A 11 10 5 5=^711 MERCE

National Bureau of Stanaards

SPECIAL PUBLICATION 647-2

The Economic Effects

of Fracture in

the United States

NBS

PUBLICATIONS
NATIONAL BUREAU OF STANDARDS

The National Bureau of Standards' was established by an act of Congress on March 3, 1901. The Bureau's overall goal is to strengthen and advance the Nation's science and technology

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2 Some divisions within the center are located at Boulder, CO 80303.
The Economic Effects

of Fracture in

the United States

Part 2 — A Report to NBS by

Battelle Columbus Laboratories

NATIONAL BUREAU OF STANDARDS

LIBRARY

J.J. Duga, W.H. Fisher, R.W. Buxbaum,

A.R. Rosenfield, A.R. Buhr, E.J. Honton,

and S.C. McMillan DATE DUE

Battelle Columbus Laboratories

505 King Avenue

Columbus, OH 43201

U.S. DEPARTMENT OF COMMERCE, Malcolm Baldrige, Secretary

NATIONAL BUREAU OF STANDARDS, Ernest Ambler, Director

Issued March 1 983
Library of Congress Catalog Card Number: 83-600705

National Bureau of Standards Special Publication 647-2

Natl. Bur. Stand. (U.S.), Spec. Publ. 647-2, 352 pages (Mar. 1983)

CODEN: XNBSAV

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1983

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402

Price $11.00

(Add 25 percent for other than U.S. mailing)
FOREWORD

This study on the Economic Effects of Fracture in the United States

is the second program of this general type undertaken by the Battel le Columbus

Division on behalf of the National Bureau of Standards. As in the earlier

study on corrosion, the analysis was based on an Input/Output model of the

U.S. economy, and required detailed study and alteration of the factors which

describe all interindustry transactions.

No effort of this complexity could be performed in a vacuum. From

the initial definitions of scope and approach to the intensive examination of

the 150-sector model, many researchers have contributed insights, information,

and inspiration. No list of associates could do full justice to their total

contributions.

Several, however, deserve special mention. Among the principal

Battel le researchers, Frank Hoi den and Allen Hopper supplied both general and

specific insights which were invaluable in all phases of the program. Patrick

Stephan, Donald Hill, and Deborah Carter--our three principal data-collectors

--brought to the project the technical expertise necessary to provide baseline data on which an advanced analytical tool could be developed. Numerous

helpful in supplying data specific to a broad

practices. Professor Andrew Brody, a Battel le

and authority on I/O modeling, added an critical issues of reliability and sensitivity.

other Battel le staff were most

number of industries and their

Distinguished Visiting Scholar

essential understanding to the

The authors also appreciate the support and consideration given at

all levels of Battelle management. Their continued interest, understanding,

guidance and assistance have been most welcome throughout the program.

A very special note of thanks is due to Harry Barr, whose broad

knowledge of almost every industrial sector and his sensitivity to the demands

of the I/O approach represent a unique talent.

An Advisory Board, drawn from a wide spectrum of interests, provided

commentary and guidance which has served to place this work in a more

realistic context, assuring that the approach and results served a broad

audience. These Advisory Board members included:

Dr„ Anne P. Carter

Brandeis University

Mr, Lawrence Casel lini

Travelers Insurance Companies

Prof. George Irwin

University of Maryland (Ret.)

Mr. Robert Philleo

U.S. Army Corps of Engineers

Mr. Joseph C i ri 1 1

o

State of Rhode Island

Mr. David Poole

Electric Power Research Institute

i i i
Dr. Wil li am J. Harris

Association of American

Rail roads

Dr. Nathan Promisel

National Materials Advisory Board

(Ret.)

Mr. Abraham Hurlich

General Dynamics Corp. (Ret.)

Mr. Foster Wilson

Owens Corning Fiberglas Corp.

At all stages of the program, it has been apparent that this has been

a cooperative effort with the National Bureau of Standards. The project has

clearly been carried out with , rather than merely for, NBS. Drs. Richard

Reed, John McKinley, Elio Passaglia, John Smith, Bruce Christ, and John

Wachtman have each made their impacts on the program; they have guided, they

have shared their perspectives and concerns, and they have shed considerable light on the utility of the work. And finally, Dr. Edward Berman,

consultant to NBS, has--through his challenges, interest, and enthusiasm--

helped make this study more germane to the benefits of all parties.

i v
TABLE OF CONTENTS

Page

FOREWORD 111

EXECUTIVE SUMMARY xvi

I. INTRODUCTION AND OVERVIEW 1 Historical Progress in Fracture Prevention 2 Improvements in Materials 2 Improvements in Design 3

Improvements in Testing/Inspection 3

Developments in Fracture Mechanics 3

The Pervasiveness of Costs 4

Program Objectives 5 Structure of the Report 7

II. THE SCOPE OF THE PROGRAM 9

Comparison with the "Cost of Corrosion" 9

The Concept of Worlds 11

Physical Significance of the Worlds 15

Special Attention to Factors Beyond Scope 20

III. GENERAL APPROACH 22

What is Input/Output? 22

The Concept of Sectors 25

Sectoral Format 25

Materials 26

Fabrication Processes 26

End Uses 26

Special Services 28

The Data Collection Approach 29

Supplemental Models 29

Events Character Model 30

Injury Cost Model 32

Property Damage Model 32

Environmental Degradation Model 32

Use of Supplemental Models 33

v
TABLE OF CONTENTS (Continued)

Page

IV. SPECIFIC INPUT/OUTPUT METHOD . 35

The Nature of Simulation Adjustments 35

The Ex Ante Approach to Corrosion 36

The Planned Approach to Fracture 36

Column-Oriented Data Gathering. . . 37

The Emergence of Row Rules 37

The Reason for Row Rules 38

The Nature of the Row Rules 40

The Process of Matrix Adjustments 44

Changes in the A Matrix 44

Changes in the B Matrix 45

Changes in the U and R Matrices 45

Changes in Final Demand 46

Technological Changes in the Column Specific Sectors 48

V. I/O MODEL OUTPUT 61

The Overal 1 Procedure 61

Model Outputs: World I. . 61

Data Bases 62

Calculated Outputs 62

Model Output: World II 65

Data Bases 65

Calculated Outputs 72

Model Output: World III 77

Data Bases 77

Calculated Outputs 79

Model Outputs: the Difference Tables 79

Interpreting the Tables 83

The World I-World II Difference Table 84

The World I-World II Difference Table 85

The World I-World II Difference Table 85

vi
TABLE OF CONTENTS (Continued)

Page

VI. SUPPLEMENTAL MODELS 86

Data 86

Maximum/Minimum Approach 88

Translation of Findings Between Events 88

Results 89

VII. THE IMPACTS OF FUTURE RESEARCH 92

Factors for Consideration 93

Selection of General Research Areas 93

Sector Selection 95

Identification of Sector-Specific Research Topics ... 96

Probabilities of Research Benefits 96

Translation to All Sectors 106

Application of the Reduction Fraction 106

Final Comments 114

VIII. ANALYSES OF RESULTS ..... 115

Aggregate Fracture Costs . . 115

Costs in Sectoral Terms 115

Sectoral Analysis of Total Fracture Costs 117

Sectoral Analysis of Presently Nonreducible Costs . . . 120

Fracture Costs at the Cell Level 121

Future Costs of Fracture 123

Future Reducible Costs 123

The Issue of Reliability/Sensitivity 123

The Observed/Observer Problem 125

The Indeterminacy Principle 125

The Problem of Aggregation 125

Some Inference with Respect to Model Reliability 126

Comparative Reliability of Worlds 127

"Direction" of Measurement Errors 128

General Note on Sensitivities and Errors 129

Sensitivity of the Model 129

vi i
TABLE OF CONTENTS (Continued)

Page

The Supplemental Models 132

Overall Reliabilty of the I/O Model 134

Data Collection 134

Confidence Ranges 135

Final Assessment of Fracture Costs 136

Adjusted Costs of Fracture. ........ 137

ADDENDUM TO VIII. NORMALIZED ANALYSES 139

Analysis 140

Intersectoral Comparisons 145

IX. CONCLUSIONS AND RECOMMENDATIONS 147

Method 147

The I/O Model 147

The Supplemental Models 148

Summary of Fracture Costs 149

What Next? 150

Presently Reducible Costs 150

Future Reducible Costs 151

Special Sectoral Analysis 151

LIST OF TAbLES

TABLE 1. EXAMPLES OF POTENTIAL WORLD II MATERIALS SUBSTITUTIONS. ... 19

TABLE 2. TYPICAL MATERIALS SUBSTITUTIONS APPLICABLE WITHIN THE

CONTEXT OF WORLD III 19

TABLE 3. DIRECT AND INDIRECT EFFECTS, WORLD 1 63

TABLE 4. DIRECT TECHNICAL COEFFICIENTS, WORLD I .... „ 64

TABLE 5. TOTAL OUTPUT 66

TABLE 6. DOLLAR VALUES OF INTERINDUSTRY AND FINAL TRANSACTIONS,

WORLD I 69

vi i i
TABLE OF CONTENTS (Continued)

LIST OF TABLES (Continued)

Page

TABLE 7. DIRECT TECHNICAL COEFFICIENTS, WORLD II 71

TABLE 8. DIRECT AND INDIRECT EFFECTS, WORLD II 73

TABLE 9. SOCIAL SAVINGS 74

TABLE 10. DOLLAR VALUES OF INTERINDUSTRY AND FINAL TRANSACTIONS,

WORLD II 78

TABLE 11. DIRECT TECHNICAL COEFFICIENTS, WORLD II 80

TABLE 12. DIRECT AND INDIRECT EFFECTS, WORLD III 81

TABLE 13. DOLLAR VALUES OF INTERINDUSTRY AND FINAL TRANSACTIONS,

WORLD II 82

TABLE 14. LIST OF EVENTS 87

TABLE 15. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS WORLD II DIFFERENCES 90

TABLE 16. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS WORLD III

DIFFERENCES 90

TABLE 17. CANDIDATE SECTORS FOR WORLD IV CONSIDERATION 97

TABLE 18. RESEARCH LEADING TO POTENTIAL SAVINGS 98

TABLE 19. AREAS OF POTENTIAL SAVINGS DUE TO RESEARCH 100

TABLE 20. PROBABILITY OF REDUCING WORLD III-WORLD II COSTS,

WHERE 10 = 100 PERCENT COST REDUCTION 105

TABLE 21. PERCENT REDUCTION IN COSTS, BY RESEARCH AREA, FOR

HIGHEST SECTORS 107

TABLE 22. PERCENT REDUCTION IN COSTS, BY RESEARCH AREA, FOR

SECOND PRIORITY SECTORS 108

TABLE 23. FUTURE REDUCIBLE AND NONREDUCIBLE COSTS, BY COLUMN

SECTOR 110

TABLE 24. MAJOR COMPONENTS OF FRACTURE COSTS, 1978 116

TABLE 25. TEN LARGEST SECTORS BY COLUMN AND ROW MAGNITUDES,

IN TERMS OF TOTAL COSTS OF FRACTURE 118

TABLE 26. SELECTED SECTORS IN TERMS OF THEIR RATIO OF TOTAL

OUTPUT DIFFERENCE TO SOCIAL SAVING DIFFERENCE,

WORLD I-WORLD II 119

ix
TABLE OF CONTENTS (Continued)

LIST OF TABLES (Continued)

Page

TABLE 27. SUMMARY OF ELEMENTS IN THE COST OF FRACTURE 124

TABLE 28. MOST LIKELY VALUES. COST OF FRACTURE IN THE

UNITED STATES, 1978 . ...... 138

TABLE 29. DATA FOR ANALYSIS OF NORMALIZED FRACTURE COSTS. ...... 141

TABLE 30. CALCULATION OF THE NORMALIZED DIRECT AND INDIRECT

COSTS OF FRACTURE ASSOCIATED WITH EACH SECTOR . . 144

LIST OF FIGURES

FIGURE 1. SCHEMATIC OF THE COSTS OF FRACTURE. ............ 12

FIGURE 2. SCHEMATIC OF THE COSTS OF FRACTURE, WITH FUTURE

BEST PRACTICE » « • • • • • • • « • • • • « & • • • • • • • 14

FIGURE 3. SCHEMATIC DISTRIBUTION FUNCTION FOR MATERIAL

PROPERTIES IN WORLD I AND WORLD II. ... 16

FIGURE 4. FLOW AMONG MODELS .......... 31

LIST OF APPENDICES

APPENDIX A. GLOSSARY ............... A-l

APPENDIX B. THE INPUT/OUTPUT MODEL B-l

General Framework. ........................ B-l

3|36Glctl PGcttlJPGS • • • • • • • • • • © « e • • o • 9 « © ® © © -' ® B TM 7 Sectoral Format B-7

APPENDIX C. I/O SECTORS: SIC 's, DEFINITIONS AND NOTES ........ C-l

APPENDIX D. THE ROW RULES D-l

Materials Rules D-l

Transportation Rules for Reduction in Material Weights D-8

Maintenance and Repair Rules D-1U

20A05 Fracture R&D Row Rules D-13

x
TABLE OF CONTENTS (Continued)

LIST OF APPENDICES (Continued)

Page

Environmental Cleanup Rule (Sector 20C05) U-14

Inspection Rule D-15

Scrappage Rule D-28

Downtime Rule D-31

Useful Lives/Replacement Matrices D-33

Final Demand Changes D-35

Trade and Transport Margins D-40

Information Sources D-42

APPENDIX E. DETAILS OF THE SUPPLEMENTAL MODELS E-l

Overview of the Methodology E-l

Events Character Model E-3

Injury Cost Model E-8

Property Cost Model E-10

Environmental Degradation Model E-ll

Summary E-l 3

Results E-14

Events Character Model E-14

Injury Cost Model E-34

Property Cost Model E-49

Environmental Degradation Model E-50

Reliability E-52

Total Costs E-52

World I E-52

World II E-52

World III E-54

References E-57

APPENDIX F. INJURY COST MODEL SUMMARY F-l

Hospital Costs (and Retreatment Costs) F-2

Foregone Earnings F-3

xi
TABLE OF CONTENTS (Continued)

Page

LIST OF APPENDICES (Continued)

Health Insurance Costs F-3

Product Liability Insurance Costs F-4

Litigation Costs F-4

Transportation Costs .... F-4

Visitor Costs F-5

Pain and Suffering Costs F-5

Disability Costs F-5

Valuation of Loss of Life F-6

APPENDIX G. VALUATION OF LOSS OF LIFE G-l

Introduction G-l

Definition and Application G-l

The "Human Capital" Approach G-3

Quality Adjusted Life-Years G-4

The "Willingness To Pay" Approach G-10

Adjustment to Reflect the Societal Value of Loss of Life G-14

References G-20

APPENDIX H. (Separately Bound)

LIST OF TABLES

Table E-l. List of Events . E-4

Table E-2. Comparison of Accidents, 1978 E-7

Table E-3. Railroad Transport E-l

5

Table E-4. Pipeline Transport E-16

Table E-5. Components Involved in Natural Gas Pipeline

Materials Failures E-17

Table E-6. Auto Transport E-19

Table E-7. Other Motor Vehicle Transport E-21

Table E-8. Aviation Transport E-2

3

Table E-9. Marine Transport E-24

Table E-10. Work-Related Accidents E-27

xii
TABLE OF CONTENTS (Continued)

LIST OF TABLES (Continued)

Page

Table E-ll. Home-Related Accidents E-29

Table E-12. Total Reported Operational Mishaps in the Military .... E-31

Table E-13. Maximum Percent of Military Accidents Due to Fracture. . . E- 32

Table E-14. Recreation Related Accidents E-35

Table E-15. Event Categories and Supplemental Data Sources E-38

Table E-16. Relative Injuries Frequencies: Motor Vehicles E-39

Table E-17. Relative Injury Frequencies E-40

Table E-18. NEISS Injury Categories - NEISS Injury Diagnosis Codes . . E-41

Table E- 19. Included NEISS Injuries Categories E-43

Table E-20. Injury Costs by NEISS Injury Category E-45

Table E-21. Average Injury Cost by Event Category E-46

Table E-22. Property Damage by Event from ECM E-48

Table E- 23. Environmental Consequences by Event E-51

Table E-24. Supplemental Model Results for World I Minus

World II Differences (Millions of 1978 Dollars) E-53

Table E-25. Fraction of Best Practice Already Being Practiced

in World I E-55

Table E-26. Supplemental Model Results for World I Minus World III

Differences (Millions of 1978 Dollars) E-56

Table G-l. Value of Loss of Life: Option 1 Present Value of

Expected Future Earnings G-5

Table G-2. Weights for Life-Years G-6

Table G-3. Expected Number of Quality-Adjusted Life-Years

by Age and Sex of Potential Victim G-8

Table G-4. Value of Loss of Life: Option 2 Integration of

QALY and Discounted Future Earnings G-9

Table G-5. Value of Loss of Life: Option 3 Willingness to Pay

Adjusted by Discounted Future Earnings and QALY G-13

Table G-6. Value of Loss of Life: Option la Present Value of

Expected Future Earnings Plus Additional Societal Loss . . G-l

6

xi i i
TABLE OF CONTENTS (Continued)

LIST OF TABLES (Continued)

Page

Table G-7.

Table G-8.

APPENDIX H.

Value of Loss of Life: Option 2a Integration of

QALY and Discounted Future Earnings Plus Additional

Societal Loss G-17

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

Table

H-l.

H-2.

H-3.

H-4.

H-5.

H-6.

H-7.

H-8.

H-9.

H-10.

H-l 1. H-l 2. H-l 3. H-14.

H-15.

H-16.

Table H-17.

Table H-18.

Table H-19.

Value of Loss of Life: Option 3a Willingness to Pay

Adjusted by Discounted Future Earnings and QALY Plus

Additional Societal Loss G-18

DETAILED COMPUTER PRINTOUTS OF SELECTED INPUT/OUTPUT

MATRICES (SEPARATELY BOUND)

Direct Technical Coefficients, World I Direct Technical Coefficients, World II

Direct Technical Coefficients, World III

Capital /Output Coefficients, World I Capital /Output Coefficients, World II Capital /Output Coefficients, World III

Useful Lives, World I Growth Matrix

Social Capital Infrastructure, World I Average Annual Capital Replacement Rate, World I Average Annual Capital Replacement Rate, World II

Average Annual Capital Replacement Rate, World III

Direct and Indirect Effects, World I Direct and Indirect Effects, World II

Direct and Indirect Effects, World III

Dollar Value of Interindustry and Final Transactions,

World I Dollar Value of Interindustry and Final Transactions,

World II Dollar Value of Interindustry and Final Transactions,

World III

Dollar Value of Interindustry and Final Transactions,

World I minus World II Difference

xiv
TABLE OF CONTENTS (Continued)

LIST OF TABLES (Continued)

Page

Table H-20. Dollar Value of Interindustry and Final Transactions,

World I minus World III Difference

Table H-21. Dollar Value of Interindustry and Final Transactions,

World III minus World II Difference

LIST OF FIGURES

Figure B-l. Matrix Flow of Input/Output Model B-6

Figure E-l. Analytical Flow of the Models E-2

Figure G-l. The Valuation of Loss of Life in a Risk-Reduction

Framework G-2

xv
THE ECONOMIC EFFECTS OF FRACTURE

IN THE UNITED STATES

by

J. J. Duga, W. H. Fisher, R. W. Buxbaum,

A. R. Rosenfield, A. R. Buhr,

E. J. Honton , and S. C. McMillan

SUMMARY

Materials produced in the United States--and the structures, con- tainers and other products made from them--are all subject to fracture. For

this reason resources have been directed toward many aspects of the attainment

of structural integrity. Substantial effort is continuously directed toward:

improved understanding of fracture mechanics; development of more fractureand fatigue-resistant materials; improved processing techniques to achieve

more uniform materials; utilization of design concepts to reduce the potential

for structural failure; advancement of nondestructive evaluation equipment for

both inspection and preventive maintenance; and development of consumer educational materials, maintenance guides, and operating instructions to ensure the

proper use of products.

While our understanding of material fracture has advanced considerably over the past several decades, we still need to overdesign structures so as to maintain safety factors and to assure reliability, and we still expend

much effort on maintenance and repair to prevent catastrophic failures. These

and other activities represent uses of resources (materials, energy, labor,

devices, etc.) that could be diverted to other worthwhile purposes were it not

for the simple fact that things break.

In spite of our efforts to prevent or to anticipate fracture, breakages do occur--often with tragic consequences. The injuries and losses of

life resulting from the recent Kansas City Hyatt Hotel walkway collapse, the

fall of the Silver Bridge in Ohio, and other similar events remind us that the

results of fracture-related incidents can be devastating.

