9781118041581

own control), man-made (rather than natural), and potentially catastrophic

(rather than mundane). For these reasons, the average person tends to over-

state the risks from nuclear power, hunting, mountain climbing, skiing, private

aviation, and police work. The same person tends to understate the risks from

swimming, X-rays, contraceptives, and food preservatives.

Compare your own rankings to those in Table 11.3. Were your assessments

closer to those of the average person or to those of the experts?

II. BENEFIT-COST ANALYSIS AND PUBLIC

GOODS PROVISION

Benefit-cost analysisis a method of evaluating public projects and pro-

grams.^16 It is used in planning budgets, building dams and airports, con-

trolling disease, planning for safety, spending for education and research,

and evaluating the costs and benefits of regulation. In short, almost any

470 Chapter 11 Regulation, Public Goods, and Benefit-Cost Analysis

TABLE 11.3

Ranking Risks:

Perception versus

Reality

Activity Voters Experts

Alcoholic beverages 6 3

Antibiotics 28 24

Bicycles 16 15

Commercial aviation 17 16

Contraceptives 20 11

Electric power 18 9

Fire fighting 11 18

Food coloring 26 21

Food preservatives 25 14

Handguns 3 4

High school and

college football 23 27

Home appliances 29 22

Hunting 13 23

Large construction 12 13

Motorcycles 5 6

Activity Voters Experts

Motor vehicles 2 1

Mountain climbing 15 29

Nuclear power 1 20

Pesticides 9 8

Police work 8 17

Power mowers 27 28

Private aviation 7 12

Railroads 24 19

Skiing 21 30

Smoking 4 2

Spray cans 14 26

Surgery 10 5

Swimming 19 10

Vaccinations 30 25

X-rays 22 7

(^16) By some historical accident, there is no clear agreement on the proper term for this method of
analysis; benefit-cost analysisand cost-benefit analysisare used interchangeably.
c11RegulationPublicGoodsandBenefitCostAnalysis.qxd 9/29/11 1:34 PM Page 470