Home Solutions (i) Critically analyse the approach to the use of Cost Benefit Analysis (CBA) principle in support of safety-related decisions with the UK Health and Safety Law.
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a) In May of 1968, the Ford Motor Company, based upon a recommendation by then vicepresident Lee Iacocca, decided to introduce a subcompact car and produce it domestically. In an effort to gain a large market share, the automobile was designed and developed on an accelerated schedule. During the first few years sales of the Pinto were excellent in the USA, but May 1972, Lily Gray was travelling with thirteen year old Richard Grimshaw in a 1972 Pinto when their car was struck by another car travelling approximately thirty miles per hour. The impact ignited a fire in the Pinto which killed Lily Gray and left Richard Grimshaw badly burned and scarred for life. In the subsequent, US civil case in 1978, Grimshaw vs. Ford Motor Company, it was established that a safety measure to protect against petrol-tank fire had been omitted by Ford on grounds of a strict cost-benefit analysis: the $11 dollar per vehicle charge required to reduce to the average value the probability of petrol-tank fire following a rear collision was calculated to cost $137M, about 2.8 times the $49.5M price tag put on the expected loss of 180 lives, 180 severe burn injuries and 2100 cars expected to be written off (individual values taken as $200k, $67k and $0.7k respectively). The Ford Motor Company lost the case: the jury awarded just over $3M compensation and $125M in punitive damages, subsequently reduced to $3.5M. Please read the document Reducing Risk, Protecting People, HSE’s decision making process, was first published in 2001, three paragraphs (25, 101 and 103) from it are reproduced below;
..... “Individual concerns or how individuals see the risk from a particular hazard affecting them and things they value personally. This is not surprising since one of the most important questions for individuals incurring a risk is how it affects them, their family and things they value. Though they may be prepared to engage voluntarily in activities that often involve high risks, as a rule they are far less tolerant of risks imposed on them and over which they have little control, unless they consider the risks as negligible. Moreover, though they may be willing to live with a risk that they do not regard as negligible, if it secures them or society certain benefits, they would want such risks to be kept low and clearly controlled.
........Societal concerns or the risks or threats from hazards which impact on society and which, if realised, could have adverse repercussions for the institutions responsible for putting in place the provisions and arrangements for protecting people, eg Parliament or the Government of the day. This type of concern is often associated with hazards that give rise to risks which, were they to materialise, could provoke a socio-political response [.....]. Typical examples relate to nuclear power generation, railway travel, or the genetic modification of organisms. Societal concerns due to the occurrence of multiple fatalities in a single event is known as societal risk. Societal risk is therefore a subset of societal concerns.”
101...” We sometimes need to carry out formal analyses of costs and risk reduction to help with judgements on the benefits of each option and the costs involved in reducing the risks. These analyses may be of varying sophistication and complexity, and might in some cases include a cost benefit analysis (CBA). CBA is often a useful tool for judging the balance between the benefits of each option and the costs incurred in implementing it. CBA aims to express all relevant costs and benefits in a common currency, usually money. [.....]”
103.....”When an option produces the benefit of preventing fatalities, this requires putting a monetary value on achieving a reduction in the risk of death. For example, for the purpose of conducting CBAs, we currently take as a benchmark that the value for preventing a fatality (VPF) is about £1 000 000 (2001 figure). As is made clear in Appendix 3, VPF is not the value that society, or the courts, might put on the life of a real person or the compensation appropriate to its loss. This figure derives from the value used by the Department of Transport, Local Government and the Regions (DTLR) for the appraisal of new road schemes. However, we regard higher values as being appropriate for risks for which people appear to have a high aversion”
(i) Critically analyse the approach to the use of Cost Benefit Analysis (CBA) principle in support of safety-related decisions with the UK Health and Safety Law.
(ii) Compare and contrast the approaches to Health and Safety in the UK and in USA based on all the information given in this question above (Ford Pinto case) and your own knowledge. Consider suspicious arguments for not taking action on economic grounds and ethical issues with assigning monetary value to a life.