The present study was undertaken with the objective of estimating

several different costs or levels of resource utilization:

• What is the total cost of fracture in the U.S. economy ? It is

estimated that the resources consumed in anticipation of, or as a result of, fracture amount to $99.0 bi 11 ion annually (in 1978

dol lars)

.

• How much of these costs could be reduced by the application of

presently known technology ? Approximately $29.1 billion could" be

saved if all known best fracture control practices were applied

throughout the productive economy.

xvi
• How much of these costs could be reduced by further research into

fracture-related technologies ? It is estimated that future

research could reduce these annual costs to the economy by an additional $23.4 billion .

This project was undertaken with an appreciation of the fact that

total costs cannot be determined by the simple summing of all the expenditures

devoted to the individual components of fracture-prevention activities, or a summing of those costs which accrue as a result of fracture-related events.

Such an approach would, at best, provide a microeconomic accounting that

neglects the complex interactions among the many diverse sectors of the

economy. Based on the experience with an earlier study for the National

Bureau of Standards ("The Cost of Corrosion"), Battel le again employed a full

Input/Output (I/O) model, thus permitting an examination of the direct and

indirect resource flows which result from consideration of material fracture.

While most of the costs of fracture could be accommodated easily

within the I/O framework, the objective of isolating those other costs associated with accidents and similar "visible" events required the development of

a set of specialized Supplemental Models. These latter were applied to a broad range of accident types, and served as the basis for determining both resource and imputed costs attributable to fracture-related events.

Battelle's I/O model is technology based, reflecting all activities

which derive from the actual technologies of production. Thus, any technological factors which affect industry can be incorporated as changes in the

model, and their impacts can be traced throughout the economy. The general

application of this tool requires both detailed knowledge and judgment on the

part of experts familiar with all manner of industrial processes. In view of

the complexity of the I/O model as adapted to this study (covering 150 different sectors of the economy), and in view of the pervasiveness of fracturerelated concerns, Battelle's standard approach to I/O analysis was augmented

by the development of generalized rules, which could be applied across a majority of sectors. This modification and expansion of the method is

expected to permit a more effective use of I/O in assessing the impacts of a wide range of emerging technologies, the consequences of widespread improvements in existing technologies, or the costs of degradation effects (similar

to corrosion or fracture).

The estimation of the cost of fracture was undertaken by the definition of four "Worlds", or states of the economy, three of which are directly

comparable with those defined in the earlier corrosion study. World I represents the U.S. economy as it actually existed (in 1978), adjusted to conditions of peacetime full employment. World II is a hypothetical construct

which describes what the economy would look like were there no unintended

fracture and no need to expend resources on fracture prevention. World 111 is

another hypothetical description of the economy, assuming those conditions

where all sectors performed according to the known best fracture-control

technologies (regardless of where each technology originated).

xvii
An additional objective of this study was to estimate the impacts of

future research. This World IV--the only part of the study in which a simple

summation was employed in place of a full 1/0 model --represents the potential

reductions in costs that could be realized through the conduct of research and

the applications of the findings therefrom.

It is important to note that of the total costs of fracture given

above, approximately 29 percent could be reduced through the widespread use of

presently available technology, that is, through education and technology

transfer. An additional 24 percent may be reducible through research and

development in four broad areas: (1) understanding basic materials properties

and the mechanisms of material failure; (2) improving our knowledge and

application of processing techniques; (3) specialized fracture-prevention

design and related computational efficiency and accuracy; and (4) "support" areas related to inspection, testing, maintenance, and reliability control.

The total cost of fracture ($99.0 billion) is 4.4 percent of the

Gross National Product for "full employment" 1978. If we assume no great

change in the relative size of these costs in today's economy--wi th a GNP of

approximately $3,000 bil 1 ion--current (1982) costs of fracture are running at

a level of about $132 billion per year.

Two major factors deserve special attention at this point: (1) the

magnitude of the costs associated with accident-related events; and (2) the

basically conservative nature of the 1/0 model. The total resource and

imputed costs which result from accidents and other similar events amount to

slightly less than $2 billion. This is considerably smaller than the $34

billion estimated by the National Safety Council as being the cost of automobile accidents alone in 1978. However, it must be emphasized that the total

events cost defined here account only for those events which are caused by

fracture; even within that limiting definition, we exclude from the scope any

fractures that are the result of acts of violence or vandalism, operations

beyond design, natural disasters of magnitude greater than that expected in

original design; and similar causes. We have included only those events which

could be associated with the types of causes that conceivably can be addressed

through efforts of those organizations that are concerned directly or indirectly with fracture technology.

This estimate of event-related costs is subject to errors associated

with the paucity of reliable data on the true causes of events. However, the

analysis was carried out so that this portion of the costs is considered to be

a maximum. That is, fracture-related events, within the scope of this study,

could be as high as $2 billion annually .

With regard to the 1/0 model outputs, the estimates provided in this

study are on the conservative side; that is, the original estimates were

subject to a 26 percent confidence range. The dollar figures cited above

therefore have already been subject to a 13 percent adjustment for under - estimation. Even so, these resource costs can still, with reasonable assurance), be interpreted as lower bounds--the present cost of fracture is at least

$99 billion annually. Similarly, the estimates given for the (present or future) reducible costs are also conservative.

xvi i i
It is shown that while the general order of magnitude of the costs of

fracture is essentially the same as that which had been estimated for the

costs of corrosion, there is a significant difference in the makeup of these

costs. Broadly speaking, in each study, the costs fall into two broad

classes: those associated with changes in technology and those associated

with changes in demand. In the case of corrosion, over 70 percent of the cost

of corrosion arose from changes in demand , much of which could be directly

tied to the effect of corrosion on automobiles. In the fracture study, over

80 percent of the costs are technology based. They derive primarily from

technologies of production and the amounts of material that are used in

production processs in order to prevent fracture. It is largely within this

area that future research and development will have their greatest impacts.

It is shown that future cost reductions can be addressed on a sectorby-sector basis through a detailed analysis of the cost components that accrue

to individual sectors and are provided in this report. A major portion of

resource savings may be realized by the transfer of existing technology, i.e.,

applying a tchnology developed for one use to another onei, perhaps far

removed. Depending upon the particular sector(s) involved, savings may accrue

to producers, to users, and/or to society at large.

In addition-, an almost equal resource savings may be obtained through

basic and applied research, and the subsequent dissemination and application

of new technology throughout the productive economy.

Regardless of whether future efforts are directed toward applications

of existing technology or toward advancements of technology, the target for

future savings is highly significant.

xix

1

I. INTRODUCTION AND OVERVIEW

The prevention of material fractures consumes major resources in the

total economic flow of the United States. Such resources, including materials, manpower and energy, are expended both directly and indirectly in an effort to prevent the fracture of structures and containers; to assure the

physical integrity of consumer goods and the safety of equipment; and to

develop and apply maintenance and inspection procedures for the prevention or identification of critical flaws. In addition, capital resources are expended

in the stockpiling of inventories or redundant equipment which are held in

anticipation of fracture. Replacement parts or entire units are held in

reserve--f reezi ng capital which might be used for other purposes—for little

reason other than to ensure the continued performance of an activity or function in the event of a component failure.

Starting with the premise that, under a variety of conditions,

materials wi 1

1

fracture or otherwise be physically altered so as to preclude

their application in a particular configuration, one is led to the conclusion

that material fracture considerations have a far-reaching and pervasive effect

on the U.S. economy.

In addition to the fact that fracture prevention (through materials

selection, design, and inspection) represents a major resource flow, there are

the additional costs that accrue as a consequence of unintended fracture. One

need only look at a few of the more spectacular fracture-related accidents to

obtain an appreciation of those consequences:

t the fracture of airplane components, resulting in disastrous

accidents similar to the well-known DC-10 crash in Chicago

• the fracture of support members leading to the collapse of the

Silver Bridge in Ohio, with subsequent deaths and injuries

• the fracture of railroad wheels or tracks, leading to derailment,

the consequent rupture of tank cars, and the spillage of hazardous, toxic, or other environmentally degrading chemicals

• the recent collapse of overhead walkways in the Kansas City Hyatt

Hotel

.

These consequences of fracture include not only the personal human costs in

pain, suffering, and death, but also those costs that are reflected in losses

of cargo, business costs of delay, environmental damage, and the costs of

environmental cleanup.

The total impact of fracture on the U.S. economy is a measure of both

the resources expended in fracture prevention and those costs and other resource flows incurred as fracture consequences. The economy, having developed into a complex system for the delivery of goods and services, is highly

dependent upon a number of different factors. Advances in technol ogy--i

n

terms of both basic and applied sciences—have had a significant role in
2

shaping that economy. Research in electronics has changed the way in which we communicate, the manner in which we conduct business, and the forms of entertainment that we enjoy. Research in transportation has affected our personal

mobility, the delivery of essential material for consumer and industrial use,

and the distribution of fuel supplies. And research in basic materials,

engineering, and construction techniques have impacted the appearance of our cities, the tapping of resources, and the development of an enormous spectrum

of consumer goods. Inasmuch as past research has markedly affected the

overall economy of the U.S., it is reasonable to assume that future research

will have a similar result.

Can one expect, for example, that advances in fracture-related

research could result in the delivery of the same goods and services at a lesser expenditure of resources?

Would new developments in materials, design, construction, and

maintenance permit a decrease in the costs or distribution of fracture prevention expense without a concomitant increase in the costs associated with

fracture occurrence?

Can advances in fracture technology result in a change in overall resource flows such that the savings in materials, manpower, energy and

capital com lid be diverted to other more productive activities?

In order to begin the process of addressing such questions, it is

instructive to revi ew briefly some of the advances that have significantly

affected the prevention of fracture.

Historical Progress in Fracture Prevention

The history of efforts to avoid structural failure is long and

fascinating, replete with spectacular bridge collapses, tank explosions, and

other disasters. The many structures that have survived over the centuries

attest to the successes of the early designers and builders. Much of that success was based upon trial and error designs and highly redundant uses of

materials. Most of today's technology in analysis, design, materials, and

construction has evolved over the past two centuries, although many of the key

elements were known (or at least observed) and frequently practiced long

before thato

Improvements in Materials

With the exception of polymers, the common materials of construction

have been used in one form or another for centuries: wood, stone, metals and

alloys, glass, and ceramic materials. However, the industrial revolution of

the 1800s marked a period of significantly rapid development both in the

methods of producing materials and in their application. It was not until the

20th Century that an understanding was developed of how the composition and
3

microstructure of materials determine their properties, leading to the degree

of control in the production of materials that we have today. This century

also has seen the development of polymers from laboratory curiosities to a class of materials competitive with wood, metals, and ceramics.

Materials today are produced to industrial standards of composition

and microstructure that represent a balance between product quality and cost.

Those standards commonly differ according to the material and its intended

use; aircraft quality steels, for example, are produced to tighter specifications than structural steels and are therefore more costly.

Improvements in Design

Engineering design as we know it today is largely based upon the

principles of mechanics and the theory of elasticity. Although the foundations of those disciplines can be traced farther back into history, the most

significant developments took place during the 19th Century. Further refinements were made during the first half of the 20th Century, and these gradually

made their way into industrial design during that period. Modern analysis and

design methods have evolved during the last twenty years or so, following the

introduction and rapid use of electronic computing equipment. This technology

continues to progress rapidly as further computer-assisted design methods are

real i zed.

Improvements in Testing/Inspection

The testing and inspection of materials (as distinguished from products) has evolved mainly during this century. Before that time there was little testing of materials properties, and inspection rarely went beyond

visual examinations. With the introduction of rational design methods, it

became necessary to characterize the mechanical properties of materials, and

equipment for that purpose was developed in the late 1800s. Testing machines

have been continually refined and increasingly automated during the past

decade to include sophisticated computer control and data reduction systems.

The impact test was increasingly utilized during World War II and the years

immediately following, as the problems of brittle fracture of ordnance

components and cargo ships received attention.

Inspection procedures likewise received increasing attention during

World War II with such techniques as radiography and magnetic particle analysis. Inspection techniques for the detection of flaws has continued since ^

that time with the development of acoustic emission, eddy current, and

ultrasonic systems, many of which are still being refined.

Developments in Fracture Mechanics

The study of fracture as a phenomenon dates back to about World War I and the subsequent theories relating the strength of brittle materials to the

presence of microscopic flaws. Here again, the problems encountered during
4

World War II with brittle fracture of steels, as well as such postwar problems

as the British Comet jet airplane and high-strength steel rocket motor cases,

provided impetus to the development of fracture mechanics.

This discipline is the unifying factor in mechanical failure

prevention since it contains the major components of safe operation. It is now recognized that the strength of a flawed material may be significantly

lower than that of a perfect material. This finding is embodied in the

material fracture toughness property. Design and overl oad protection can proceed based on a knowledge of toughness, so that the failure load of the

body is not exceeded. Testi ng insures that the material has sufficient

toughness and load-bearing capacity for its function. Inspection detects the

presence of critical flaws and maintenance insures that, once detected, they

are eliminated. Certain industries are now using fracture mechanics as a design method—aerospace and nuclear vessels, for example--and current

research is active in this field to extend its applicability to more materials

classes and systems.

The Pervasiveness of Costs

The total resource costs which accrue in the attempt to preclude

fracture, as well as those costs associated with the consequences of fracture,

cannot be totally determined or appreciated by the simple expedient of

tallying individual direct dollar values. It would be tempting, for example,

to make simple assumptions regarding direct outlays for material and manpower

which would account for the added sales of reinforcing bars or the salaries of

inspectors. Or to compute that portion of direct materials and labor costs

which account for repair of bridges and highways. Or to total the direct

medical or cargo loss costs associated with accidents related to transportation or falls from defective scaffolding.

To be sure, these are typical of the kinds of costs which are attributable to fracture. However, such an exercise would severely underestimate the total impact of fracture on the U.S. economy. Furthermore, it would

preclude any detailed and cohesive effort to identify those types of research

or other activities which might be undertaken to reduce the total costs to the

economy. The underestimation would result from two origins. First, it is

doubtful whether complete coverage of all manner of individual cases or events

could be compiled and properly attributed to materials fracture.* Second, the mere summation of direct costs does not permit an accounting of those indirect

and downstream costs which are fracture-relevant. For example, the cost of

fracture surely includes the direct cost of maintenance, including the materials consumed during that process. In the simple case of pot-hole repair,

one should consider not only the material used for filling voids, but also the

raw materials and energy consumed in preparing basic patching compounds; the

cost associated with transport of such raw and finished materials; the capital

* As will be seen later, the compilation and attribution in only one subset of

fracture-event information is a major undertaking which is compounded by a lack of detailed historic investigative data.
5

equipment required to mine and process the original resources; and the list

goes on and on.

The determination of total costs to the economy requires a much more

sophisticted approach coupled with a consistent method of collecting the

appropriate data. As will be shown in the following sections and chapters,

the application of a detailed Input/Output model of the U.S. economy permits a tracking of all fracture-related costs, and an attribution of these costs as they are encountered throughout the economy.

Program Objectives

The statement of program objectives rests principally on two factors

that have been discussed above:

(1) the fact that materials can fail has a profound effect on the

total U.S. economy, in terms of both the resources used to

prevent failure and the costs that accrue as a result of

failure*; and

(2) the need to determine the extent to which present and future

reducible costs of failure can be addressed through the broader

application of known technology and the development of better

technol ogy

.

In order to accomplish the objectives noted below, an economic

modeling approach was adopted that would lead to an estimate of three basic

measures

(1) the total economic activity in the U.S. under the actual

operating conditions of a base year (1978), corrected in such

manner as to assume a peacetime, f ul 1-empl oyment economy; this

description of the economy is referred to as World 1, The Real

World;

(2) the total economic activity as it would be described in a situation in which undesired materials fracture did not occur;

this description is referred to as World II, The No-Fracture

Worl d ; and

(3) the total economic activity as it would be described under those

conditions in which best known fracture control practices were employed throughout all productive processes; this description

is referred to as World III, The Best Practices World.

* In keeping with the convention adopted throughout the course of this

program, we shall use the generic term "failure" or the convenient term

"fracture" to include fracture and excessive deformation. Unless otherwise

specified, these terms will be used interchangably

.
6

It follows from these definitions that the differences between these Worlds

provide estimates of three different costs of fracture.

World I - World II represents the difference in total economic

activity between the Real World and the No-Fracture World or. in other terms,

the total cost of fracture .

World I - World III represents the difference in economic activity

between that which actually occurs and that which would occur if the best

present technical fracture prevention and control practices were employed in

all productive processes. Thus, this difference reflects presently reducible

costs of fracture .

World III - World II thus represents the remaining costs, that is,

presently irreducible costs of fracture .

It is clear from these definitions that the existance of a positive

World I - World III difference suggests that there are available fracturerelated practices and procedures which, if applied throughout the economy,

could lead to a reduction in the use of selected resources. The attainment of

World III may be achieved through the application of that which is presently

known; in part, World 111 may be approached through adaptation or adoption of

technologies developed for one purpose and applied to another.

The existance of a World 111 - World II difference implies that even

if all presently known technologies were applied, there still would remain a cost of fracture. It follows that reduction in that remainder can only be

achieved through future research; and even then, the ultimate reduction in

fracture costs will be limited.

From the definitions of Worlds II and III, it is seen that the

productive economic activity under No-Fracture and Best Practices conditions

can be carried out with fewer resources. As a result, the resources that

would have been used in World I--the so-called "Social Savings" (see Appendix

B)--can be channeled into still more productive economic activity.

Just as past research efforts have resulted in refined uses of

materials, designs, and practices, future research may be expected to have an impact on the presently determined World III - World II difference. In keeping with the definitions already established., we may now introduce the

concept of World IV, the so-called Future Best Practices World.* It describes

the economy to which we may aspire, where future fracture-relevant research

and its application have achieved their full potential.

* As will be shown in greater detail in later portions of the report, World IV

is not to be described in the same sense as Worlds 1, II and 111. That is,

Worlds I — 1 1 1 are determined by a full Input/Output (I/O) analysis, while the

nature of the model and the definition of World IV preclude such detail.

We shall continue to refer to this state as World IV in order to preserve

consi stency
7

five-fold

Given this background, the objectives of this research program are

(1

(2

(3

(4

(5

to estimate the total cost of fracture in the U.S. economy;

to estimate that portion of present (i.e., 1978) costs which may

be reduced through the widespread application of presently

known fracture-relevant technology;

to estimate those remaining costs, i.e., those not preventable

through the application of presently-known best practices;

to define those areas of research which, if carried to their

ultimate conclusion and applied throughout the productive

economy, would further reduce the costs of fracture; and

to estimate the extent to which such research would reduce the

cost of fracture.

Structure of the Report

The remainder of this report is divided into chapters and supporting

appendices which develop and describe the method*, present the results, and

discuss conclusions and recommendations.

Chapter II is devoted to a more detailed explanation of the worlds

and their physical signif icancei, and to a comparison between the present "Cost

of Fracture" program and its predecessor, "The Cost of Corrosion". This com- parison and the "World" definitions are critical in delineating the Scope of

this program.

In Chapter 111, the general approach is presented, with emphasis on the Input/Output method and the development of Supplemental Models used to

describe the impact of fracture-related events.

The specific approaches to both the Input/Output and Supplemental

Models are presented in Chapters IV and V, respectively.

Chapter VI focuses on the results of the projecti, with emphasis on the character of Worlds II and III, and on the differences among all pairs of

Worlds 1, II-i, and 111. Of particular importance are the World III - World II differences which set the stage for the consideration of future research

thrusts and their potential impacts.

In Chapter VI 1, emphasis is placed on those research areas which are deemed to have the greatest promise in terms of their impact on future reducible costs of fracture.

Following the overall analysis as given in Chapter VIII, final recom- mendations and conclusions are summarized in Chapter IX.
8

In order to avoid repetition or extensive footnotes, the reader is

referred to a Glossary of Terms (Appendix A) for a summary of those

definitions

Additional appendices have been devoted to presentation of the

details of sub-portions and background materials which, while most germane to

the project, are deferred so as to maintain the basic continuity of the

report. Appendices B - H thus provide:

(B) Definition of the sectors of the I/O model

(C) Details of the I/O approach to economic impact analysis

(D) Details of the so-called "Row-Rules", an approach to ex ante

modeling developed for this study

(E) Detailed background on the Supplemental Models developed to

account for fracture-relevant costs associated with a variety of

fracture-caused events

(F) A summary of the Injury Cost Model prepared under subcontract

with Technology + Economics, Inc. (T+E)

(G) A critique on the evaluation of loss of life., used to support

findings of the Supplemental Models prepared by T+E

(H) Separately bound detailed computer printouts containing all

pertinent data for the materials used in the description of

Worlds I, II and III, and the differences among them.
9

II. THE SCOPE OF THE PROGRAM

The "Cost of Fracture" program utilizes an approach and set of

itions which are somewhat difficult to understand and which may appear at nee with common experience. Perhaps no concepts are more alien than two

related factors which must be established at the outset and which will

e the range of applicability of the results. First, there is the concept

no-fracture World (World II), a situation in which no unintended, nonicial fracture occurs. And second, there is the question of "Scope",

ding a determination of those situations which fall into or out of

deration in this program. It will be seen throughout the report that

definitions and their applications relate intimately to the approach

is taken for the Input/Output (I/O) portion of the program, to the

tion or exclusion of fracture-related events (in the Supplemental

s), and to the types of future research which are suggested.

