Let the Market Protect Consumer Safety
APRIL 01, 1990 by JOHN HOOD
John Hood is contributing editor of Reason magazine and political columnist for Spectator magazine in Raleigh, N.C.
You’re the new chairman of the Consumer Product Safety Commission. It has come to your attention that a number of children under 5 years of age have been poisoned by overdoses of aspirin. A research associate comes up with a solution to the problem: require child-resistant caps on all aspirin bottles in the United States.
His reasoning seems sound: make it more difficult for children to open aspirin bottles and fewer children will be poisoned. The caps may cost more to manufacture than regular screw caps, but the drop in child poisonings, he tells you, will be worth the expense. So you pass the regulation. And child poisonings slightly increase.
This is not a hypothetical case. In 1970 Congress passed the Poison Prevention Packaging Act to authorize Federal regulations that would address the child poisoning issue, and two years later protective safety caps were required on aspirin bottles. Since then, studies have shown that the requirement resulted in no significant drop in aspirin poisonings among children (the rate has come down, but not because of the rule—poisonings have gradually fallen since the 1950s). And the safety-cap rule may well have caused a slight rise, again adjusting for historical trends in the rate of non-aspirin poisonings.
How is this possible? Kip Viscusi of Duke University attributes the failure of the safety-cap standard to the “lulling effect” of government action: parents feel less need to take precautions about storing aspirin and other medicines away from their children because the caps are “child-proof.” Viscusi also suggests a design problem. “Consumers may leave the bottles open rather than grapple with caps that they find difficult to open,” he says, making the medicine more available to children.
It would be unfair and unwise to fault all government regulation of product safety because of the safety-cap debacle—if it were an isolated case. But it is not. Since the creation of the Consumer Product Safety Commission in 1972, its sweeping mandates have hurt consumers, impaired product development, and bungled the job of promoting safety.
During a brief period in the second half of the Reagan Administration, the CPSC was less a nuisance, chiefly because of its deregulation-minded chairman, Terry Scanlon. But since he—and Reagan—have passed the reins of power to others, the CPSC may well resume its activist role with bans, recalls, and mandatory standards.
The regulatory burden might not be as infuriating if consumer product safety had been vastly improved by CPSC actions. But the evidence suggests otherwise. In 1985 Viscusi reviewed general accident statistics and specific cases of commission regulation for The Journal of Law and Economics and found “no evidence of any significant beneficial impacts on product safety.” Home-accident rates, which have been falling steadily since at least the 1930s, were affected by changes in per-capita consumption and income, but not by changes in CPSC regulation.
If CPSC regulations simply failed to pan out, that would be one thing. But in many cases the regulations actually make consumers less safe by affecting product price and availability or by “jumping the gun” on research. In one well-publicized case, the commission required children’s pajamas to be treated with TRIS, a fire-retardant chemical. Later it was discovered that TRIS caused cancer in laboratory animals, so the commission had actually mandated an increased risk of cancer.
In another case, the Commission took action against a product called Worm Gett’r, which uses electricity to flush earthworms to the surface of the ground, where they can be easily harvested for fish bait. After one injury involving the Worm Gett’r, the CPSC wanted to ban it, although 28 people had been fatally electrocuted since 1971 using homemade devices such as hot-wired golf clubs, which the Worm Gett’r is designed to replace.
The Consumer Product Safety Commission fails so frequently not because of incapable staff, or contempt for consumers, or bureaucratic malfeasance. Consumer safety is simply not an area in which categorical government actions canbe successful. Every consumer is different—in taste, in wealth, in the willingness to take risks. These differences cannot be wished away or eliminated through regulation. And when the Commission tries to do so, consumers and producers of the affected products react in unanticipated ways.
Most accidents are completely unpredictable. They depend on the mannerisms and behavior of a consumer, the time of day, the weather, and just blind luck. This information is not available to regulators in Washington, and cannot be reflected in CPSC directives. But it can be reflected in a free market.
Regulators all too often view product-safety questions as static yes-or-no cases: if John Smith had not been holding an electric worm probe, he would not have been electrocuted by the probe. The real question is what John Smith would be holding and doing if the worm probe were unavailable. There are as many answers to that question as there are John Smiths.