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Cost-benefit analysis (CBA) has long been the dominant economic methodology that regulatory agencies use when deciding what policies to implement. CBA gives a policy’s impact on individual well-being a monetary value, and favors the one that yields the greatest total benefit. But when it comes to fatality risk regulations, a major area of government action that aims to reduce human deaths, is CBA the best way?

Duke Law professor Matthew Adler says there’s a more ethically grounded alternative. 

In his latest book, Risk, Death, and Well-Being, Adler, an expert on public policy and administrative law, argues that CBA can systematically misvalue risk reductions, especially for the poor, the elderly, or those with lower incomes. He favors evaluating such rules through a “social welfare function” methodology that takes individual risks and attributes into account and offers a principled way to account for differences among people in a given population.

In particular, a “prioritarian” approach that weights, or prioritizes, the interests of people with lower levels of well-being does just that, he says. 

“How do you design policies that take inequalities into account? A dollar isn’t worth the same to everyone,” Adler said, emphasizing that his work focuses on methodologies, not specific policy solutions. 

“A prioritarian ranking gives greater weight to changes in well-being that affect those at lower levels of well-being,” he said. “In thinking about policy, it gives priority to the worse off. Prioritarianism is well situated to take inequalities into account whereas CBA does not.” 

Adler is the Richard A. Horvitz Distinguished Professor of Law and Professor of Economics, Philosophy and Public Policy at Duke Law School, where he directs its Center for Law, Economics, and Public Policy. He pioneered the social welfare function methodology in his 2019 book Measuring Social Welfare: An Introduction.

A fairer way to distribute well-being benefits

In the new book, Adler develop a methodology for applying a social welfare function framework to fatality risk regulations, policies designed to reduce statistical human deaths from natural disasters, pandemics, exposure to toxic workplace chemicals, diseases stemming from air pollution, highway accidents, or other dangerous human activities. 

He applies it to evaluate such policies under different welfarist frameworks, primarily utilitarianism and prioritarianism, and contrasts those results with cost-benefit analysis. By demonstrating how the well-being of individuals fares under each framework, he offers policymakers a structured way to rank them, so they can choose the most ethical and equitable alternatives. 

As Adler explains, the utilitarian approach measures the sum total expected lifetime well-being of a population, while prioritarianism measures its sum total expected “transformed” lifetime well-being.  The “transformation” device, part of the social welfare function methodology, is designed to place greater weight on lower levels of well-being.  Adler favors the latter approach for fatality risk regulation. 

“The idea of the social welfare function is, rather than measuring effects in dollars through cost-benefit analysis, you have a scale of individual well-being,” Adler explained. 

“But utilitarianism is insensitive to the fair distribution of well-being,” he said. “Prioritarianism repairs this flaw.”

Prioritarianism can be implemented by government as an alternative to CBA and used to analyze policies in a wide range of other domains, from health care and taxation to environmental regulation and infrastructure, as is demonstrated in the 2022 volume Prioritarianism in Practice co-edited by Adler. Under this framework, a benefit applies equally to all, regardless of income.

When it comes to the costs of fatality risk regulation, Adler said, prioritarianism offers something conventional cost-benefit analysis cannot: a principled way to account for inequality. After all, death is the ultimate depriver of lifetime well-being — however one defines it — and most people place a high value on staying alive. 

Yet using the economic tools that currently dominate policy analysis, the value of reducing risk is frequently tied to how much individuals are willing and able to pay. That raises the question: Should fatality risk regulation — and protection from lethal risks— be biased in favor of how much an individual can afford? Adler thinks the ethical answer is “no.”

“Cost-benefit cost ignores unequal distribution of income and says society should be indifferent to whether and to what degree costs are borne by the poor, the rich, and the people in between,” Adler said. “We can do better.”