It will also be seen that many fracture-related events, including

which are very dramatic and visible, may actually fall outside the scope

e study and its attendant definitions. With one of the major objectives

the development of insights relative to future fracture-relevant

rch, it will be seen that almost all events which are excluded from Scope

hose same types of events which may not be prevented by research on

ure.

Comparison With the "Cost of Corrosion"

The present study of the "Cost of Fracture" is the second program of

type to be undertaken by Battel le for the National Bureau of Standards.

the earlier study on the "Cost of Corrosion", Battelle's basic method

zes the I/O Model. In spite of the similarity in approach, however,

are significant differences between these two projects. As a result,

derable care must be exercised in comparing the two studies and their

ctive outputs. It will be seen from the program differences noted below

a direct comparison is beyond the purview of the present report and

d, in fact, be treated as an entirely separate activity.

Some of the most important distinctions between the studies are:

(1) The corrosion study was restricted to metal lie corrosion,

whereas the fracture study is expanded to consider metals,

ceramics and glass, polymers, wood, and composites.

(2) The corrosion study defined a hypothetical world in which no adverse corrosion occurred and no precautions had to be taken to

prevent corrosion. The analog in the fracture study--the

world without fracture—cannot be quite so absolute, for such

a construct could lead to completely unrealistic results. The

"world without fracture" does, in fact, permit fractures (for

example, under conditions of usage outside of design).
10

(3) Both the corrosion and fracture studies consider the costs of

prevention and the consequences as reflected in terms of changes

in demands. The fracture study goes further in that it includes

an accounting of additional impacts, including those direct and

imputed costs associated with human injury, environmental

damagei, and the like.

(4) The corrosion study was confined to the estimation of presently

reducible costs and presently irreducible costs of corrosion.

In the fracture study, the latter classification is further

subdivided into future reducible and future irreducible costs.

(5) Battel le's basic 126-sector 1/0 model was redefined to a 139-sector model for the corrosion study, and has been disaggregated to a 150-sector model for the fracture project. This

disaggregation has been required in order that special fracturerelevant sectors could be studied individually. In only 85 cases are the sectors common to the two studies.

(6) The calculations for the corrosion study were based upon a model

of the full employment U.S. economy for the year 1975; the fracture study is based upon the full employment U.S. economy for

the year 1978. Furthermore, the costs associated with fracture

events (to be detailed in Chapter VI and Appendices E, F and G) were usually based on averages over a three to five year span,

rather than only those events occurring in 1978.

As a consequence of these distinctions between them, it must be

acknowledged that the results of the two studies are not completely and simply

additive, nor can they be compared directly with each other. This lack of

direct comparability immediately brings into focus a potentially serious

accounting problem, namely, the possibility of "double counting" between the

two studies. In cases where either corrosion or fracture or both are responsible for early failure, conceptually the same failures may be attributed to

both. This is especially likely in considerations relative to capital equipment, where replacement rates are affected by increases in useful life. For

instance, if the useful life range for a given item is 5-20 years in World 1,

the lower limit is generally viewed as most susceptible to change in shifting

to World II. Therefore, if the range becomes 10-20 years in a no-corrosion

world and 11-20 years in a no-fracture world, the reduction of the span by

years 5-9 may be viewed as leading to double counting.*

There are some situations in which double counting conceivably is

realistic and desirable. For instance, where shorter life spans are caused by

a combination of corrosion and f racture--i .e. , if either were absent, the span

would be longer—double counting is correct. On the other handi, if either

* As will be noted in later discussion, there are few fracture-related impacts

on the capital structure of industry; under normal wi thi n-design usage,

there is a much greater likelihood that corrosion is the principal determinant of useful lives, and double-counting is not expected to be of significant proportion.
1

1

corrosion or fracture could lead to a shorter useful life without the presence

of the other, then the double counting is incorrect and should be eliminated.

In keeping with the intent of the National Bureau of Standards'

objectives, the present study will concentrate strictly on the fracturerelated aspects of the problem. The corrosion study was conducted as if

corrosion were the sole relevant cause of failure; therefore the fracture

study will be conducted as if fracture/deformation were the sole cause of

failure. If it is to be dealt with at all, this question of double counting

should be the subject of a subsequent exercise.

The Concept of Worlds

Although the general concept of Worlds was introduced in Chapter I, a more detailed description is necessary in order to gain further insight into

the interpretation and utilization of the study's results.

In parallel with the "Cost of Corrosion" study, we first define three

"Worlds" that can be used to form the basis of a determination of the costs of

fracture. With reference to Figure 1, "World I" represents the real U.S.

economy of 1978. As it applies to fracture, the real world is precisely what

it implies -- real in the sense that it does in fact describe all the interindustry transactions which did occur: shapes were fabricated and put into

inventory or use, structures broke and were replaced, all manner of services

were provided between and among the different sectors of the economy.

"World II" describes a hypothetical world in which, for the most

part, all the same interindustry transactions occurred with one major exception: in World II there are no unintended fractures. Material properties are uniform and perfectly known, design and fabrication of all finished structures

can be accomplished with perfect knowledge of the stresses and strains encountered in normal use, fully elastic behavior is uniformly observed, no timedependent fracture processes apply, fracture-relevant inspection of structural

members is not required, and the useful lives of all products are not limited

by their propensities to fracture or to deform inelastical ly. In short, World

II is a world without fracture within design, and the differences in economic

activity between World I and World II represent the total cost of fracture.

In defining "World III", a presumption is made that not all

knowledge, materials, designs, and practices are employed in the best possible

way; that is, present best practices are not fully and uniformly applied. It is assumed that if present best practice as it applies to fracture were to be

fully implemented throughout, the economy would be represented by World III.

The differences in economic activity between World I and World III then

represent the presently reducible costs of fracture. By definition, the

remaining differences between World III and World II are the presently

nonreducible costs of fracture.
12

Real World I "X"

Presently reducible costs

Present Best Practice . World III .

World II

FIGURE 1. SCHEMATIC OF THE COSTS OF FRACTURE
13

To this point, the parallel with the "Cost of Corrosion" study is

nearly complete.* A significant departure from that parallel has been purposely introduced into the present study as a result of a special need with

which the NBS is faced. In order to determine the extent to which future

investments in research and development might be expected to achieve still

further reductions in the cost of fracture, a "World 'IV'" is defined.

It is recalled that Worlds I — 1 1 1 are a representation of what the

U.S. economy would look like under the conditions imposed by the definitions.

These Worlds are described in terms of interindustry transactions, capital

requirements, final demands, and all the other elements of an I/O Model. Such

is not, and cannot be, the characteristic of World "IV". World "IV" is based

upon a futuristic estimate of ultimate best practice. That is to say, we examine an individual sector of the economy, taking as given the World

Ill-World II difference as a measure of presently non-reducible costs in that

sector. Then we pose the question: "To what extent, or by what proportion,

could these costs be reduced by making and adopting the most reasonably

expected technological advance?". The answer to this question would provide

an estimate of future reducible costs within that sector.

The total result of querying all 150 sectors would provide a weighted

summation of such percentages and an estimate of the cost savinq that would

accrue. This value would not be the same as that which would derive from a full I/O analysis of that future world for a variety of reasons. However, it

would represent an estimate of the target benefits that can be achieved from

advances in research in different fields.**

Given this approach to World "IV", it is now possible to define

Future Reducible Costs and Future Irreducible Costs, as shown in Figure 2.***

* As suggested earlier, and to be expanded upon later, the parallel is not

exact, since we cannot realistically conceive of a world without fracture

in the same sense as a world without corrosion. It is not necessary to

belabor this point further, except to note that once the physical

significance of our present World II is described, the conceptual problems

vani sh.

* It is important to note that the conduct of this study has resulted in an advanced application of Battel le's I/O method, and that such technical

advances may make it possible to construct a variety of World IVs, each

corresponding to the potential impacts of individual classes of research

output. The detailed application of this approach would, however, require

significant additional development of the overall model and is beyond the

scope of the present study.

* To this point, we have used the notation World "IV". The appearance of

the quotation marks has emphasized the fact that this World "IV" is a different construct from Worlds I — 1 1 1 . The point having now been made, it

is no longer necessary to confuse the notation. Subsequent reference to

this World will omit the quotation marks.
14

Real World I 1—

Presently reducible costs

Present Best Practice, World III

Future reducible costs

through R+D

Future Best Practice, World IV 1

Irreducible costs

World II ±X ±

FIGURE 2. SCHEMATIC OF THE COSTS OF FRACTURE, WITH

FUTURE BEST PRACTICE
15

Physical Significance of the Worlds

While many of the terms and concepts used in this study are quite

straightforward (a full Glossary of Terms is included in Appendix A), the

early stages of the program revealed considerable difficulties in developing

mathematical and economic constructs which had physical significance. Furthermore, the problem was seen to be larger than the mere satisfaction and education of the Battel le and NBS project staffs. It was recognized from the

outset that the proper conduct of the research would require much interaction

with other resources outside of the two principal staffs. A large portion of

the data to be gathered for the project would involve discussion with other

parties (including additional Battelle researchers, industry representatives,

other Federal government agencies, etc.) and it was obligatory that the specification of the Worlds be such that it could be quickly transmitted and

absorbed during the data gathering process.

To this end, much effort was devoted to developing guidelines that

would ease the data gathering activity, would permit the articulation of the

results in terms most readily understood by the audience to which the project

is directed (as well as the larger community of readers), and would maintain

the closest possible relationship to the "Cost of Corrosion" study.

World I . There are no special considerations which have to be

included in the definition of World I, since this World represents the real

U.S. economy as it would have existed in 1978, under full employment conditions. All fracture-prevention costs are included, and fractures occur with

costly consequences.

World II . Perhaps one of the most difficult concepts in the entire

study relates to the definition and specification of World 1

1 --a world without

fracture. In a world that was truly without fracture or massive deformation

(although still limited by considerations of stiffness and some non-structural

properties of materials), automobile bodies could be made from plain glass,

balsa would replace oak and other sturdy woods, and the physical integrity of

bridges, buildings and aircraft engine mountings would be taken as a constant,

not requiring inspection. To adopt definitions of "No-Fracture" which are

taken to the extreme would result in such absurdities that any conclusions

drawn therefrom would be equally absurd. It would remove any semblance of

practical realism from the study, and would result in there being such an enormous cost of fracture (World I-World II or even World Ill-World II) that

it would appear that no amount of future research could have a significant

impact on those costs. Thus, it was necessary to establish a definition of

World II that, while highly idealized, still maintained at least a textbook

significance*. The elements of this definition are as follows:

* It is important to recognize that World II is a hypothetical construct which

is "given" to use at no expense. We do not have to perform any work or expend any resources to attain World II. In World III, the only thing that

is given is the knowledge that we may not otherwise have regarding best

fracture-control practices; the truly best practices which might be applicable could well have been developed in one sector but not known in another.

In order to attain World III, resources would have to be expended through

education, technology transfer, etc. Similarly, the realistic approach

toward World II would require expenditure of resources for both the advancement of knowledge and the dissemination and application of that knowledge.
16

Material Property

FIGURE 3. SCHEMATIC DISTRIBUTION FUNCTION FOR MATERIAL

PROPERTIES IN WORLD I AND WORLD II.
17

(1) Each material's properties will have no variability, i.e., we represent mechanical properties in a delta function instead of

a Gaussian or Weibull distribution (see Figure 3).

(2) Each material's mechanical properties will be defined as being

four standard deviations above the mean of the distribution

which is now achievable. The mechanical properties include the

yield and ultimate strengths at the temperature of interest

(see Figure 3).

(3) We assume no unfavorable influence on any one of a material's

mechanical properties as we reduce the variability of its other

properties.

(4) A material may be substituted if, in 1978, the primary reason

for its not being used in that same application was its

susceptibility to fracture.

(5) It is assumed that materials do not fracture under any conditions unless design specifications are exceeded.

(6) Design will either be load or stiffness limited.

(7) A safety factor of unity will be applied in any case.

(8) Design is carried out with perfect knowledge.

(9) Inspection for fracture relevance is not necessary.

(10) There will be no residual stresses.

(11) There will be no crack initiation, growth, or fracture, as a result either of processing or of service; fracture mechanisms

not operating include fatigue, creep, radiation damage, and

environmentally-assisted crack growth.

It is of particular interest to note criterion (4) above, which

addresses the question of materials substitution. It will be recalled that

the "Cost of Corrosion" program incorporated materials substitution in those

obvious situations where such materials could have performed desired applications were it not for the fact that corrosion limited their usage. In a no-corrosion world, for example, it was not necessary to use stainless steel

where other (less expensive) materials could just as well have been employed.

Similarly in this study, appropriate materials substitutions can be

made in World II, where fracture events are not of concern or where a given

material is not presently used solely because of its tendency to fracture.

The determination of appropriate substitutions must be made on a case-by-case

basis, but there are sufficient cases to guide each decision. For example,

World II has embodied within it the assumption that cracks do not form under

normal service conditions and, therefore, crack growth is not a consideration.

It follows as a corollary that parameters such as toughness, impact energy,
18

and fatigue crack growth rate have no meaning. Thus, in World II, one may use the stronger (but less fatigue-resistant) 7000-series aluminum alloys in

aircraft, to replace the weaker (but fatigue-resistant) 2000-series alloys

presently employed.

Examples of such potential substitutions in different applications

are shown in Table 1. In spite of the potential for making many such

substitutions, one must be cautious in selecting and applying the concept too

broadly. The strict application of the materials criteria itemized above and

a liberal substitution policy could lead to extreme situations which strain

credibility. For example, under the conditions cited for World II, one might

imagine the use of glass as a substitute for steel in a broad variety of

applications. To do so, however, would represent a major restructuring of the

overall American productive system and would completely disrupt the intent of

the study.

Criterion (11) above raises an additional point of a conceptual

connection between the present project and the earlier corrosion study. Crack

initiation, fatigue, creep, and the like are time-dependent processes:

changes in either the micro- or macrostructure which are progressive after

some defined benchmark time t=0. The process of corrosion is exactly similar,

there being no corrosion of even the most oxidation-prone materials at t=0.

Thus, in terms of time-dependent processes, World II in either case represents

material conditions which are extant at t=0 and which remain as such during

usage.

World III . The determination of technical best practice and its

application to the computation of World III represents problems just as complex as those described for World II. In simplest terms, "best practice"

can be described as that combination of presently known materials, processes,

and technologies that will deliver the goods and services of the U.S. economy

at lowest overall fracture-related cost to society. World III implies that,

on the whole, devices and structures are not only produced using the most

advanced techniques known within a particular industry, but are also employing

techniques that have been developed for other industries. For example,

methods of bridge construction in World III take advantage of the concepts

that have developed both within the bridge industry and within the aircraft

i ndustry

.

In addition, best practice goes beyond that practice which is deemed

sufficient for compliance with imposed regulations. Furthermore, best practice can include materials substitutions which are presently technologically

acceptable. There are a number of cases (see Table 2) in which alternative

materials can be used to deliver the same function. One aspect of the determination of World III is the examination of potential materials substitutions

insofar as they contribute to overall best practice.

World IV. As noted earlier, World IV is not a detailed picture of

the economy in the same sense as Worlds I-III, but is the conceptual basis for

an estimate of the percent of presently non-reducible costs of fracture which
19

TABLE 1. EXAMPLES OF POTENTIAL WORLD II MATERIALS SUBSTITUTIONS

Application Substitutions

LNG Tanks Quenched and Tempered Steel for 9-Ni Steel

Bridges, Pressure Vessels, etc. Non-Weldable Steel for Weldable Steel

Airframes 7000-Series Aluminium Alloys for 2000-

Series Aluminium Alloys

Windshields Non-Tempered Glass for Laminated Glass

TABLE 2. TYPICAL MATERIALS SUBSTITUTIONS APPLICABLE

WITHIN THE CONTEXT OF WORLD III

Application Substitutions

Light/Telephone Poles Wood/Steel /Cement/Al uminium

Eyeglasses Glass/Plastic

Drinking Glasses Glass/Plastic

Roads Cement/Asphal

t

Shopping Bags Plastic/Paper

Di shes Crockery/Ceramic-Polymer Composi tes/Gl ass

Sports Equipment Various, depends on application

Sewer Pipes Cast Iron/Plastic

Hot Water Pipes PI astic/Copper/Iron

Automobile Fan Blades Fiberglass/Metal

Automobile Bumpers Al umi nium/Steel

Tire Belting Steel/Plastic/Glass

Rail road Ti es Wood/Cement
20

might be reduced through new and/or continuing research. In approaching a determination of World IV, one must consider the following types of questions:

(1) Given the difference between World III and World II, the

presently irreducible cost of fracture in each sector, what

percentage of that cost might be reduced through • additional

research?

(2) Of that figure derived in the answer to Question #1, what fraction may be attributable to research on materials? On design?

On reliability? Or, on production and fabrication?

(3) What types of research are required to accomplish the goals

noted in Question #2 as they apply to these areas.

Special Attention to Factors Beyond Scope

In the preceding discussion on World II, criteria were defined which

concentrated basically on the intrinsic physical properties of materials and

their applications. It will be recalled that these criteria were imposed for

two reasons: (1) to provide a basis for understanding the physical

significance of World II, and (2) to attempt to maintain parallelism with the

corrosion study. This latter factor is generally deemed necessary in order to

provide even a qualitative and conceptual connection.

From the outset of the program, it was recognized that complete

parallels could not be drawn for, as noted earlier, one cannot make the

absolute translation from "no-corrosion" to "no-fracture"; to have done so would have resulted in a reductio ad absurdum. However, through use of the

definition of "fracture within scope", one can maintain whatever parallelism

is deemed appropriate without sacrificing the intent and integrity of the

i nvestigation.

Central to the delimiting of scope is the criterion noted above that

"(5). . .materi al s do not fracture unless design specifications are exceeded " (emphasis added). This statement is critical to an appreciation of both that

which is included or excluded from the study, and that which lies within the

purview of the National Bureau of Standards and the community of other

organizations who are concerned with the fracture of materials and the failure

of structures.

The emphasis noted here stresses the fact that there are classes of

materials or structural failure which can occur but which are not subject to

study within the scope of the program. To be sure, we note that fracture does occur in World II . However, that fracture includes those cases for which

design specifications are exceeded. Included among such cases are those, for

example, which are caused by acts of terrorism, violence, or vandalism;

collapse of structures caused by natural phenomena (e.g., earthquakes, floods,

tornadoes) where the force of such phenomena exceeds that for which the

structure was designed; fracture of materials or structures that result from

drunken driving; and the like.
21

That these types of fractures still occur in World II derives from the

following arguments. It is first known that such events occur in the real

world, World I; broken windows are replaced, some purposefully broken goods

are repaired, etc. By including such fracture in both Worlds I and II, the

corresponding costs are eliminated from the difference between Worlds I and

II, and it is that difference that measures the total cost of fracture.

As a further consequence, this class of events is thus excluded from

consideration when one deals with the question of World IV. That this should

be the case is appropriate, for World IV raises the question of the types of

research which might be undertaken to reduce the costs of fracture. That

research which might be directed toward eliminating the cost of those

fractures which arise from causes including vandalism, terrorism, etc., is

certaintly not within the framework of this study or the mandate of the

National Bureau of Standards.

The specification of conditions defining World II are such that there

is no dilemma regarding what may be termed "beneficial fracture". Such beneficial or purposeful fracture includes chopping wood, breaking of windows for

emergency entrance or exit, the opening of sealed containers, and the like.

In each case, fracture would not occur unless useful and socially acceptable

ends were achieved. Such fractures are obviously desired, their occurrence is

accounted for in World II, and they are thus eliminated from consideration in

the World I-World II and World Ill-World II differences and analyses.

One might argue at this point that "acts of ignorance or neglect"

should also be cited as out-of-scope ; that failure to follow proscribed

operation or maintenance procedures should be counted in World II and

therefore eliminated from the World I-World II or World Ill-World II differences. However, such elimination would deny the fact that fracture prevention

is a process which involves both "hardware" (the materials and design) and

"software" (the instructions). Just as improvements in materials and

processes might show promise in reducing the fracture-proneness of selected

components, so also might improvements in maintenance or operation manuals

reduce the probability of error and the possibility of fracture. Similarly,

improvements in the arrangement or display of warning gauges (e.g., operator

indicators on aircraft, machining equipment) can be seen to reduce the

probability of improper operation.

