imagine that regulations designed to prevent deaths could cause them instead.

OMB backed off in response to the criticism. However, this kind of analysis became more accepted in subsequent years, and an academic literature has burgeoned in scholarly journals. One consistent finding is that it takes a lower reduction in income to induce a death when costs fall on low-income individuals, including minorities, than it does when costs are spread evenly across all of society.

Mortality risk analysis need not replace traditional economic tools like cost-benefit analysis. Instead, it can help federal agencies account for costs often missed in cost-benefit analyses and contextualize how costs and benefits affect different people.

Filling out forms and waiting for government workers to process applications can be more than annoyances — they can hinder public programs’ effectiveness. However, regulations’ indirect consequences on the health and safety of citizens can be far more important. To ensure that regulations reduce mortality across society, federal agencies should incorporate mortality analysis into their procedures for regulating.

James Broughel is a senior research fellow with the Mercatus Center at George Mason University. Andrew Baxter is an economist who previously worked for the Council of Economic Advisers.