Book Review Review: Sunstein’s “Valuing Life”

A couple weeks ago the Financial Times ran a book review (behind a pay wall) by Mark Vandevelde of Cass Sunstein’s “Valuing Life: Humanizing the Regulatory State” (linked here). The book review carries the tagline “Beware the paternalist in libertarian garb.” I happen to have read the book and, since the Financial Times beat me to the job of reviewing, I thought I would use the holiday lull to review the review.

In short, for reasons I explain in perhaps too much detail below, the review misses the mark in a way foreshadowed by the tagline. The review takes issue with Sunstein the libertarian paternalist, the Sunstein who advocated a class of choice-respecting regulations in his book “Nudge.” But “Valuing Life” is not “Nudge”; it is about the nitty-gritty of how we quantify the costs and benefits of all sorts of regulations, not the desirability of any particular sort of regulation (or even regulation in general). On the latter topic Sunstein has much to say in his book, Vandevelde’s review not so much.

As background, “Valuing Life” is an exploration of the hard valuation questions posed by cost-benefit analysis—a tool for evaluating regulations—as practiced by the federal government. Sunstein has written on cost-benefit analysis as an academic, and recently spent several years leading the federal office that uses cost-benefit analysis to make sure that all significant federal regulations actually create more benefits than they do costs. (The Office of Information and Regulatory Affairs at the Office of Management and Budget, “OIRA.”) This is all hugely relevant in the health law space, especially because it raises questions about how to value and make tradeoffs about sickness, health, injury, death, and dignity. Which is worse, a thousand amputations or a single death? What about a prison rape versus a single death? Or, as the FDA recently asked, what is the cost of lost pleasure from going without unhealthy (but delicious) snacks? In my view, if you want to get to the current frontiers of thinking on such questions, “Valuing Life” is a great place to start.

Vandevelde’s review is skeptical in both tone and content, but his criticisms are misplaced. First, Vandevelde criticizes the fact that cost-benefit analysis often uses data about how people value a particular protection (or risk) in deciding whether to “force” them to buy that protection (or pay to avoid the risk) through regulation. For example, policymakers might make a guess about how much people would pay to avoid running over their own child in deciding whether a rule mandating that cars be equipped with back-up cameras creates more benefits than costs. The reasoning behind concluding such regulations are cost-justified, as Vandevelde puts it, is that “[i]f you are willing to pay for the benefits that some piece of regulation will bring you, you must think they are worth having.” The problem with this as a justification for regulation, Vandevelde says, is that “there is no clear sign of this willingness in anything [people] do with their wallets.”

Vandevelde can’t mean this literally, because in fact the valuation data we use to estimate how much people think a life or limb is worth is based in large part on things people do “with their wallets.” As Sunstein says in the book (page 82), the “first and most important” source of valuation data is “real world markets, producing evidence of compensation levels for actual risks.” For example, data on peoples’ employment decisions comparing how much extra those in comparatively dangerous occupations make. (A second source of such information is survey data, aka “contingent valuation studies.”)

So Vandevelde must really be taking issue with the fact that any regulation necessarily imposes on regulated actors a behavior they did not themselves choose; laws mandating that cars be equipped with back-up cameras make us buy those cameras whether we really want them or not. Vandevelde is touching on a fundamental, long-standing debate about when the government should intervene in our decision-making, but I do not read “Valuing Life” to enter that debate and think Vandevelde wrong to invoke it in criticizing the book. When the government makes the (sometimes) controversial decision to intervene in our decisionmaking—to regulate—cost-benefit analysis comes in as a tool to decide whether the particular resulting regulation creates more benefits than costs. This often happens in situations I imagine Vandevelde would agree call for at least thinking about regulating, say, deciding whether to forbid or allow a paper mill to dump a particular chemical into a river. So it is that the Reagan administration was an early implementer and advocate of cost-benefit analysis. (See historical discussion by DeMuth and Ginsburg, two of Sunstein’s predecessors at OIRA, included here.) And whenever we do employ cost-benefit analysis, our use of the tool will necessarily run into the tough questions about how to value life, health, dignity, and so on that Sunstein actually does take on in “Valuing Life.”

Which brings up Vandevelde’s second criticism and what I take to be the heart of his disagreement, which again does not appear to be directed at “Valuing Life” at all but rather Sunstein’s earlier book, “Nudge.” Vandevelde objects to Sunstein’s claim in Nudge (and other writings) that certain regulations, like a default rule or disclosure rule, are in a sense libertarian because while leading people to make certain (government-preferred) decisions they leave those same people much of their freedom. Vandevelde sees this as a “Jesuitical evasion” and thinks we would be better off calling any government effort to change peoples’ choices “paternalism.” Hence the tagline “beware the paternalist in libertarian garb.”

It bears emphasis that even more than his first criticism of “Valuing Life,” this particular attack by Vandevelde has zero connection to the book. Cost-benefit analysis is used to evaluate all manner of regulations, most certainly including purely paternalistic mandates, and the “libertarian paternalism” line of thinking is not (in any way I can see or Vandevelde identifies) central to the book’s analysis. According to my “Nook,” the words “libertarian” and “paternalism” do not appear even once in the text.

That said, Vandevelde is onto something. There is an argument to be made that “libertarian paternalistic” regulations are actually more paternalistic than libertarian. See for example Rebonato here or Bubb & Pildes here. Sunstein has responded too, see for example here and here. (The latter article was presented at the Petrie-Flom Center’s conference on behavioral economics and health law last spring and is forthcoming in Nudging Health: Health Law and Behavioral Economics.) It’s an interesting debate. But readers who are really curious about the merits of libertarian paternalism will find little edifying in either Vandevelde’s misplaced review or its nominal target, a fine book about a different topic.

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