It will be noted later (in particular connection with the data which

provide input to the Supplemental Models), that the collection and analysis of

any information related to the World I and World II constructs must be viewed

in terms of the considerations: (1) are the data relevant to fracture; and

(2) is the fracture within scope? It is only with an appreciation of these

basic criteria that one can approach the overall complex problem with useful

consistency.
22

III. GENERAL APPROACH

The introductory comments in this report noted the necessity of

taking a macroeconomic approach to a determination of the costs of fracture.

That such should be required is a consequence of the interrelations among all

the productive sectors of the economy, for costs are distributed in a complex weave which is not unlike the progression of disturbances in a closed pond.

Just as a pebble generates waves in all directions, and the reflection of such waves produces reinforcements and troughs which are influenced by the geometry

of the perimeter, so also does a change in a single production process or industry have an impact throughout all other portions of the economy.

One need only consider, qualitatively, the stream of consequences

which could follow from the replacement of wood, as a material of construction, with plastics. The lumber industry would decline; establishments which

provide saws, planers, and chippers would undergo major modifications in their

product lines; land would be diverted from forestry to agriculture or other

uses; wood adhesives would be replaced by polymer adhesives; and many established processes and producers would become extinct.

Conversely, such a substitution would give rise to massive expansions

in the production of plastics and in industries which supply raw and precursor

materials; there would be an increase or modification of the business of producing specialized capital equipment, and so on down the line. The demand for

fossil fuel materials (coal and crude petroleum) would skyrocket, as well as the supply of by-products or waste; and the competition for such fossil materials could have a significant impact on their availability to satisfy needs

for energy. Clearly, the event postulated here would result in changes

throughout the national economy, (both structurally and regionally), with some "winners" and some "losers," depending on the nature of resultant changes in

economic base, employment shifts, etc.

No simple microeconomic tabulation approach can assure that one could

account for the total economic impacts associated with even a single technological change. Certainly, no such approach could be expected to deal with

the simultaneous impact of a large number of departures from the present system. It is immediately apparent, from the description of the present program

and the definitions of the "Worlds," that a more sophisticated approach is

required. The transition from World I to either of the other Worlds represents a substantial and far-reaching change in the economy, and no lesser tool

than a complete Input/Output model would suffice.

What is Input/Output?

Most simply stated, the Input/Output (I/O) Model is a straightforward

series of relationships that combine the output (or "sales") of one industry,

group of industries, or productive process with the inputs (or "purchases") of

all other industries, groups of industries, or productive processes. For

example, a given company within the electronics industry may sell its output

as follows:
23

(1) A portion of its output (say, semiconductor components, resistors, capacitors) will be purchased by the industry which

assembles and distributes video games or home computers.

Another portion will be purchased by industries which produce

controls for home appliances. These are examples of purchasers

who use electronic components as "intermediate inputs" in their

own business.

(2) Another portion of the electronic industries' outputs (e.g.,

computers) may be purchased annually as capital equipment by

other industries, either for application to process control or

as accounting tools. Unlike intermediate inputs, capital is not

consumed or changed by its use in the ' productive process. The

capital equipment sold in an average year must provide both for

the replacement of obsolete or worn out equipment and for the

growth of the capital-using industry. The total capital held by

the buying industry also includes any redundant capital (that

is, capital held in reserve for emergencies).

(3) The electronics industry also sells spare parts and maintenance

and repair services to industries using its capital. These

sales are treated in the same manner as the intermediate inputs

(Item 1, above).

(4) The electronics industry also sells its product to final buyers

who are not part of the productive process, such as private consumers and government agencies. In addition, it exports

goods for use and consumption in all of the above forms,

thereby finally removing them from the U.S. economy.

Taking each of these classes of transactions in turn, the simplest

expression for the distribution of a single company's output is given as:

x = ax + gbx + rbx + fd (1)

where

a = that portion of output which is used as intermediate inputs and

as purchases of maintenance and repair parts and services

b = the capital held by the buying industry

g = the fraction of that held capital which is purchased to provide

for annual growth

r = the fraction of held capital that is purchased for replacement

purposes

fd = the portion of output that is purchased by final users and is

thereby removed from the U.S. productive activities.
24

We may now write a similar equation for each of the productive elements of the economy, say N in number, and sum them for the total economy.

The collection of all these equations can now be expressed as:

[X] = [A][X] + [G]®[B] [X] + [R]® [B] [X] + [FD] (2)

where the symbol © represents the Kroenecker multiplication of matrices (i.e.,

a cell -by-cell multiplication of corresponding elements, as opposed to the

standard matrix multiplication), and

X = a vector of total output

A = a matrix of direct technical coefficients

B = a matrix of capital /output coefficients

G = a full matrix of industry growth rates, with each entry in any

column being equal to the growth rate of that column sector

R = a matrix of capital replacement rates

FD = stipulated noncapital final demand (personal consumption

expenditures, government expenditures, exports, and inventory

change)

Equation (2) states that an industry's total output is distributed

among intermediate consumers, purchasers of capital (for both growth and

replacement), and final consumers. The term AX is the output consumed by

intermediate users, B©GX is the output which is allocated to growth capital,

B(&RX is the output allocated to replacement of worn out capital, and FD is

the output accruing to final consumers. Equation (2) may be solved for total

output, X, by the following:

X = [ I - A - B®(G + R)]" 1 * FD (3)

where [I - A » B®(G + R)]" 1 is an inverse matrix.

Equation (3), often termed the dynamic inverse, is key to the I/O

formulation used in this study. It treats the capital stock coefficients B@G

and B®R as if they were flow coefficients and combines them with the direct

technical coefficients, allowing capital purchases to be a function of stipulated final demand. The resulting inversion permits the specification of the

output required from each sector, both directly and indirectly, to support the

production of one unit amo unt of final demand for the products of each other

sector.

It is apparent from inspection of Equation (3) that changes in the

purchases by one industry of the output of another industry (reflected in the

change of a single entry in the A matrix) has an impact which diffuses

throughout the economy. The simple mathematics of matrix operations shows

that each element of an inverted matrix is altered by a change in any element

of the original matrix. Hence, any change in technology which influences one
25

industry's purchase from another will affect the outputs of all other industries. This approach permits one to systematically inspect each element of

each matrix and isolate the influences of changing purchasing patterns.

A more detailed description of the I/O Model and its implications

will be found in Appendix B.

The Concept of Sectors

To this point, our discussion has been in terms of purchases and

sales between companies or industries . Neither such reference, however,

permits a detailed inspection of productive processes and the technologies

which support them. Battel le's approach to I/O takes a different form, with

this difference being manifest in two ways. First, the model is based upon

the technologies of production and the manner in which technological change

impacts the economy; second, this information is collected in the form of

expert knowledge. Thus, it does not concentrate on single companies or SIC

codes; nor is it concerned with the varied mixes of products that might be

marketed by diversified companies or conglomerates.

Instead, the Battel le I/O Model defines "sectors" in terms of the

technology required to produce a specific set of outputs, where the spectrum

of outputs may be very broad or very narrow, but the productive processes are essentially similar. Also, the Battel le approach does not rely upon existing,

historical statistics (collected by the ex post or survey process) to ascer- tain relations between and among sectors. Instead, the process (termed

ex ante) depends upon expert opinion and knowledge regarding the extent to

which intersectoral transfers are involved in the technologies required to

produce the outputs of every sector.

Sectoral Format

The standard format of the Battel le Input/Output Model divides the

productive economy into 126 productive sectors and six final demand subcategories. This format is, however, readily altered by the aggregation or disaggregation of specific sectors or subcategories to provide the kinds and

degrees of detail needed to deal with particular problems. For the present

study of the costs of material failures (fractures and deformations) in the

United States, the sectoral format has been modified to consist of 150

productive sectors and eight subcategories of final demand. These elements

are set forth and defined in Appendix C.

Although the standard sectors of this I/O table provide an excellent

framework for general economic analysis, they have some obvious shortcomings

when used for such special analyses as those of the earlier Corrosion Study

and the present Fractures Study. In the former case, it proved desirable to

provide much greater detail with respect to rnetals, paints, coatings and

special services, all specifically corrosion-relevant. Similarly, in the case

of fracture, particular fracture-relevant detail is required. With respect to
26

materials subject to fracture, there are, for example, (a) fabrication pro- cesses which cause fracture or in which fractures often occur, (b) end use

i ndustries in which fracture-caused accidents ("events") are particularly

troublesome, and (c) certain services which are used largely because of

fracture exists.

Material

s

The scope of this study embraces a wide range of materials: metals,

glass and other ceramics, polymers, concrete, wood, and composites, each of

which represents a different history and design philosophy. Minimally, we have striven to provide separate sectors for the production of each of these,

as well as for the more important product groups into which each enters.

Material sectors are important in the column (process) sense because variations in their input structures may exert significant influence upon their

behavior in use; they are also important in the row (use) sense because the

fracture-related characteristics of the material may pose special problems for

every use into which they enter (e.g., the brittleness of glass).

Moreover, technology which is adopted or changed in order to reduce

fracture will affect the amounts of particular materials that are employed in

particular industrial processes. Thus, when going from World I to World II, we would expect a general change in the thickness of materials being used.

For instance, if steel generally had the characteristics and was used in the

manner hypothesized in World II, approximately half as much would be needed in

many manufacturing processes.

Fabrication Processes

In the Battelle model, a sector is defined as an industrial process

or group of processes producing a specified collection of products. There-

-

' in products are especially fracture-prone or f racture-rel evant 9 in terms of either the process that creates them or the uses into which they

enter, these products ideally should be segregated into a single disaggregated

sector. This is especially true if there are other products in the same original sector that are not so relevant. For this reason, stone, clay and

glass products have been extensively disaggregated. Standard sector 6.01

(Glass and Glass Products), for example, has been disaggregated into four

subsectors in order to isolate flat glass, glass containers, and auto/truck

windshields from all other glass products. Not only are each of these three

product classes highly fracture-relevant in the (row-wise) uses into which

they enter, but the processes by which they are produced (column-wise) are subject to alteration for fracture-related reasons.

End Uses

When we think in terms of end uses that are especially fracturerelevant, transportation industries quickly come to mind. Fracture-caused or complicated accidents ("events") are especially prevalent in these industries
27

and attract a great deal of public attention when they occur. For this rea- son, construction (which includes both new construction and the maintenance

and repair of corresponding output) has been extensively disaggregated in

order to isolate that which goes into railways, pipelines, and highways, among

others. It happens that the transportation industries themselves, along with

the industries providing their carrier capital, are sufficiently disaggregated

in the standard sectors so as not to need further treatment.

Note on Military/Civilian Uses . In connection with end uses, attention is called to a set of disaggregations that was considered, but not undertaken. These relate to the special design problems involved in military land

vehicles, naval vessels, and military aircraft. It was initially considered

that each of the sectors in Group 11, Transportation Equipment, be disaggregated so as to separate military and civilian equipment. It was thus assumed

that military equipment was produced by different technologies and was generally treated as more fracture-sensitive than the non-military equipment

produced within the same sector.

If this suggestion were to be followed consistently, it would have

led to the conversion of five sectors into ten, as follows:

11A01 Military vehicles & parts

11B01 All other motor vehicles & parts

11A02 High-performance military aircraft & parts

11B02 All other aircraft & parts

11A03 Armored ships & submarines

11B03 All other ship & boat building & repairs

11.04 Locomotives, rail cars & streetcars

11A05 Guided missiles & space vehicles

11B05 Military tanks

11C05 All other transportation equipment (motorcycles, trailer

coaches , etc.

)

It was decided that none of these military disaggregations be

undertaken for the following reasons:

1. In each sector, as that sector was originally established in the

several World I matrices (intermediate, capital, useful life,

growth, and replacement), the coefficients were approximated as weighted averages of military and civilian technologies. In most

cases, the total sector outputs are probably dominated by civilian products.
28

2. The costs of fracture are to be measured as the differences

between Worlds I and II, III and II, or I and III, and not as the

absol ute values in any Worlds. Therefore, the important question

is not "does military technology differ from civilian technology

in any World?" Instead it is "is the change from World I to

World II, etc., proportionately the same or different in military

and civilian technologies?" For example, the metal in a civilian

ship might be .25" thick; and in an armored ship, it might be

4.0" thick. If elimination of material and design uncertainties

in going from World I to World II allows a 50 percent saving of

metal in both kinds of ships, they would be treated alike and

need not be separated.

3. In general, we can assume that the technological differences

between military and civilian forms of the same item flow from

differences in function and tend to relate uniformly across all

"Worlds". To the extent that this is true, there is no need to

disaggregate sectors into military and civilian subparts, since

it is the between-Worl ds differences, rather than the wi thinWorlds differences, that are important.

4o It should also be noted that the final demand vectors will show

separate military and civilian Federal government expenditures on the products of every sector. This will permit attribution of

fracture costs to national defense without further

di saggregation.

Other End Uses . There are some other end uses, however, those which

deal directly with fracture control, that had to be taken into account. An

important one was the separation of fracture control instrumentation [e.g.,

strain gauges, nondestructive evaluation (NDE) equipment] from other scientific instruments. Another was the similar disaggregation of R&D from other

business and professional services and its further disaggregation into fracture related and other R&D. This latter disaggregation permits isolation of

those activities which are directly related to the objectives of the program:

namely, the identification of specific fracture-relevant R&D and its future

impact on the cost of fracture.

Special Services

Fracture-related end uses, such as those just discussed, tend to

merge into the group of special service disaggregations that are important

because of their relationships with fracture prevention, control and/or

consequences. Insurance, for example, has been isolated for this reason. Automobile repair (a standard sector) has obvious fracture-relevance; and for

similar reasons, repair services have been separated from personal services .
29

The Data Collection Approach

The general approach to the development of Worlds II and III, given

the characteristics of these Worlds and the existing specifications of World

I, requires that consideration be given to those changes in all the matrices

which would be expected under the conditions of World II and World III. While

specific details relative to the data collection will be presented in Chapter

IV, it is worth noting here that emphasis must be placed on the manner in

which a technological change (in this case, for example, changes regarding

material fracture) would result in a different pattern of purchases. Thus, it

is important that data collection proceed with a knowledge of present practice

and a sensitivity to the rationale which ties one sector's output with another

sector's input needs.

The classical ex ante approach to this type of data collection

generally rests on the so-called "expert interview." It will be shown that

this method was augmented in this study by the development of a more generalized approach which should find further applications in future investigations

of this type.

Supplemental Models

The consequences of materials fracture, as noted in the opening

chapter of this report, can be highly visible and tragic. Headline-making

events occur which result in consequences ranging from death and severe injury

to diverse long-term impacts on both individuals and society. The loss of

hundreds of lives in airplane disasters, mine collapses, and bridge and

scaffolding fail ures--some of which are precipitated by the breakage of

relatively small components—give rise to hearings, investigations and

lawsuits. There is no question that such events result in direct and indirect

costs. Additionally, they carry both measured and imputed costs.

In addition to the costs which accrue to the victims and direct

survivors of such events, there are other, more peripheral costs which are incurred as a result of such events. When a bridge collapses, there are costs

associated with business interruptions, excess fuel used because of detours,

and general inconvenience, among others. When an airplane crashesregardless of the reason—there are business losses (often temporary) to the

airline industry as well as a variety of "inconvenience" costs*. When a train

derails or an oil tanker breaks up, there are additional costs associated with

lost cargo, costs of cleanup of spilled wastes, costs associated with

environmental degradation, and costs of loss of use of affected facilities.

* While these ancillary impacts and their associated direct and imputed costs

are important, such costs are not, for the most part, included in the

present analysis. The determination of these costs constitutes a major

project in itself and is not within the scope of the present study.
30

Because, in part, of the visibility of such events, this study has

been expanded beyond an assessment of the pure technological cost of fracture

prevention, as had been done in the earlier NBS study of the cost of corrosion. To this end, a set of Supplemental Models was developed to estimate

these additional costs, starting with the premise that a variety of events are the result of fracture of some component, that such fracture causes an event

rather than being caused by the event, and that such fracture is within the

scope of the project.

It has been established, to this point, that the economic costs of

fracture are composed of two major categories: those costs that are incurred

in anticipation of material fracture, and those that accrue as a result of

fracture. The Input/Output Model accounts for the majority of the technological costs associated with fracture prevention. The Supplemental Models

account for the costs which result from fracture, including losses of cargo,

human pain and suffering, environmental degradation, and other imputed costs.

Four supplemental models were used to evaluate the above consequential costs of fracture in the U.S. economy: the Events Character Model

(ECM) , the Injury Cost Model (ICM), the Property Cost Model (PCM), and the

Environmental Degradation Model (EDM). The overall flow among the models is

presented in Figure 4. The Events Character Model determines the number of

fracture-related events, the average consequences of each fracture-related

event, and the severities of their consequences. The Injury Cost Model determines a dollar cost of injury consequences, including such costs as hospital

and drug costs, as well as those associated with pain, suffering, and death.

Similar costing procedures are used in the Property Cost Model and the

Environmental Cost Model. Details concerning the input characteristics and

types of results are briefly summarized below. Further detail is provided in

Appendix E.

It should be noted in connection with the Supplemental Models that

they vary from the I/O Model and from each other in their levels of vigor

and/or formality. The term "Model" is used in economics to describe any

intellectual construct or abstraction that provides a simplified framework for

the examination of reality. In this study, the I/O Model is quite rigorous in

its formulation and quantification. Some of the Supplemental Models (e.g.,

the injury Cost Model) are almost as rigorous. Others (e.g., the Environmental Degradation Model) are distinctly less so. The degree of formality characterizing a model is a function of the availability of "hard" data for use with it and of the necessity for imputations of nonmarket costs to elements

thereof.

Events Character Model

Input to the ECM is a list of fracture relevant events which may be

classified into five basic types of accidents: transportation-related, workrelated, home-related, public-related, and other events. The outputs from the

ECM include tabulations of the number of fracture-caused accidents by event,

the average number of injuries and deaths per event, the number of each of

various types of property damaged, and finally, a determination of the average

environmental consequences of each accident.
31

INJURY/COST

MODEL

INPUT/OUTPUT

MODEL

PROPERTY COST

MODEL

2kL

UNDUPLICATED TOTAL

COSTS IN HUMAN AND

OTHER RESOURCE TERMS

^TTC

ENVIRONMENTAL

COST MODEL

FIGURE 4. FLOW AMONG MODELS
32

The availability of the data required to run the ECM varied

considerably both by event and by level of detail of the consequences which

resulted from that event. All data were collected for the "average" year

1978; i.e., in cases where the frequency of occurrence was low, data were collected for several recent years and averaged.

Injury Cost Model

The Injury Cost Model (ICM) was utilized in conjunction with the

subcontractor T+E.* This model, which was originally developed for the U.S.

Consumer Product Safety Commission, concerns accidents and failures involving

consumer products, and uses a disaggregated approach to estimate the total

social costs of injuries. In the model, total injury costs were partitioned

into a set of eleven cost components, each of which was then independently

estimated.

The inputs to the ICM consist of the numbers of deaths and human

injuries developed by the ECM. ICM output consists of detailed cost estimates

of human injury and death due to fracture-caused accidents. Values of costs

by event were then summed to produce total aggregate costs.

Property Damage Model

The Property Damage Model (PDM) provided cost estimates (in 1978

dollars) for all property identified as damaged in the ECM. The method used

to value the cost of property damage was a simple listing of each item of

property damaged. Where severity of the damage was known, it was included in

the costing of the damage.

Inputs to the PDM were the average numbers and types of property

damage per accident by event, and the number of occurrences of the accident

due to fracture. This model provided approximate dollar cost estimates for

all the items damaged by fracture-related accidents. Nonrecoverable property

damage (such as cargo losses at sea) were assigned on a sector-by-sector basis

to final demand in the I/O Model.

Environmental Degradation Model

The Environmental Degradation Model (EDM) measured costs (in 1978

dollars) of total environmental cleanup and environmental degradation due to

fracture-caused accidents. Inputs to EDM were the types and severities of

environmental consequences associated with fracture-related accidents, and the

number of such accidents, by event.

