The president-elect should pay close attention to mortality costs of binding federal regulations.
While the world watches with bated breath as the last days of the Trump administration wind down, Joe Biden and his transition team are eagerly drafting plans to roll back various Trump-era polices concerning the environment, the health-care sector, and the American workforce (among other topics). But there is one area in particular that the Biden team ought to double down on: economic analysis, specifically the analysis of how regulations can induce loss of life.
While criticized by his detractors for being everything from a clown to a dangerous threat to democracy, President Trump has made significant and meaningful contributions in regulatory policy. (Indeed, his administration has done much more in this respect than many of his predecessors.)
As we know, regulations have unintended consequences, a famous example of which is the minimum wage. Well-intentioned advocates of a higher minimum wage usually want to give working folks a few extra dollars in their pockets each week. In so doing, however, businesses will invariably hire fewer workers (and fire a few as well). Unfortunately, many who would have otherwise been happy to work for the minimum wage then find themselves in the unemployment line.
While this is hardly what policy-makers intended, the unintended consequences of unemployment are at least reversible. The government can — and indeed does — offer a variety of services to assist individuals facing such straits. When policy consequences entail loss of life, however, there is of course nothing that can be corrected or undone.
Examples of life-threatening policies are more common than you may think. Consider fuel-efficiency regulations, which can increase mortality for several reasons. First, auto companies predictably respond to these rules by making some cars lighter. A lighter vehicle can go farther on the same tank of gas, but is also far more dangerous in the event of a crash.
Second, research also finds that people respond to having a more fuel-efficient car by driving more miles in what is known as the “rebound effect.” In addition to offsetting some of the environmental benefits of fuel-economy standards, this effect also offsets some of the health benefits of reduced air pollution. Indeed, because driving is one of the deadliest activities people engage in on a routine basis, when people drive more miles, some fatalities occur that would not have otherwise.
The Trump administration took the rare step of acknowledging some of these unintended consequences when it finalized new fuel-economy standards last year. While some may disagree with the administration’s exact numbers, few would argue that consideration of such impacts is not a worthwhile exercise when there is hard evidence to back it up.
In fact, economists have long had tools to do just that. Economists and risk analysts long ago developed models for estimating fatalities caused by government-mandated expenditures. As it turns out, most regulations can be expected to increase risk along some dimensions. When resources are spent in one area, they naturally incur an opportunity cost (i.e., the resources aren’t spent in some other area, such as on health and safety).
In a new Mercatus Center research paper, we find that binding federal regulations are associated with higher levels of mortality across the 50 states. Using a novel dataset of federal regulations from the Mercatus Center and combining it with an index of mortality across the states, we find an effect that is economically and statistically significant and stands up to a variety of different modeling assumptions.
This research is not an outlier, and builds on a longstanding body of research from economists on the mortality costs of regulations. While previous research generally evaluated regulations one at a time, ours is one of the first to suggest that the federal regulatory system as a whole corresponds with greater mortality.
Unintended consequences may be undesirable, but they aren’t always unforeseeable. Given the decades of research on the mortality costs of regulations, it’s time that policy-makers better accounted for these deadly side effects. While Democrats may take issue with a long list of President Trump’s policies, the attention he gave to these fatal tradeoffs should not be among them. If Joe Biden is serious about avoiding unintended consequences, he should start by accounting for the most serious one of all — the loss of human life.
James Broughel is a senior research fellow with the Mercatus Center at George Mason University and an adjunct professor of law at the Antonin Scalia Law School. Dustin Chambers is a professor of economics in the Perdue School of Business at Salisbury University and a senior affiliated scholar for the Mercatus Center. They are coauthors of new Mercatus Center research on “Federal Regulation and Mortality in the 50 States.”