* Technology + Economics, Inc., Cambridge, Massachusetts
33

Use of Supplemental Models

As noted earlier, the Supplemental Models are designed to specifically

measure costs which accrue as a result of fracture-relevant events. Often,

the Supplemental Models deal with events that are highly visible to the

public. To the extent that an event is a newsworthy item, fracture may also

be a sensitive issue. Occasionally a spectacular fracture event captures the

public attention and forces recognition of the fracture problem. However,

such events do not occur frequently and, as will be seen later, their overall

average annual cost is low compared with the total cost of fracture. Thus, even though certain fracture events are highly visible, emotional, or spectacular, they do not account for a large share of the total cost of fracture

to society. This must be recognized to place the Supplemental Model results

into perspective.

Great care must also be exercised in defining the "allowability" of

events within the context, scope, and objectives of this study. As will be

detailed in Appendix E, the selection of events results from what is essen- tially a three-stage screening approach:

(1) the compilation of all events within a particular class (e.g.,

transportation, home, industrial, etc.);

(2) the identification of a basic cause of the event, isolating

those events which were precipitated by fracture; and

(3) the selection of those events in terms of fracture as defined

within the scope of the program.

Steps (1) and (3) are straightforward, the first being facilitated by

the on-going accounting procedures of various Federal , state, and local government organizations, as well as private "watchdog" organizations and public

interest groups. The third step follows from the definitions of scope (see

the earlier discussion on World II and the attendant remarks regarding those

types of fractures which still occur in a no-fracture World).

There is no doubt that the second stage above is the weakest link in

the chain since, for the most part, there are few classes of events for which

sufficient investigations are carried out to determine root causes. The

heavily regulated industries (railroad and air transport) undertake detailed

studies in an attempt to identify those initiating factors which lead to

disasters.* In stark contrast are the analyses carried out in connection with

* Such detail, for example, permits identification of causes in terms of

materials, designs, or even maintenance and repair procedures. It is

precisely because of such detail that steps can be recommended which deal

with the "software" approach to fracture prevention, rather than only

"hardware" changes.
34

the, vast majority of automobile accidents, where the sheer number of events

and different levels of professional investigatory expertise preclude the

specific identification of fracture within scope as the principal contributing

factor.*

As will be seen in the more detailed description of the events

models (Appendix E) and the results from the Supplemental Models (Chapter VI),

the total cost of fracture attributed to events is a relatively small proportion of the overall costs of fracture. While there is no question that the

total costs related to automobile accidents is considerable, (see Table E-2,

Appendix E), after going through the screening process noted above it will be

found that only a very small portion of those costs is clearly attributable to

fracture within scope.

* A common account of, say, an automobile accident might note that "the steering column broke and I lost control". Whether, in fact, this was the

sequence of events, or whether the accident occurred from other non-fracture

related or out-of-scope fracture causes, is seldom determined unless significant litigation is involved.
35

IV. SPECIFIC INPUT/OUTPUT METHOD

In applying the general approach to the data actually going into the

model, changes from the plan were inevitable. Data were not always available

as planned; personal capabilities and understandings varied from those

expected; conceptual problems often arose when theory was confronted with

reality; and there was an ongoing learning experience that deepened our understanding of what information had to be obtained and from where. In this

chapter, we take up the actual steps in data collection and introduction into

the Input/Output (I/O) model, in sharp contrast to the plans and expectations

around which the research program was built.

In modifying World I coefficients to fit the hypothesized World II and World III conditions, the original program had envisioned the collection

of information from selected industrial experts on a sector-by-sector basis

that would be introduced in the form of column-specific changes in the A, B,

and U matrices and noncapital final demands*. This approach can be termed the

standard (or classical) ex ante approach. As we will show, however,

circumstances necessitated a specific and significant extension of method, the

use of what we have termed "row-rules". This concept marks a distinct

departure from the method used in the earlier study of the cost of corrosion.

In the case of corrosion--as probably would also be the case in

many other similar research programs--emphasi s had to be placed primarily upon

column, rather than row, adjustments. The significance of these differences

is taken up below. They stem from the fact that, so far as corrosion is

concerned, each sector (industry) creates a specific environment that affects

the rate at which employed capital (plant and equipment) can be expected to

deteriorate. Although not entirely absent from fracture considerations, this

specificity of relevant sectoral environment is not a dominant aspect of the

study, for which reason much more of the technological modification can be

introduced by the row, rather than by the column.

The Nature of Simulation Adjustments

In the Battel le method of estimating costs of degradation (i.e.,

corrosion or fracture), adjustments are made in the elements of the I/O model

to alter them from World I (real world) conditions to the conditions

hypothesized to exist in World II (no degradation) and World III (best

anti-degradation practice). The directions and degrees of the adjustments are determined as functions of the World I conditions and costs that are thought

not to characterize Worlds II and III. In the corrosion study, it was felt

that many sectors created an especially destructive envi ronment--e.g ., coal

* The specialized terms (e.g., "A matrix", "U matrix", "Final Demands", etc.) are defined in the Glossary, Appendix A.
36

mining, pulp and paper--i n World I. Therefore, in order to make adjustments

to no-corrosion or best practice conditions, the changes were introduced by

the column as a whole, not by the row. In other words, all capital and all

technologies in the paper industry or in coal mining were exposed to a common corrosive environment; but there was nothing particularly corrosive that

happened specifically to motor vehicles alone, regardless of where used.

Thus, in terms of I/O technique, the changes were introduced by the col umn , and not by the row . Since the World I coefficients had originally been

collected and refined by the column, it was decided to utilize the same,

standard, ex ante approach in generating World II and World III differences as had been used for World I.

As will be noted below, the column-oriented approach was not as. applicable in the present study. While there are, to be sure, many sectors

having both capital and productive processes which would be altered in World

II or World III, it was determined that a significant portion of the changes

could be accounted for in terms of row-input manipulations.

In addition, two other features of this modification in approach are important. First, while the initial program plan called for detailed inspection of only those sectors deemed to be of highest priority (as defined in

consultation with NBS and among the project team), the emphasis on a row approach permitted giving attention to al

1

sectors. Second, the row approach

provided consistency and cohesion throughout the analysis, linking the

approach with both the scope and the objectives.

The Ex Ante Approach to Corrosion

In order to make World II and World III modifications in the

Corrosion model, all the sectors were grouped in terms of their dominant

technologies. Metal producing sectors were grouped together, for example, and were grouped separately from the metal fabrication sectors, etc. In this way,

the more than 130 sectors of that model were distributed over some 15-20

industry groups, each of which was assigned to a one or two man datacollector. As information was collected, it was injected into the several

matrices by the column to give effect to the interindustry differences with

respect to technological practices and exposures to corrosive environments.

The Planned Approach to Fracture

In the original work plan, the list of I/O sectors was to be arrayed

in terms of fracture-relevant importance and assigned to individual datagatherers (chosen from a group of Battel le staff scientists and engineers) for

literature searches and industry interviews. It was planned that all the

high-priority sectors would be researched before any of the second-level

sectors, etc. Insofar as time and resources would permit, all the matrix

modifications from World I to Worlds II and III would be based on these data;

and most, if not all, changes would be made on a column-by-column basis. This

procedure was generally consistent with the ex ante work that had
37

been carried out earlier, including the matrix modifications made in the

corrosion study.

Column-Oriented Data Gathering

The sectors of the fracture study model were distributed in terms of

five priority groups:

First priority:

Second priority:

Third priority:

Fourth priority:

Fifth priority:

25 sectors

31 sectors

24 sectors

40 sectors

29 sectors

Three data-gatherers were chosen--each representing a different field of

specialization (metallurgy, ceramics, and polymer chemistry) --and all the

sectors were either distributed among them or placed into a fourth group for

special consideration by the project's senior staff.*

The Emergence of Row Rules

It was originally planned that the data-collectors would be

"debriefed" sector-by-sector by three senior economists who would then rework

the information into the actual (eel 1-by-cel 1 ) matrix modifiers. It was later

realized, however, that this procedure was not cost-efficient: the complexities of many sectors, the difficulties 1n sensitizing even the most knowledgeable industry experts, and the major conceptual differences between the corrosion study and the present program all contributed to inefficiencies in both

collecting the data and debriefing the data-collectors. As a result, the

overall procedure was modified in three respects:

• A series of row rules was developed which would facilitate the

process of introducing appropriate changes into the matrices for

World II and World III; in all cases, the nature of the rules and

magnitudes of the changes were guided by Information already

obtained by the data-collectors.

• The six-man senior project staff team (representing a collective

broad range of expertise, including the physical and engineering

sciences, process development and engineering, and economics) was convened as a device for

* In anticipating the complexities of data collection, 1t was originally

intended that emphasis would be placed on only the first three priority

areas with only a cursory examination, if any, of the remaining sectors.

The later definition and development of the so-called "row rules" permitted

examination of all sectors.
38

- Reviewing and completing the column-oriented work, begun by the

data -col lectors

- Carrying out, either by their own effort or by special

assignments to the data-collectors or additional senior staff,

incompleted column-oriented matrix changes

- Reviewing relevant data, gathered by the data-collectors and

others, and establishing the row rules and the exceptions

thereto,

• The expertise of a most-experienced Battel le engineer/industrial

economist was utilized as a source of additional information for

the senior group.

Ultimately, following the initial procedures as modified above,

column-specific modifications were made for 60 sectors in the A-matrix; and

row-specific rules and exceptions were established that would apply across the

entire A-matrix and perhaps to other matrices and/or final demand. It should

be noted in this connection that all the row rules were applied to the

column-specific sectors at the same time other adjustments were made in them

in order to minimize procedural opportunities for error.*

The Reason for Row Rules

As the senior researchers examined the data--al ready collected by

columns—it soon became quite evident that columns did not have the same generalized significance for the fracture study that they had for the

corrosion study. This is not to say that there were no fracture-relevant

industry technologies. But it does say that such technologies were less numerous and that certain very important fracture-related adjustments were more product-specific than technology-specific.

Sector 7A01 (Iron and Carbon Steel) provides examples of both kinds

of adjustments. In the real world technology (A) matrix, this sector employs

both casting and forging to shape its output for use by other sectors. If

fracture strength is an important metallic requirement, forging will be chosen

over casting as the method of shaping steel. In World II, however, the metal

characteristics will be the same, regardless of which shaping process is

chosen, and casting is a less expensive process than forging. Therefore, in

* The adoption of changed procedures and the emphasis on row-rules should not

be misconstrued as an "internalizing" of the data-collection process, i.e.,

a deviation from the "industry expert" concept which is inherent in the ex ante approach. Each of the permanent and ad hoc members of the project team

is closely identified with one or more industries and is intimately aware of

both industrial processes and industrial perspectives. Given the technolog - ical basis of Battel le's I/O model, and the research implications, the use of Battel le staff is seen to enhance the outputs of this project.
39

going from World I to World II conditions, changes would be incorporated into

col Limn 7A01 to indicate the choice of casting over forging, with significant

savings in resource use. This is a column-specific adjustment.

The use of iron and steel as a material input is shown across row

7A01. Regardless of what happens to the technology of producing steel, its

physical characteristics also change from World I to World II. As has already

been discussed, we hypothesize that in World II al

1

steel will have the

strength and other fracture-relevant qualities now found only at the upper end

of the quality distributions; and we would know exactly what those characteristics were and how to design with them to achieve functional requirements.

This has been calculated to imply that, in general, each user of steel as a material could expect to achieve with 51 pounds of steel the same functional

performance vis-a-vis fracture that calls for 100 pounds of steel in World I.*

Thus, in going from World I to World II, all else being the same, we would

reduce the coefficients on the row 7A01 to 51 percent of what they were in

World I. This is a row-specific adjustment.

In writing a material row rule for row 7A01 , however, we must keep

clearly in mind that fracture strength is not the only characteristic for

which the designer uses steel. There are several factors that immediately

come to mi nd

:

t Porosity : There are many uses (e.g., containers for gases) in

which the strength requirements can be met, even in World I, with

less metal than is used. However, in order to achieve gas-tight

walls with economical fabrication methods, the walls are made

thicker.

• Stiffness : In many instances (table tops, bridge decks) a strong,

thin sheet will resist fracture admirably. However, in order to

prevent sagging (i.e., to achieve the requisite degree of stiffness), more and thicker material would have to be used.

t Weight/balance : There are uses (e.g., golf clubs) in which weight

and balance, rather than strength, are the critical criteria. In such cases, regardless of fracture relationships, a given amount

of material would be needed--perhaps the same amount in World II as in World I.

* The 49 percent reduction in steel used in this example is, to be sure, more

than an arbitrary figure. While the details of the row rules will be found

in Appendix D, we note that first principle calculations suggest that World

II metals may be reduced to 51 percent of their World I thicknesses. Similarly, most metals may be reduced to 81 percent of their World I thicknesses

for application in World III. This convention is referred to as the "49/19

Rule", representing the percentages by which many metal thicknesses may be

reduced in Worlds II and III, respectively.
40

Implicitly, therefore, any row rule may be subject to exceptions.*

It has been found, however, that the use of row rules and closely similar devices introduced many efficiencies into these simulations.

The Nature of the Row Rules

Generalized rules, intended primarily to be applied across the rows,

have been established for a variety of relationships.** It must be emphasized

at this point that it would be possible to treat these relationships as applicable generally by the row, but with column exceptions, or as cell

adjustments in specified blocks of columns that affect only certain rows.

Some of these rules fall into qroups, one of which has been termed

"materials" rules and another "M/R", or "maintenance and repair" rules. There

is also a miscellaneous group made up of rules concerning "fracture-related

research and development", "fracture-related environmental cleanup", "transportation cost reductions" because of material weight adjustments, and

"1 nspection".

At this point in the text, the row rules will be discussed in general

terms: the considerations that went into their establishment and the limitations that affected them. The particular rules, the numerical adjustments

that they required, and the sectors to which they applied are set forth in

Appendix D.

The Materials Rules involve adjustments in material inputs because of

technologies that would apply to World II and/or World III. Each applies to a different material or group of materials. There is a general "49/19" rule

that applies to all metal

s

; exceptions to this rule--and there are many--

result from the fact that, in many uses of metal, there are characteristics

other than fracture strength that determine design. Different rules (with

different exceptions) have been established for wood , for ceramics and

concrete , and for pi astics and their composites. Rules were not established

for paper, cardboard, and textiles because it is felt that fracture-strength

is not the determinant of their thickness in use.

The M/R Rules are needed because of a convention that has been

applied (with few exceptions) to the fracture model. This is that the sectors

* Although the 49/19 rule, mentioned above in connection with steel, has also

been applied to other metals, the exceptions mentioned for steel would not

necessarily apply. For instance, electrical conductivity would be an important determinant affecting the use of copper, aluminum, etc.; and

thermal conductivity or appearance might apply in other instances.

** Two rules that are not intended for row-wise application will also be discussed at this point. They are the scrappage rule and the down-time rule.

Although actually applied by the column, these two rules are similar in

many respects to the true row rules.
41

which produce specialized capital goods and sell them to capital using sectors

(in the B matrix) also provide repair parts and services (in the A matrix and

in final demand). It must be noted, however, that maintenance and repair

parts/services may not be all that a given capital -produci ng row sector sells

in the A matrix. Other legitimate A matrix transactions involve the sale of

components (e.g., small electric motors for complex machines) or of supplies

(the sale of cutting tools by the metalworking machine industry). Thus, in

any given A-matrix cell on a capital -produci ng row, only part of the coefficient may represent M/R activity; only part of the M/R activity may involve

fracture (the remainder involving corrosion, wear, modernization, cosmetic

activity, etc.); and only part of the fracture-related M/R may be within

project scope.*

Still other applications of the M/R rules within the A matrix derive

from the definitions of the construction sectors. The bulk of construction

activity consists of new construction, by definition delivered to the ultimate

buyer only in the B matrix (for industrial construction) or in the final

demand vectors (for residential or governmental construction). Maintenance

and repair construction on industry account is delivered by the same construction sectors in the A matrix or in final demands. Like other capital producers, construction can also deliver components within the A matrix, often, but

not always, to another construction sector (e.g., delivery of a bridge to

railroad construction or a dam to public utility construction). Thus, in the

A matrix, only part of the coefficient may involve M/R activity, only part of

the M/R activity may be fracture-relevant, and only part of the fracture

related M/R activity may be within project scope.

Finally, some part of total M/R services may be provided (also within

the A matrix) by specially designated repair services (e.g., auto repair by

sector 21.05 and other, miscellaneous kinds of repair by sector 21B04). But

again, as in the cases discussed above, only part of the repairs may be

fracture-related, and only part of the fracture-related repairs may be within

scope.

The R&D and Cleanup Rules . The two special rows (20A05, FractureRelated R&D; and 20C05, Environmental Cleanup) were established for the purpose of providing convenient row-wise adjustments in Worlds II and III. One

of those sectors (20A05) has been defined so that it would have nothing to

deliver in World II. This is to say that the output of this sector is defined wvUrin project scope. Any R&D, including fracture considerations, that

would go on i n World II is included as part of 20B05 (All Other R&D). The

Environmental Cleanup sector has been defined to include only those kinds of

activity involved with spi 1 1 s of hazardous or environment-degrading substances. It is not directed toward old pollution, deliberate dumps, and the

like.

* It will be recalled that fracture "within scope" or "within design" refers

to fractures or deformations not caused by human error or accident,

vandalism, natural disaster, etc.
42

In World II, deliveries of fracture R&D go to zero; but in World III

they are the same as in World I. Environmental Cleanup, however, would still

continue in World II, since some spills occur for reasons that are outside of

project scope. Since most of the cleanup in any "World" will result from the

same kinds of events that have been separately examined in the Supplementary

Models, the World II and III adjustments have been established with reference

to Supplemental Model results.

The Transportation Cost Rules . Under I/O convention, transportation

costs are paid by the purchaser, not by the seller/shipper. These costs are affected in two ways by fracture considerations. The only costs paid directly

by the buyer relate to the weight or bulk of the goods purchased and transported. We have assumed that transport costs of all goods affected by the

material rules are solely weight-related, not cube-related.

In the coefficient (A matrix) sense, only those inputs which change

per dollar's worth of output can affect the transportation costs. For

instance, if it takes a given amount of iron ore to make a unit amount of

steel, the transport costs associated with ore will not change in the steel

column of the A matrix, but if the amount of steel in an automobile declines

by 49%, the transportation costs associated with steel will decline by the

same proportion in the automobi le column. Thus, in each column sector

affected by material row changes, the relevant transportation coefficients

have been reduced by an estimated proportion. This proportion is the weighted

average of the materials reductions, implicitly assuming that all the materials share an average mass. It is felt that this assumption does not

introduce significant error.

In this connection, it should also be noted that any hardware with

reduced weights per unit will also reduce corresponding transport costs in

both the B matrix and the final demand vectors. These reductions have been

calculated as the coef ficent-weighted averages of the transport reductions in

the sectors producing the hardware items.

Also, in connection with transport costs, it should be pointed out

that still another set of reductions must be calculated. The reductions in

transportation coefficients, as a result of inversion, reduce the demands for

activity by the transportation sectors. However, these sectors (as columns)

are also affected by the materials rules. Implicitly, as we apply the

materials rules, we not only reduce the weights transported (as discussed

above), we also reduce the dead weights of the trucks, trains, boats and

aircraft which do the transporting. If we assume no cube limitations, there

is no change in fuel requirements per item transported; however, there is a reduction in the fuel costs of moving the transportation equipment/vehicles,

whether full or empty. Coefficient changes for these latter fuel reductions

have been made in the relevant transport sector columns of the A matrix.

The Inspection Rule . Almost without exception, every sector has

something to inspect. It at least inspects its own capital periodically; it
43

may inspect material inputs received from other sectors; and, if it produces

any goods (as distinguished from services), it probably inspects work in

process and finished outputs.

The process of inspection always involves persons (either part of

labor costs in Value Added or purchased as a service from the outside), and it

may also involve the use of capital equipment. As was true of other row activities, inspection may be undertaken for many reasons, only part of which

can be considered to be fracture-related and within project scope. Where

inspection involves the use of own labor (i.e., part of Value Added) or other

special purchases in the A matrix, it has not been treated as a row rule, but

has been treated as part of the column-specific adjustment.

Adjustments for Scrappage. One of the most nearly ubiquitous elements of fracture cost is scrappage , the loss of product during manufacture.

Some scrappage occurs because imperfect intermediate inputs (such as glass

containers for beverages) break in process; some occurs because of shortcomings of the product itself, which may or may not be fracture-related; and

some occurs because of carelessness or accidents during manufacture.

When these accidents or imperfections occur or are discovered,

affected goods-in-process often may be recycled or reclaimed, rather than

discarded. For instance, in the manufacture of glass containers, broken

bottles can be remelted and remolded. However, if bottles break while being

filled in the beverage sector, the product (the beverage) is lost and the

broken bottle probably will be scrapped, whether or not it is ultimately

reclaimed. It is obvious that the precise stage of manufacture at which

breakage occurs or an imperfection is discovered significantly affects the

amount of the associated loss. For instance, any imperfect bricks that are discovered before they are fired can be recycled; after firing, they are usually discarded. When something is recycled, only the energy and labor

expended on it is lost--but when it is thrown out, materials are lost as well.

Resources did not permit the calculation of scrappage at each stage

of production. Even if they had, it would not have been possible to calculate

scrappage rates from available industry data. Many of the reasons for scrappage are not fracture-relevant; and many fracture-related scrappages fall

outside the scope of this study. A major cause of scrappage losses by fracture involve accidental breakage: a crate of bottles falls off a truck; a worker knocks over a stack of filled cartons. As neither of these is "fracture within design", neither should affect the scrappage rate.

For each sector, viewed as a column, the scrappage rate is taken as an average phenomenon that will affect all inputs by the same proportion.

Once the actual rate is determined, the correction is quite simple. All A and

B matrix coefficients in the affected sector's column are multiplied by (1-s),

where "s" is the scrappage rate. This procedure reduces all inputs per unit

of output (including the overall capital -to-output ratio) by the average

proportion that would be saved through the elimination or reduction of

scrappage within project scope.
44

Adjustments for "Downtime" , In this study, the base period for which

the cost of fracture is estimated is the calendar year 1978, after adjustment

to peacetime, full employment conditions. Implicitly, under full employment,

there will be no surplus capital in World I, so that any production loss

because of shut-down must be made up in some manner. In this study it has

been assumed that downtime can be made up by overtime in any sector which

normally operates on a one-shift or two-shift workday. There are, however,

some sectors which typically operate around the clock, such as blast furnaces,

continuous chemicals processes, utilities, and petroleum refineries. These

industries lose output during downtime and have no opportunity to recover. In order to maintain output, they must (in World I) hold in readiness standby

equipment, some of which will be redundant in Worlds II or III.

The presence of standby capital, however, is not necessarily

fracture-related within project scope. For this reason, the estimate of

downtime-related redundancy must be corrected for both nonfracture downtime

(maintenance for corrosion, wear, etc., or breakdown caused by nonfracture

events) and for fracture beyond designed strength. After the downtime redundancy rate is estimated as a fraction of total capital, it is applied (to the

B matrix, only) in a manner similar to that for scrappage.

The Process of Matrix Adjustments

In order to incorporate the changes from World I conditions to those

of Worlds II and III, it was necessary to actually translate the above discussed generalizations into changes in coefficients. At this point we take up

the procedure by which this was accomplished in terms of matrices, rather than

of rules.

Changes in the A Matrix

As has already been indicated, data takers, operating sector-bysector, collected industrial Information mostly involving the technological

aspects thereof. The bulk of this Information was applicable to the A matrix

—I.e., related to process changes which might occur under World II and III

conditions. This material was reviewed at least twice (first by the datacollectors and senior economists, and then by the economists and the senior

scientists of the project team) and Incorporated as column-specific changes

for 60 sectors in the A matrix.

At the same time this work was underway, the senior group, assisted

by a very experienced industrial engineer, was establishing the row rules (see

above). Where relevant, these rules were also incorporated into the columnspecific changes in addition to any other changes that had been made.

Finally, the other (some 90) sectors were also adjusted for the

row-wise changes embodied in the rules. Both sets of changes were carried out

for World II and World III. It should also be noted in this connection that

the scrappage rules were generally applied to the A matrix of World I before

any of the other changes were made.
45

Changes in the B Matrix

Utilizing the data already generated for the separately researched

sectors, the senior project staff determined the necessary changes in sector

capital /output ratios implied by changes in technology. At the same time, all

sectors were examined in terms of downtime considerations (see above). Every

column sector in the B matrix was then adjusted for the combined impacts of

the scrappage and downtime-redundancy rules.

In this connection, it should be noted that there were no formal or pervasive capital -related row rules*. Therefore, after the general scrappage/

redundancy adjustments had been made, only the column specific adjustments

called for by technological considerations needed to be made.

Changes in the U and R Matrices

In this context, the fracture study differs significantly from the

earlier corrosion study and from the situation with respect to wear. These

last two processes continuously remove from capital items materials that

cannot be replaced easily by maintenance and repair or offset by capital

redundancies. In the case of fracture processes, while the weakening may be

progressive, it is also localized and therefore can be discovered by inspection and eliminated by parts-substitution in the M/R procedure. It appears,

therefore, that there are no specific changes that should be made in the (Useful Life) U matrix in going from World I to Worlds II and III. What otherwise

would be the fracture-relevant changes in useful lives generally are taken

care of by overdesign, maintenance and repair, etc. To then adjust useful

lives probably would significantly overstate fracture costs. There is, however, some minor shortening of useful life that still must be taken into

account, even though it is too small to be handled by whole-year change in the

lower limit of the useful life range. We propose that this be accomplished by

changes in the R matrix.

The R (Replacement Rate) matrix is calculated cell-by-cell as a function of the U (Useful Life) and G (Growth) matrix values. By definition

of the entire simulation situation, the G matrix does not change between

"Worlds". Moreover, it has already been indicated that discrete year changes

in useful lives woul d over ad just for f racture-rel atedness between World I and

Worlds II or III. This leaves only the replacement rates themselves as a vehicle for changes of proper proportions. Therefore the R matrix for World I has been calculated and changes have been made directly in it as the means of

* Less formalized adjustments were made, however, to account for reduced

needs, for example, for equipment held in capital and used in inspection.

In addition, some small adjustments were made to account for those components of capital equipment which serve to protect against operation beyond

design limits. Were it not for such "warning" devices, World II fracture

(out of scope) could occur.
46

simulating World II and III situations. Since these R values are continuous

functions, they can be adjusted by small increments so as to treat all sectors

in a more consistently equitable fashion. As will be shown in Appendix D, the

adjustments in replacement rates have been related to maintenance and repair

activities.

Changes in Final Demand

With the exception of the capital formation final demand column,

which is treated separately, other fracture relevant final demand changes

summarized below include:

(1) fewer noncapital purchases/replacements associated with less

fracture within scope.

(2) maintenance/repair activities associated with consumer and

social capital.

(3) replacement rate changes associated with consumer and social

capital

.

(4) trade and transport margins associated with (1-3) above.

(5) Federal, state, and local payroll implications of fracture

relevant inspection.

(6) capital redundancy issues.

Details of these changes are presented in Appendix D.

(1) Fewer noncapital purchases : accounted for here are those items

of which less would be purchased as replacements due to less

fracture within scope. Affected sectors include:

Examples of considerations in (1) include container breakage and

loss of contents due to e.g., bags breaking, thermal shock

breakage of china/crystal in dishwashers, and use of adhesives

for do-it-yourself repair of a variety of broken objects or

their application as preventive measures. The rules for each of

the above are applied to PCE and the three government final

demand columns.

3A01

5.09

6A01

PC15

3B01

5X10

6B01

6D01

8.07

5A06

5.12

PB14

6C03

(2) Maintenance/repai r activities : considerations taken account of

here include application of the five maintenance/repair rules
47

derived for A-matrix changes to the noncapital shares of the

final demands for all consumer and social capital producing

sectors. For example, PCE final demand for Sector 9.01, Engines

and Turbines (almost all of which consists of outboard motors in

PCE), is $288 million. Of this amount, 7.4 percent ($21 million) consists of parts and factory authorized repairs (including labor). Of the $21 million, Rule #3 is applied, i.e., one percent of the $21 million is considered the fracture relevant

portion, thus $210,000 less Sector 9.01 parts and repair

services are purchased by PCE in World II.

Adjustments similar to the above are applied to the noncapital

shares of final demand for all of the other social and consumer

capital producing sectors. For noncapital producing sectors,

rules #1, #2, and #5 are applied to each of the final demands

where, for example, fracture relevant maintenance and repair

services are provided by Sector 19.01 (Construction, Residences), Sector 21B04 (Repair Services Except Auto), and Sector

21.05 (Automobile Repair and Services).

Replacement rate changes : as discussed in Appendix D, fracture

relevant replacement adjustments have been applied to all appropriate consumer and social capital stocks.

Trade and transport margins : account is taken here of trade and

transport margins associated with adjustments in (1-3) above,

and, most important, for overall transport savings due to

lighter weight materials being delivered to final demand. In

(1), trade and transport margins associated with fewer purchases

of noncapital items were calculated. In (2), as trade and

transport margins are already included in the costs of repairs,

no additional changes are made. In (3), margin adjustments

which account for fewer replacements were applied. For transport savings which result from delivery of lighter weight

products to final demand, a set of rules, similar to those for

the A-matrix transport changes, were formulated and applied.

Generally, these rules accounted for lighter weight "hardware"

going into the production of consumer and social capital for all

capital producing sectors (8.01 through 16B02).

Government payrolls associated with inspection : here, estimates

of wi thi n-scope, fracture-relevant inspection activities undertaken by Federal, state, and local governments were calculated

and applied as payroll savings in each of the government final

demands. Total savings for World II were estiamted at $175

million; total additional costs in World III were estimated as $175.9 million. These figures reflect payrolls associated with

fulltime job equivalents but do not include, for example, armed

forces personnel who inspect military aircraft for fracture

within scope. If not engaged in inspection activities, such

personnel would be assigned other duties.
48

(6) Capital redundancy : the only capital redundancy identified in

final demand was for Sector 11.02 (Aircraft and Parts), in the

Federal government (defense) column. After allowances for

corrosion, wear, and fracture beyond scope, it was estimated

that 3 percent of the total defense aircraft fleet is

inoperative because of fracture within scope.

Technological Changes in the Column Specific Sectors

As a result of interviews with firms in the relevant industries and

discussions among the senior scientists, column-specific technological changes

were quantified for a group of some 60 sectors. These sectors were the ones

for which the row rules were not sufficient to reflect the changes required in

Worlds II and III. In going from the real world (World I) situation to the

two hypothetical situations (Worlds II and III), specific technological

changes took place in these sectors that required column-specific changes in

their direct technical coefficients. At this point, the natures of these

changes and the row inputs that were affected will be set forth briefly. The

more generalized adjustments, which these sectors shared with the other 90

sectors, will be discussed later.

Sector 1»01» Livestock and Livestock Products

Sector 1A03, Forestry Products

Sector 7C01, Stainless Steel

Sector 8.01, Metal Cans

Sector 8.02, Metal Barrels, Drums and Pails

Sector 19A03, Construction, Railroad

Sector 19C03, Construction, Other Public Utility

Sector 19D04, Construction, All Other Construction

Sector 20.01, Wholesale and Retail Trade

For these nine sectors, no specific technological changes had to be

made other than the changes in Value Added (VA) because of inspection (of

capital, of inputs, and/or of outputs). For each sector, the proportion of

the VA coefficient that was labor cost differed, as did the proportion of

labor cost that was involved in inspection. Therefore, inspection adjustments

could not be treated as a row rule.

In Sectors 1.01, 1A03, 19D04, and 20.01, inspection costs would be

reduced slightly in World II and even less in World III, as compared with

World I. In the other five sectors, while World II would have reduced

inspection, World III was judged to require an increase in inspection costs

because the real world level of inspection fell below that required by best

practices.

Sector 1B03, Fishing, Hunting and Trapping

This sector was found to require fewer ropes and nets, especially the

former (from 3807, Miscellaneous Textiles), in the no-fracture world
49

(World II) than in the real world. Because of the importance of rope (for net

repair as well as for various load-handling purposes), best practices (World

III) would require the use of more rather than less. Inspection of boat and

gear would be reduced somewhat in World II and by less in World III.

Sector 2A04, Underground Coal Mining

The most important fracture related changes in this sector involve

roof bolts (from 8.07, Other Fabricated Metal Products) along with the labor

(VA) to inspect the roof and to install the roof bolts. In both cases, inputs

in World II would be lower than real world practices. However, in order to

achieve current best practices, both should be increased significantly.

Sector 2A05, Crude Petroleum

Sector 2B05, Natural Gas

The oil and gas well sectors (operating, but not drilling the wells)

are faced with a special fracture problem—blowout under gas pressure—much of

which is within the well design. Blowout preventers (from Sector 10.04, Oil

Field Machinery) would be used distinctly less in World II and slightly less

in World III. Similarly, environmental cleanup services (from 20C05) would

also be reduced from World I levels, as would inspection labor (VA).

Sector 2.06, Stone and Clay Mining

Packaging materials used in handling the output of this sector come from sectors 4.07 (Pulp, Paper, and Paper Products except Containers), 4.08

(Paperboard Containers and Boxes), and PC15 (All Other Manufactured Plastic

Products). These supplies would be generally reduced in the World II, but

would be increased over real world levels in World III. Much the same can be

said about the tires (from P. 13) used on off-the-road vehicles. Conveyer

belts (from PAH) are subject to more breakage in the real world than in

either of the other two situations. Similar reductions in inspection labor

would be found in both hypothetical worlds.

Sector 3X05, Fabrics, Yarns, Threads, and Soft Floor Coverings

Inputs of natural fibers (from 1.01 and 1.02) and manmade fibers

(from P. 08) are higher in the real world than in World II. However, to

achieve best practices, these inputs should be increased. Current inspection

labor levels are thought to be at the best practice level, but they would

decline in a no-fracture situation.

Sector 3A07, Metal Tire Cord

The general application of the materials rules to this sector implies

special technological changes because the same lengths of wire would have to
50

be used. This means that the wire would be drawn to smaller diameters in both

Worlds II and III than in World I, with World II diameters smaller than those

of World III. To accomplish this would require more machinery and supply

parts (from 10.07, Metalworking Machinery), more electrical energy (from

18.02), more water (from 18.04), and more labor (from VA). The reductions in

diameter would also reduce the use of plating chemicals (from 5.03 and 5B06),

the use of lime as a lubricant (from 6.02), plating metals (from 7X04), and

labor (from VA).

Annealing carried out solely for fracture prevention purposes would

be eliminated in World II and left unchanged in World III. This would affect

the use of special machinery and supplies (from 9.02), chemicals (from 5.03),

electrical energy (from 18.02), gas (from 18.03), water for cleanup (from

18.04), insurance on the equipment (from 20XA2), and inspection labor (from

VA).

The net effects of these changes are very substantial increases of

World II use of inputs from Sectors 10.07, 18.04 and VA; total elimination of

gas and very substantial reductions in the use of equipment/supplies from 9.02

in World II; and World III increases in inputs from 10.07, the energy sectors

and VA.

Sector 4.01, Sawmills and Planing Mills

Aside from inspection labor, which would be reduced in World II and

increased in World III (primarily in terms of timber inputs and lumber

outputs), there is only one other column-specific change in this sector. In World II there would be a significant reduction in the breakage of saw blades

(from Sector 8.07, Other Fabricated Metal Products), with a lesser reduction

in World III.

Sector 4.02, Veneer, Plywood, and Laminated Wood

In this sector, inspection would be reduced in Worlds II and III.*

The only other technological adjustments would involve inputs from Sectors

4.03 (the lumbering component) and 5A06 (Adhesives). In Worlds II and III,

log inputs would be reduced via reductions in splitting and buckling; and

adhesive inputs, for reasons of ply delaminations, would be reduced in World

II. Best practice, however, would require increased use of adhesives.

Sector 4.03, All Other Lumber and Wood Products, Except Containers

Aside from inspection, reduced in both Worlds II and III, only

adhesives (Sector 5A06) would be affected by specific technological change.

Although there would be no World II reduction in adhesi ves--it being thought

* Unless otherwise specified, hereafter, "reductions in Worlds II and III"

will always imply larger reductions in World II than in World III.
51

that the minimal amount possible is now used --mo re should be used in World

III.

Sector 4XA5, Wooden Furniture and Fixtures

Again, inspection and adhesives are the only column-specific inputs

changed. Inspection would be reduced in both Worlds II and III. Adhesives

(from Sector 5A06) would be reduced in World II and increased significantly in

World III.

Sector 5.01, Petroleum Refining and Related Products

This sector only refines crude petroleum; it neither operates the

wells nor transports and sells the products. The only specific fracturerelevant changes in technology involve inspection labor, the purchase of

ultrasonic inspection of refinery equipment services (from Sector 20D05), and

the purchase of cleanup services after spills (from 20C05). Cleanup services

would be reduced in both Worlds II and III; ultrasonic inspection would be

eliminated in World II and substantially reduced in World III. Inspection

labor (from VA) would be reduced in both Worlds II and III.

In this connection, it should also be noted that labor for maintenance and repair is furnished by this sector, since it is a very substantial

part of the operation. This input also is reduced in both Worlds II and III.

Sector P. 07, Plastic Materials, Resins and Synthetic Rubber

This sector provides materials only, no formed or extruded products.

In addition to inspection (only of equipment) that is reduced in both Worlds

II and III, the only specific technological changes involve inputs from Sector

5.03 (Industrial Inorganic and Organic Chemicals). This sector provides

plasticizers, use of which is required to prevent brittle fracture. These

inputs would be reduced in World II, increased in World III.

Sector P. 08, Organic Manmade Fibers

This sector is affected essentially in the same ways as P. 07, above.

Sector P. 13, Tires and Inner Tubes

In terms of fracture-related technology changes, this is one of the

more stringently affected column sectors. There are three main aspects of

fracture impacts: the substitution of natural for synthetic rubber, reinforcement against fatigue and brittle fracture, and the avoidance of delamination.
52

Natural rubber (produced in Sector 1A03 S but imported into the U.S.)

is far superior to synthetic rubber in terms of fracture resistance in Worlds

I and III, but not in World II. Thus, inputs from 1A03 would be unchanged in

World II and significantly greater in World III. Synthetic rubber inputs

(from Sector P. 07) would not change in World II and would decline somewhat in

World III.*

Reinforcements in terms of tire cord (nonmetallic from 3B07, metallic

from 3A07) and the use of carbon black (from 5B06), both for the prevention of

fatigue and brittle fracture, would be substantially reduced in World II; cord

would be increased in World III, but carbon black is already at best practice

levels. Adhesives (from 5A06) used to protect against delamination would be

eliminated in World II and kept unchanged in World III. Breakage of industrial belting (from P. 14) and inspection would be substantially reduced in

World II and unchanged in World III.

Sector PB14, All Other Rubber Products

The bulk of manufactured rubber product s--i .e. , all except tires,

tubes and industrial belting—are technically affected in a manner quite

similar to tires and tubes. The substitution of natural for synthetic rubber

affects inputs from 1A03 and P. 07 in the same ways as was true in the case of

P. 13. Reinforcing (with fabric from 3X05, nonmetallic cord from 3B07, and

carbon black from 5B06) would be reduced in World II and unchanged in World

III, as would inspection labor.

Sector PA15, Plastic Pipe

In this sector, the use of chemical additives (from 5.03), quality

control supplies (from 14A01) and inspection and quality control labor would

all decline in World II and increase in World III.

Sector 6A01, Flat Glass

There are several significant fracture-related column changes in this

sector (in addition to the ubiquitous row rules). Packaging, to reduce

breakage in handling and transportation, would be reduced in World II and

increased in World III. This would affect inputs from sectors 4.03 (excelsior

from miscellaneous wood products), 4.04 (wooden containers), 4.07 (paper,

except containers), 4.08 (cardboard containers), and PC15 (all other plastic

products).

* Application of the P. 07 materials row rule would reduce this input in both

Worlds II and III.
53

Chemical hardening would increase chemical uses (from 5.03) in World

III, but would not occur at all in World II. Uses of energy (from electricity, 18.02, and gas, 18.03) for annealing would decline in World II, and be

unchanged in World III. Inputs of refractories (Sector 6D03), replaced as a result of thermal shock, would be reduced in both Worlds II and III. Wire

reinforcements for door and window glass would decline in World II and remain

unchanged in World III. And the use of inspection labor (for equipment and

outputs) would decline in both Worlds II and III.

Sector 6B01, Glass Containers

In many respects, this sector behaves in the same manner as 6A01,

especially with respect to packaging, refractories, energy for annealing, and

inspection labor. There are, however, some differences.

Plastic "overcoats" on glass containers require World I inputs from

PC15. These would decline significantly in World II and increase somewhat in

World III. Unlike flat glass, containers require special equipment and

supplies for annealing and cooling from Sectors 9.02 (General Industrial

Machinery and Equipment) and 10.08 (Special Industry Machinery), which are reduced in both Worlds II and III.

Sector 6C01, Auto and Truck Windshields

This sector occupies a position of special visibility because of its

ability to complicate otherwise minor motor vehicle accidents. There are

several column-specific changes from World I to World II and III conditions.

Protective packaging from 4.04 and 4.08 (wood and cardboard containers) would

be reduced in World II and kept unchanged in World III, as would annealing en- ergy (gas from 18.03) and inspection. Lamination, requiring adhesives (from

5A06) and plastic sheeting (from PC15), would be greatly reduced in World II,

but kept unchanged in World III.

Sector 6D01, All Other Glass Products

This sector behaves much like some of the other glass sectors, but

not completely like any. With respect to packaging, annealing energy, annealing equipment, refractories, and inspection, it is like 6B01. However, 6B01

has several other adjustments that are not made in Sector 6D01.

Sector 6A03, Structural Clay Products, except Clay Refractories

This sector is affected by three fracture-related technologies that

are not covered by row rules. These include considerations of porosity,

packaging and inspection labor.

Porosity of the products is a function both of ingredients and firing

temperatures. In World I, both are controlled because they directly affect
54

fracture resistance. In World III, best practice would require increases; in

World II, fracture would not occur and the inputs could be reduced. Firing

temperatures directly affect energy inputs from coal mining (2A04, 2B04),

petroleum refining (5.01), electricity (18.02), and gas (18.03). Ingredient

additives would come from stone and clay mining (2.06) and chemicals (5.03).

Packaging inputs, typically reduced in World II and increased in World III, come from sectors 4.03 (excelsior, etc.), 4.07 and 4.08 (paper and cardborad

containers) and PC15 (plastic sheet). Inspection labor is reduced in both

Worlds II and III.

Sector 6B03, Structural Concrete Products and Ready-mixed Concrete

Fracture-related technology changes include the use of chemical

additives (from 5.03), these being reduced in World II and greatly increased

in World III. In addition, inputs of reinforcing bars and wire (from 8C05)

and inspection labor would be reduced in both Worlds II and III.

Sector 6C03, Pottery, Whiteware, and Porcelain Products

This sector is similar in some respects to 6A03. Additives to reduce

porosity come from 2.06 (Stone and Clay Mining) and 5.03 (refined alumina, a chemical); both are reduced in Worlds II and III. Higher heats to reduce

breakage involve both electricity (18.02) and gas (18.03), both down in World

II and increased slightly in World III. Packaging (supplied by Sectors 4.03,

4.04, 4.07, 4.08, and PC15), which is very important in World I, would be

reduced considerably in World II but raised in World III. Inspection, mainly

of finished products, would be reduced in World II, and remain unchanged in

World III.

Sector 6D03, Clay and Nonclay Refractories

Packaging and inspection are the only factors affected by other than

row rule considerations. As above, packaging (from Sectors 4.03, 4.04, 4.07,

4.08, and PC15) is down in World II and up in World III. Inspection is

reduced in both Worlds II and III.

Sector 7A01, Iron and Carbon Steel

This sector is subject to special adjustments, particularly in World

III, that introduce an anomaly into World 1 1 / 1 1 1 relationships. In addition,

there are several other sets of adjustments that further complicate the

relationships.

In World III, the substitution of continuous casting for slabbing

constitutes both a best practice--it reduces the proportion of trash- or slag-caused imperfections that must be cropped--and a source of process

economies. There is no f racture-rel evant reason to assume continuous casting
55

in World II, since it is not present in World I and would not affect or be

affected by World II metal characteristics (as would the casti ngs-for-forgi ngs

substitution, below). Continuous casting would lead to significant World III

savings in the use of coal (from 2A04, 2B04 and 2C04).

In Worlds I and III, the casting of steel shapes is technically

feasible and economically desirable, but it results in a lower-quality product

(in terms of fracture resistance) than does rolling or forging. In World II,

castings would have the same metal characteristics as forgings or rolling-mill

products and would be substituted because of cost economies. This would

reduce the World II use of oil for heat (from 5.01) and would reduce the

consumption of machine parts and supplies from 10.07 and 10.08 (Metalworki ng

and Special Industry Machinery). Also, in Worlds I and III, annealing would

be required that would be unnecessary in World II; this would lead to World II

reductions in energy used (from oil, 5.01; electricity, 18.02; and particularly gas, 18.03).

The greater use of casting in World II would, however, increase the

use of scrap instead of new metal, and would substantially increase the 7A01

diagonal in World II over that of World I or III.

In World II, compared to Worlds I and III, there would be considerably less spalling--or thermal shock degradation—of coke oven refractories

(from 6D03).

Finally, inspection labor would be reduced in World II and increased

in World III over World I levels.

7B01, Alloy Steel

In many respects, this sector behaves in a manner similar to Sector

7A01. This is especially true with regard to annealing and inspection. In the case of the casti ngs-for-forgi ngs substitution, there is impact on inputs

from 10.07 and 10.08, but not from the energy sectors; and the increased use

of scrap metal affects both 7A01 and 7B01 inputs.

7.03 Aluminum

As was the case for the iron and steel sectors, this also is affected

by the World II castings/forging substitution, by reductions in World II

annealing, and by changes in inspection labor.

The substitution of castings for forgings affects parts and

supplies from 10.07. Annealing changes in World II reduces energy use (electricity and gas) and parts and supplies related to annealing ovens (from

9.02, General Industrial Machinery). Inspection labor is reduced in World II and increased in World III.
56

Sector 8.03, Metal Sanitary Ware and Plumbing Fittings

In this sector, enameling (from 8.07) can be reduced in World II because of no-fracture conditions. Inspection labor would be reduced in World

II and increased in World III.

Sector 8.04, Nonelectric Heating Equipment

Sector 8A05, Structural Metal

Sector 8B05, Boiler Shop Products

In all these sectors, inspection labor would be reduced in World II and increased in World III. Rewelding after inspection would be reduced in

both Worlds II and III, affecting inputs from 7A01 (welding rod), 18.02

(electricity) and the labor component of VA.

Also, in Sector 8B05, there would be another affected activity, the

reglassing of tank interiors after inspection, which would reduce World II and

III inputs from 5.03 (glass frits) and 18.03 (gas energy).

Sector 9.01, Engines and Turbines

Three fracture-related, column-specific, technological considerations

affect this sector--heat tempering of metals, substitutions of less expensive for more expensive metals and alloys, and inspection labor. Tempering

would be unnecessary in World II, but should be increased in World III. This

would lead to reductions in World II use, and increases in World III use, of

energy from oil (5.01), electricity (18.02) and gas (18.03). Metals/alloys

substitutions would reduce World II and III inputs from iron and steel (7A01,

7B01) and all nonaluminum, nonferrous metals (7X04). Inspection labor would

be reduced in World II, increased in World III.

Sector 9.02, General Industrial Machinery and Equipment

Only two fracture-related column-specific adjustments--substi tution

of welding for fastening and use of inspection labor- -would affect this

sector. In World II, welds would be of full strength and could replace other

types of joining. This would reduce inputs from 8.06 (screw machine products

and stampings) and would increase welding supplies (10.07) and energy (18.02) over those required in Worlds I and III. Inspection labor would be reduced in

World II and increased in World III.

Sector 11.02, Aircraft and Parts

This sector is profoundly affected by column-specific technological

adjustments. In addition to the metals materials rules ( row rules), World II inputs of all metals are affected both by substitutions among metals and

alloys, and by substitutions of castings for forgings. Since World I is

assumed to be at best practice in these respects, Worlds I and III are the
57

same for all metals*. In World II, however, iron and steel inputs (7A01)

would rise substantially while alloy steels, aluminum and other nonferrous

metals (7B01, 7C01, 7.03, 7X04) would decline substantially.

Shifts in fabrication methods, especially the substitution of welding

for riveting would also affect only World II. Screw machine products and

stampings (8.06) would be substantially reduced, as would metalworking

supplies (10.07), the use of electricity (18.02) and gas (18.03), the use of

water (18.04), and labor (VA). Inspection labor (VA) and x-ray supplies

(12A07) would also decline but only in World II.

Sector 11.03, Ship and Boat Building and Repair

The main factors specifically affecting this sector are inspection

and rewelding after inspection. Inspection would decline in World II and

increase in World III; this affects fracture control instrumentation

(parts/supplies from 14A07) and labor (VA). Rewelding after inspection would

be reduced in both Worlds II and III, affecting inputs from 7A01 (welding

rod), electric energy (18.02) and labor (VA).

Sector 14.04, Optical and Ophthalmic Goods

This sector is affected by the substitution of glass for plastics in

lenses, the substitution of chemical for heat tempering of glass, and

inspection. Weight reductions in glass via tempering and grinding to finer

thicknesses (in both Worlds II and III) would lead to reduction in plastics

(P. 07) without increases in glass (6D01). Chemical tempering, in World III

only—since tempering is unnecessary in World II--would increase the use of

chemicals (from 5.03) but would not change energy use (from 18.02). Taken

together, inspection and glass/plastic substitution would reduce labor inputs

in both Worlds II and III.

Sector 17.01, Railroads and Related Services

This sector operates railroads. The three column-specific

adjustments affecting it would involve fuel reductions through reduced

rolling-stock weights, reduced environmental cleanup, and inspection of track

and rolling stock.

Fuel consumption would be reduced in both Worlds II and III,

affecting inputs of coal (2A04, 2B04), diesel fuel (5.01) and electricity

* A combination of factors is responsible for the assumption that Sector 11.02

operates at best practice. In addition to the massive R&D investments that

have been made, the overall quality of U.S. -made military and commercial

aircraft is unsurpassed; the industry is heavily regulated and evaluated;

and the consequences of failure are tragic and highly visible.
58

(18.02). Environmental cleanup caused by fracture related spills (20C05)

would also be reduced in both Worlds II and III. Inspection labor would

decline in World II, rise in World III.

Sector 17.02, Local and Other Highway Passenger Transport

Like 17.01, this sector is affected by weight reductions in rolling

stock and by inspection labor reductions. Both reductions occur in Worlds II and III. Fuel reductions affect inputs from 5.01 (gasoline and diesel fuel)

and 18.02 (elect ricty).

Sector 17.03, Motor Freight and Warehousing

Like other transportation sectors, this one will have World II and

World III reductions in fuel, via rolling stock weight reductions, that affect

gasoline/di esel fuel (5.01). Trucks, like railroads, are involved in fracture

related spills of hazardous substances. Inputs from 20C05 (environmental

cleanup) will be reduced in both Worlds II and III, as also will the use of

inspection labor (from VA).

Sector 17.04, Water Transportation

Although this sector's capital is floating (rather than rolling)

stock, fuel use is reduced in both Worlds II and III. Affected inputs are from coal (2A04, 2B04) and gasoline/diesel fuel (5.01). Environmental cleanup

(20C05), mainly for oil spills, will be reduced in both Worlds II and III, as

will inspection labor (VA) a

Sector 17.05, Air Transport

Like the other transport sectors, this one will have World II and III

reductions in both enviromental cleanup (20C05) and inspection labor (VA).

Fuel savings (5.01) via weight reduction will occur, however, only in World

II. In addition, there are several types of x-ray and other electrical

inspection methods used by this sector, supplies and parts for which (from

12A07 and 12B07) will be reduced in World II, increased in World III. We note

that reductions in x-ray equipment would affect only that part which is

applied to the inspection of aircraft components. There would be no change in

that portion of x-ray equipment used for viewing passenger baggage.

Sector 17.06, Pipelines

This transportation sector has no "rolling stock" and therefore no associated fuel savings. However, reductions in environmental cleanup (20C05)

and inspection labor (VA) will occur in both Worlds II and III.
59

Sector 17.07, Transportation Services

This sector is only peripherally associated with the act of

transporting. Only inspection labor, of all its column-specific inputs, is

likely to be reduced, and that only in World II.

Sector 18.02, Electric Power

This sector has been judged to be less specifically affected by

fracture than was originally assumed. In terms of its technology, some of the

more soci al ly concerned aspects (particularly nuclear generation) represent

only a small part of total activity which, in any event, is subject more to

corrosion than to fracture as a cause of failure. In general, the sector is

close to best fracture control practice*. Aside from row-rules, there are only three adjustments to be made. In World II, but not III, there will be

significant saving in the purchase of power from the grid (the 18.02 diagonal)

to replace losses by fracture-caused failures. Some reductions in

environmental cleanup (20C05) and inspection labor (VA) will occur in both

Worlds II and III.

Sector 19.01, Construction, Residences

The main column specific technology changes in this sector involve

concrete. In World III, but not World II, concrete should be better protected

for a better cure. This would require increases in the use of straw (from

1.02), cloth (3X05) and/or plastic sheeting (PC15). Additionally, also only

in World III, footing should be widened for better structural support,

requiring more ready-mix (from 6B03).

Inspection labor (VA) should be reduced in World II and increased in

World III; and reductions in many material inputs, via the row rules, would

imply further reductions in labor to handle them in both Worlds II and III.

Sector 19.02, Construction, Nonresidential Buildings

Better World III curing of concrete would require protection by straw

(1.02), cloth (3X05) and plastic sheet (PC15). The only other column specific

change would be in inspection labor (VA), reduced in World II and increased in

World III.

* Comments similar to those which footnote Sector 11.02 (above) apply here,

particularly as they relate to nuclear power generation.
60

Sector 19B03, Construction, Pipelines

Inspection and reweld after inspection are the two column-specific

fracture related technology changes affecting this sector. The first reduces

labor (VA) in World II and increases it in World III. The second leads to

reductions in both Worlds II and III in welding rods (7AQ1), electrical energy

(18.02) and labor (VA).

Sector 19A04, Construction, Highways

There are four column-specific changes that affect this sector.

Covering concrete for better curing is unnecessary in World II, but requires

additional World III inputs of straw (1.02), cloth (3X05) and plastic sheet

(PC15). Improving roadbed drainage to reduce winter freeze-thaw fractures is

also not required in World II, but calls for substantial increases in gravel

(2.06) in World III. Inspection labor requirements would be reduced in World

II and increased in World III; and the application of material row rules

further reduces labor requirements for handling in both Worlds II and III.

Sector 19B04, Construction, Bridges

Most of the technology changes in this Sector come from the application of the row rules. There are two, however, which are column-specific.

Inspection labor is reduced in World II and increased in World III. Protection (stone from Sector 2.06) of bridge abutments from collisions by boats and

ships is unchanged in World II, but should be increased substantially to

achieve best practice.

19C04, Construction, Dams

Additional covering for better concrete curing is needed in this

sector in World III. In addition, inspection labor can be reduced in both

Worlds II and III.

Sector 20A05, Fracture Related Research and Development

This sector has been defined in terms of R&D directed toward the

understanding of that aspect of fracture which is within the scope of this

project. All other fracture related R&D is treated as "other R&D" and placed

in 20B05. Thus, by definition, this sector disappears from the A matrix in

World II, while there are no changes in its technology between Worlds I and

III.
61

V. I/O MODEL OUTPUT

After the changes were made in the A, B, R, and final demand

matrices, the I/O model was run to obtain the transaction tables for the three

fracture "Worlds". This chapter provides a summary of the kinds of

information generated by the model, the uses to which it can be put, and the

types of analysis that can be based upon it.

The Overall Procedure

It will be recalled from previous discussions that the I/O modelling

activity has taken place in three distinct phases. First, a description of

the economic processes characterizing the real world of 1978 was embodied in a national table of 150 sector detail; this version of the model we have called

"World I". Second, the economic processes of the real world have been altered

to show what they are expected to be in each of two hypothetical situations

with respect to fracture : "World II", or the no-fracture base, described the

1978 processes expected to characterize an economy in which our artifacts

behaved (with respect to fracture/deformation) exactly to the limits of their

original design, and in which the materials from which they were made had

precisely known and uniform characteri sties , as detailed in Chapter II; "World

III", or the best-practice world, described the 1978 processes expected to

describe an economy in which everyone applied all of the best fracture

control/prevention practices known in 1978.

Any differences found between Worlds II and I must, by definition, be

ascribed to the total costs of fracture, these costs being incurred either in

the form of excessive use of resources to avoid fracture or in the form of resources destroyed by fracture within design--i .e. , the failure of artifacts

to function vis-a-vis fracture as they were intended and designed to do. Any

differences between Worlds III and I must, by definition, be ascribed to cur- rently preventable or reducible costs of fracture in that they would not have

been borne had everyone in the economy followed all current best practices.

Any differences between Worlds II and III must, by definition, be ascribed to

currently nonreducible costs of fracture in that current best practices cannot

prevent these destructions or uses of resources.

Model Outputs: World I

In Appendix H of this report (separately bound), actual printouts are provided for the World I data bases and transactions tables. The format of

these tables is uniform with those of the other "Worlds", so that each can be

directly compared with all others. Sectors have been described, in terms of

the products and processes involved in each, in Appendix C; and the terms used
62

have both been discussed in previous chapters and more briefly defined in the

Glossary (Appendix A). In summary, these outputs are described below.*

Data Bases

The data bases for this model consist of the A, B, G, U, and R matrices and the vector of noncapital final demands. Those for World I have

been based on the Battel le-Columbus 127-sector I/O model for 1978 and have

been disaggregated to the 150-order detail adopted for this study. In the

process of disaggregating and checking these data, errors have been identified

and corrected, and some revision and updating has been undertaken to better

reflect 1978 real world state of the arts. Moreover, to whatever degree

possible, the entire data base has been adjusted to reflect a peacetime, full

employment level of resource use.

Of the World I material in Appendix H, the A (direct technology), B (capital to output), G (annual growth rate), and U (useful lives of capital)

matrices and the noncapital final demand vectors are direct inputs into the

model. The R (replacement rate for capital) matrix is calculated as a function of the G and U matrices. As will be shown, the A, B and R matrices and

final demands must be adjusted between World I and Worlds II and III. The G

matrix is the same for all three worlds; and the R matrix changes make

interworld adjustments of useful lives unnecessary.

Calculated Outputs

There are two calculated outputs for World I shown in Appendix H, the

so-called "modified dynamic inverse" and the dol la r-fl ow or transactions

table. The dynamic inverse shows the number of cent's worth of output

required from each row sector to support one dollar's worth of final delivery

by each column sector. The transaction table shows all the transactions in

the economy as each sector purchases necessary inputs and sells its output to

intermediate (industrial) and final users.

The Inverse . Under real world conditions of peacetime full employment, for instance, the iron and steel industry (7A01) has to supply 19 cent's

worth of metal to support one dollar's worth of automobile/truck production

(11.01) (see Table 3). This includes, in addition to the almost 9 cent's

worth of iron and steel actually formed into the vehicle (Table 4), another 10

cent's worth of iron and steel going into everything that the motor vehicle

industry buys from other sectors, plus that going into suppliers of those

sectors, and thei r suppliers, ad infinitum. It is the power of the inverse

that makes it possible for the I/O model to capture the indi rect , as well as the direct costs of fracture.

* Some exhibits will be shown in this chapter that illustrate material from

the tables of Appendix H, for the benefit of those who do not have access to

that volume. However, all such data will not be so supported.
63

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64

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TABLE 4. DIRECT TECHNICAL COEFFICIENTS, WORLD I
65

The Transactions Table . This table tells us a great deal about the

real world economy. For example, if 1978 had been a year of peacetime full

employment, the total outputs (U.S. domestic outputs plus imports) provided by

the steel and motor vehicles sectors would have been $65.0 billion and $144.8

billion, respectively.* Also, in that year, the steel industry would have

sold directly to the motor vehicles industry $12.4 billion worth of iron and

carbon steel (shown at the intersection of column 11.01 and row 7A01, as noted

in Table 6). This cell thus accounts for 19 percent of the supply of steel

and 8.6 percent of the direct input requirements of motor vehicles.

Turning our attention now to some economic aggregates, the transactions table shows us that, in full employment 1978, the entire economy would

have operated at a GNP (gross national product) level of some $2,243.0

bil lion.**

It should be emphasized that private fixed capital formation--i .e. , private industrial investment in plant and equipment--i s part of final demand

GNP, but is calculated rather than given in this version of the I/O model.

The noncapital portions of final demand and the dynamic inverse enter into the

computations that provide each sector's total output. These total outputs,

along with the B, G and R matrices allow the computation of each sector's new investment. It should also be noted that another column vector of final

demand has been added to this model, the so-called "cargo losses" which occur

as a result of fracture-related transportation accidents. These cargo losses,

like any other final demand, remove resources from the production flow. We

show them separately, here, rather than "bury" them in new investment,

exports, and net inventory change.

Model Outputs: World II

To the extent that anything was changed in adjusting World I values

to provide the World II realistic base for calculating the cost of fracture,

these changes are included among the printouts of Appendix H. The significance of these changes and the ways they can be utilized in analyses of the

costs of fracture are summarized below.

Data Bases

Many changes have been made from World I technologies in the A, B,

and R matrices, and in noncapital final demands. All reflect the

* These are the amounts (rounded from millions to billions) shown in the TO

(total output) column on rows 7A01 (Iron and Carbon Steel) and 11.01

(Motor Vehicles and Parts) for World I. Table 5 also reports the 11.01

total

.

• ** This is shown in two places: (a) it is the row-sum of value added, where

that row intersects the TI0 (total intermediate output) column; or (b) it

is the column-sum of TFD (total final demand), where that column intersects the Total Input/Output row. See Appendix H.
66

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TABLE 6. DOLLAR VALUES OF INTERINDUSTRY

AND FINAL TRANSACTIONS, WORLD I
70

technological and demand changes expected to flow from the fact that, in World

II:

• Characteristics of materials are uniformly at the high end of

attainable distributions;

• Functional requirements for all artifacts are precisely known,

along with the material characteristics and design rules;

• Time dependent fracture processes do not occur; and

• Nothing breaks within designed loads.

For example, it has been calculated that, in World II, any metal input for

purely load bearing purposes (i.e., no stiffness requirement constraints,

aesthetic considerations, etc.) could be reduced to 51 percent of its World I level. In World I, the direct technical coefficient for iron/carbon steel

going into motor vehicles (i.e., the A matrix cell defined by row 7A01 and

column 11.01) was 0.08562, indicating that iron/steel contributed almost 9

cents of every average $1.00 value of a motor vehicle. In going to World II,

this coefficient was reduced to 0.04323, which is 50.4 percent of the World I value. In addition to the metal reduction, there was also a small scrappage

rate adjustment made in column 11.01 that accounts for the rest of the

reduction. We treat this reduction in steel inputs as a positive saving in

the use of resources.

Viewed in a slightly different way, we subtract 0.04239--that is

(.08562-. 04323) —from cell 7A01/11.01 (steel into vehicles) and add it into

the cell ("Social Savings/Cost") in the same column.* As each affected

coefficient in the World I column for, say, 11.01 is adjusted to its World II value, reductions in inputs will be offset by adding them to social savings;

conversely, increases in inputs will be offset by subtracting them from the

social savings row. In the end, after all adjustments are made, there will be

a net social saving (shown with no sign or a plus) or a net social cost (shown

with a minus sign). In the case of motor vehicles (11.01), the net value is

+0.06507, or a social saving of nearly 7 cents per dollar of motor vehicle

output (see Table 7). There are no sectors which show net social costs in the

World II A matrix.

As indicated in Chapter V and Appendix D, similar types of changes

have been made in the capital coefficients (B matrix) and annual capital

replacement rates (R matrix). These changes are not, however, as many or as significant in these matrices, nor have the changes been balanced by use of

the social savings/cost row.

Noncapital final demands—made up of consumer expenditures (PCE),

exports (EXP), defense and civilian Federal expenditures (FGEU and FGEC),

* It should be noted that, by definition, the "Social Savings Cost" row is

empty in World I.
71

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TABLE 7. DIRECT TECHNICAL COEFFICIENTS, WORLD II
72

state and local goverment expenditures (S/L), net inventory change (NIC), and

cargo losses (LOSS)--are also subject to changes from World I to World II. In total, these amount to some $6 billion (as shown on the Social Saving row as the difference between TFD and PFCF, that is, between total final demand and

private fixed capital formation). Noncapital motor vehicles demand also

changed, from a World I value of $71.3 billion ($95.0- $23. 7 billion) to a World II of $71.0 billion ($94.0-$23.0 billion), a decline of only about $300

mil 1 ion.

Calculated Outputs

The changes in the data bases lead to corresponding changes in the

calculated outputs for World II. It should be noted, however, that the

dynamic inverse integrates all the changes made in the A, B, and R matrices,

and the final computation of the transaction table integrates these with the

final demand alterations. Thus the World I-World II changes may be surprising when compared with any of the individual adjustments that gave rise to

them.

The Inverse . It will be recalled that the 7A01/11.01 inverse for

World I was approximately 19 cents (0.18840) per dollar of motor vehicle

output. After all the matrix changes have been made to give effect to World

II technologies, the new inverse is 0.0990 (see Table 8). In other words, not

only did the amount of iron and steel per vehicle dollar decline by about 7 cent's worth, there were also many indirectly felt reductions that accounted

for an additional 3 cents per dollar.

The Transactions Table . When the full computations of the World II economy is completed, the resulting transactions table will differ from that

for World I in three distinct ways:

t Differences in technologies introduced into the data bases

• Differences in total final demands (noncapital, as introduced into

the data base; and capital, as calculated)

• Differences in indirectly derived interindustry demands.

As already noted, the technological differences are indicated by the entries

in the social savings/cost row of the A matrix. The final demand differences

are similarly displayed in the same row across the final demand portion of the

World II transaction table. The dollar values entered in the Social Savings/

Cost row across the intermediate portion of the same World II transactions

table reflect the net impacts of all three of these influences (these are listed for all Worlds in Table 9). As we will show in the analyses of Chapter

VIII, below, these influences are somewhat difficult to isolate and measure

separately.
73

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74

TABLE 9. SOCIAL SAVINGS

SOCIAL SAVINGS (MILLION 1976 OOLLARS)

11 III III-II ~iT<nrTTTT5rfiT7E:sr«r products

~ 422.7? 211.04 211. 73 1.02 FIELD + ORCHARD CROPS 394.06 137. 44 196.61

1A03 FORESTRY PRODUCTS 6.05 3.29 2.76

160 3 FISHNG, HUNTNG, T F 4 ' P I NG 20 .66 6 . 93 13.73

i.e. AGRI , FOR3T FISH SER>/C 6.09 3.74 2. 35 2.01 IRON + FERROALLOYS ORES U6.08 23. 15 22.93

^Xfl^nSTOWTliSTOUS'OR'ES MINE 35. 4C 16.62 18. 78 2A04 UNDERGROUND COAL i I NE 212.53 -2<* i* . 04 456. 62 2B04 STRIP COAL MINING 59.1*8 30.25 29.23

2C04 Of HER COAL MINING 1.22 .59 .63 2A05 CRUDE PETROLEJM 850.71. 355.51 495. 23 2805 NATURAL GAS 166.93 71.58 97. 34 STONE XTTATnSTNITn 105.77 53V73 "52.0 4" 2,0? CHEH + FERTLZR MINERALS 14.59 6. 32 8.27 BEVERAGES 1351.29 360.56 990. 73 3801 OTHER "'OOD + KINOREJ »R0 2583.1*2 1213.69 1369. 72 3.02 TOBACCO MANUFACTURES 83.81* . i*6 83. 37 3X03 l£ATHR*-LEATHS PRO 68.11 1.14 66.97

~5T0 5 FAB . VA^RTrnTrRTJ+ynrD^R xov 990.33 -191.40 1181.73

3A0T METAL TIRE CORD 11.91* 12.21 -.27

3907 OTHER COk.O*MISC TEXT PR 46.27 10 . 18 36.09

3X08 APPkL+MISC FAB TEXT PRO 23U. 37 92.13 142.24

4.01 SAWMILLS PLANING MILLS 59.04 84.77

4.02 VENEER, PLYWOOO+LAM HO 213.11 90.58 122.53

<k :. y > "OTHER LHBR*WO~rX~:OHTWRS 196.77

~ 72.16 124.61

4 .04 HOOOEN CONTAINERS 4 2 o 1

18.55 23.47

4XA5 WOOD FURNITUR+FI XTUR 1*82.37 20 8.53 IE73.83 4XB5 METAL FUPNTR+FIXTURES 198.46 90 .61 117.84

4.07 PULP+PAPR PRD EX CONTNRS 12 Mo 53 564.08 685.45

(..08 PAPERBRO CONTAINERS»BOX 174.83 51 .82 123.01

5.01 PETROL REFTJG + RELTO PRD 18 29.42 "~B52.11 977. 31 5.02 PAVING MIX ASPHALT PRO 1*2.82 19.23 ' 23.59

5.03 INDUSTRL TNORGORG CHEM 1292.36 517. CO 775.37

5X04 agricultural :hemi;als 79.47 22. 4i* 57.02

5A06 ADHESIVES 116.28 43.50 •"2.78 5B06 OTHER CHEMICAL PRD 65.60 25.1i* 40.46

152.26 3 2. 18 100.09

5X10 CLE A NING* TOILET PREP 216. HI 83.20 133. 21

5 oit PAINTS RALLIED PRD 13**. 25 60.19 74.06

P. 07 PlAST MATR,FESIN*$YN RU9 8i*. bi* 15.02 69.62

l».08 ORGANIC MANMAOE FIBERS 106.88 9.72 99.16

P. 13 TIRES*INNER TUBES 1792.03 42.85 1749.18

""~>IT"r TNtnjSTRTAX RUB9FR 3TELTS 85.38 15. 72 69.66

<»ei<. OT HEP RUBBER ~>RD 1 36 . C i» 36.24 101.30

PA15 PLASTIC PIPE 563.71* 62 .96 480.78

PB15 PLASTIC CONTAINERS 257.31 93.64 168.67

">C15 OTHER MANF PLASTi: PRO 1*31.11 150 .56 280.52

6A01 FtAT GlASS 1 63 . 1

-6. 40 169.51

6 Bar GLASS CONTAINERS 497. 5C 56.65 440. 35 6C01 AUTO+TRUCK MINJSHHLCS 35.0 3 3.13 31. 90

6""01 OTHEP GLASS PRD 177.1*2 29.67 147. 75 6.02 CENENT+LIrtF+GYPSUI PRO 57.90 22. 79 35. 11 6m03 str Clay ppo ex refrac 300.26 59. 36 240. 90 6E03 STk concret prd*ceient 815.12 228 . 36 566. 76

"TST~~"3 FOTTR~Y*tfH""~WR+P0""C..N PRD ICO. 80 27. 89 72. 91
75

TABLE 9. (Continued)

SOCIAL SAVINGS (MILLION 1976 D OLL4RS)

II III III-II

~ 6TJ0T TJtTSY+N CUA

Y

—

R"E FK A"S TOR IES 35b .93 263.19 78. 7k

btoi* ABRASIVES INC G*IN3 WH 72.33 20 .69 51. 65 6B0W OTHER NONMET MINERAL PRO 58 .".7 22 . 5<* 35.92

r A01 IRON.CAPSN 3TEE.*:0<t" 72b. kS 1223 . 66 -1.92. 20 7BQ1 ALLOY STEEL 51.37 51.97 -.60 7C01 STAINLESS STEEL 27.61 23 . 79 3. 92 PRIMARY "AlOHInUH' 3C.63 209. 71 95. 13

7X01* OTHEP NONFFROUS M£TALS 1863.15 969. 72 893. 1.1. 8 .01 METAL CANS 1032.51 392. 12 61.0. 39 6.02 METAL BARRELS, OPlMfPAlLS 219. kZ 80.83 138.59

6.03 MET SANIT+PLUMBIN3 ppo 32.57 5.31. 27.21.

6 .OA NONELEC HEATING E3JIP 103. li* 21.65 61.29

TTCUCTD P.AL HETAT 1815.0 k 635.90 1129.1%

aeo5 BOILER SHOP PRO 3<*5.31 131.81. 213. 1*8 8C05 OTHER FAB STPUCTPL PRO 2205.67 SkZ.kk 1363. i*3 9 .06 SCRH MACh PRD+STA1PNG5 17**6.51 722. 29 102i>. 22

9 .07 FABRICATED METAL PRO 3A6.08 79 . 5<* 266.51. 9.01 ENGINES * TURBINES 7<*<*.<*8 305.06 i»39. «*3

" i ru? GEN INDUS MAC^+ETJIP 1<*71.19 575. 02 896. 17

9 .03 MACHINE SHOP PRO 298.1*3 112 .82 195.62

10.01 FARM MACHINERY i«09. 53 159 . 31 251.22

n .02 CONSTRUCTION MACHINERY 1000.82 3a3 .91 619. 91

10 .03 MINING MACHINERY 99.19 <»C.01 59. 18

10 .Ok OIL FIELO MACHINERY 75.89 28.96 t.6. 91 ~VFTB5 HTRt^TOJDLNG^^HACH EX "TRUC

" <.57.51 176.88 280. &«, 10 .06 INOUST TRUCKS TRACTORS 177.65 66. 07 111. 56 10.07 METAL WORKING MACHINERY W79. kZ 192.50 296. 93

10 .03 specl inostry machinery 733.32 273.50 1*59.82

11 .01 MOTOR VEHICLES PARTS 9211.1*1 2682. 2V 6529. 16 11.02 AIRCRAFT + PARTS %9<*0 .66 27.10 i»913. 56

SMI P BOTT"~BL~rjj » RE PA IRS <*30. 38 76.79 ' 353. 60

ll.Oi* LOCOMS+RAIu+RPO TRNST 359.85 11*3.86 215.99

11. 05 CYClES, TRAILERS, ETC <*27.53 157.91 269. 62 12.01 ELEC MEASURING I NSTR UMTS 29.86 11.91* 17.92

12AC2 ELEC 10TRS*GENRTRS , POWPL 17.13 5.29 11.85

12B02 OTHER ELEC MOTR S 3 E NRTRS 325.96 114. oe 211.99

12.03 INDUS CONTkUTT RANSFM.ET 97.1*0 10 . 29 97.10

12 .On ELEC T RIC LAMPS 86.90 35. i*2 51. -*8 12 .05 LIGHT FIXT**IUNG DEVICE 369.19 137.25 231. 91

12 .06 ElECTRNC co*pnts*access les.oo Si*. 22 103.79

12A07 X-RAY EQUIPMENT 9.39 2.77 6. 62 12807 OTHER MISC ELEC M*;h 202.23 73 . 30 126. 92

S EF VTT INDTJST RT "H A ; H I NE R Y 606.07 210 . <*7 395.59

13.02 HO JS EH OLD APPLIANCES 5 17.68 180 .50 337. 18 13.03 RAOI 0, T V»COMMJN E3UIP 292.91 53.51* 239. 3 8 H*A01 FRACTURE CONTROL I NSTR 2U.61 -.51 25.12 1UB01 OTHEP SCNC I NSTR, ETC 51*1.53 19"*. i*6 357.08

1A.02 MEG, SURGCL.DEMTAL INSTR 136.25 1*2.22 <3k. 33 ffATCHFS, CLOCKS * PARTS 31.75 9.3i» 22. i*2 Ik. Ok optica l »opthalmi: gooos 55.85 ?k. 52 31. 3? 1U.05 PHOTO EQUIP SUPP.IES 1 33 . 1

2

37. i. 7 95.70

15 . 01 lonput ing*relat *a;hines 163.20 56. 22 96.96

15.02 OTHR OFFICt*eUSIN MACH 90.77 35.57 55.21

15.03 OFFICE SUPPLIES 26.32 12. 16 li*. 17

16 .01 ORDNANCE Ac;:SS3?IES 385. 6? 113. 56 2 72. 3 7
76

TABLE 9. (Continued)

SOCIAL SAVINGS {MILLION 1976 DOLLARS)

II in III-II

~ T6 A 0"Z "SPURTING GOOD*T0V5 2 79 . 1

10 3.78 175. 3 3 16B02 OTHER MISC PR3 198.90 63. 97 13«». 93

If. 01 RAi.LFOAOS*RELATD SERVOS vie . 6t 61 .96 356. 68 ir.C2 lolal*highway passngr tr 329.22 126. 10 203. 1 3 17.03 MOTOR FREIGHUWAREHOUSE 1,92.69 166. 76 305. 92

ir.0<* WATER TRANSPORTATION 312.60 133.65 208. 95

6<*7.31 68.87 ""*" 578.1.3 If. 06 PIPE LINES 27.00 10 .09 16.91

17.07 T RA N SPORTATI ON SERVICES 10.29 .07 10.21 18.01 TELECOMMUNICATION 121.63 <&. 20 75.1.3 18.02 ELECTRIC POWER 235.99 87.36 1<»8.63 18.03 GAS 66.18 28 . 3k 37. 8<» 18. OA WATEP SANITARY SrfTVICE 36.24 "3V04 "33"."2lj 19.01 NEW CONST, NONFARM RESIO ".556.56 266. 11 <»296. <»5 19.02 CONST, NONRESIO 3UILD 2808.59 13C«.2 267<.. 17 19A03 CONST .RAIcROAOS 312.68 106. 53 286. 15 19803 CONST, PIPELINES 87.97 31. 1<» 56.83

19C03 OTHER PU, CONST 1783.67 513.76 1269.91

19AU4 CONS I , HlTTHRTVYS 50C27 -162.71 """"666.98" 19P04 CONST, 8R.I0GES 168.97 "7.10 121.87

19C0<4 CONST, DAMS 28.52 7.62 20.91

19D0»t CONST, ALL OTHER 287.22 103.03 16<t. 19 20.01 WHOLESALERS. TAIL TRADE 203.26 Sl.«»7 121. 79 20XA2 INSURANCE 2.50 .92 1.53 20XB2 FINANC.REAL LST+AJVFRTSG 1<»3.29 -37.86 -181.15

20A05 FRACT RESEAP +3 EVE. 0.0b .56 -.56 20605 OTHEF " RESEARCH OEVEL 196.86 7C18 »22.69

20C05 ENVIRONMENTAL CLEANUP 1.22 • M .79 20D05 OTHR 3USNS *PROFE SNL SERV 101.80 k<3.b>* 51.95

20.06 BUS TRAVEL, E NT ER+SIFTS 4. 06 2.C6 2.02

2 1 . U 1 PRINTING * PU9LIT4ING 2«»6.65 12?. 19

\ 12«T.«6 21.02 RADIO TV BROADCASTING • 0<* .02 .02 21.03 HOTELS LODGING PLACES 28.92 10.73 16.19

21A04 PEKSONAL SERVICES 6.72 2.78 3. 95

2160<. REPAIR SERV, EXC AJTO 6.38 2.55 3. 83 21.05 AUTOMOBILE RE»AIR»3ERVC 56C24 233. 2<* 281.00

ZT7TT6" AMUSEHE"NTS 23.36 7.i*i* 15.92

21.07 MEDICAL HEALTH SERVICE <»8.50 20.22 28.26

21.08 tOUCAT SERVC+NONPROF ORG 52.02 1.0<t 50.97

22.01 POST OFFICE 25.96 IS .70 15.26

23.01 SCRAP+SECONO-HANG SOOOS 0.00 0.00 0.00 23.02 GOVERNMENT INDUSTRY 0.00 0. 00 0.00 —2TTD3 FEs T -OF -T HT-WORLC 7. NCUS COO 0.C0 COO

23. C HOUSEHOLD INDUSTRY ceo 0.00 -.8 0

Total 72282.8 21075.8 51207.0
77

Returning now to our comparisons in terms of row 7A01 (iron and

carbon steel) and column 11.01 (motor vehicles), suppose we examine the World

II situation. In World II, the total output of iron/steel was $37.4 billion

and that of motor vehicles was $141.6 billion (see Table 5). These were 57.5

percent and 97.8 percent of their respective World I values. Clearly, the

total demand for iron/steel (a material) declined much more as a consequence

of our no-fracture hypotheses than did the demand for motor vehicles (a

finished artifact). With little change in the demand for vehicles, but with a significant reduction in the amount of iron/steel per vehicle, the World II dollar purchase of iron/steel (row 7A01) by motor vehicles (column 11.01) was $6.1 billion, less than half the $12.4 billion of World I (See Table 10).

This cell accounts for 16 percent of the demand for i ron/steel (down from 19

percent in World I) and for 4 percent of the inputs of motor vehicles (down

from almost 9 percent in World I).

In aggregate terms, GNP (measured as total value added) in World II amounted to $2,165.7 billion (96.5 percent of the World I level). This may be

viewed as one way of estimating the cost of fracture in the U.S. economy.

Model Outputs: World III

World III will be recalled as the hypothetical world that shows what

our economy would have been if, in the real world of 1978, everyone had

applied best fracture control practices. It must be emphasized that adjustments were made to World I data, not to those of World II, in order to

establish the World III model.

Data Bases

The changes from World I to World II were much more uniform in nature

and direction than were the corresponding changes to World III. In general,

inputs would be reduced when going from a real world to a no-fracture situation. This would not necessarily be the case when going from the real world

to a best practices situation. For instance, if supplier sectors all applied

best practices, user sectors probably could reduce their inputs, though not by as much as would be true of World II. But if the user industry also must

apply best practices, it may well tend to increase , rather than to reduce its

inputs of certain resources. Moreover, if an industry in the real world is

already at best practice, there would be no change between Worlds I and III

with respect to the affected inputs.

Generally speaking, inputs were reduced in going from World I to

World II. But, in going from World I to World III, they might be reduced by a lesser proportion, left unchanged, or even increased. Taken all together,

about as many changes have been made in the A, B, R, and noncapital final

demand data bases in generating World III as were made for World II.

The same metal input calculations that gave us standard 49 percent

reductions in going to World II indicated that, given best practice conditions, metal inputs would be reduced by only 19 percent from World I
78

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TABLE 10. DOLLAR VALUES OF INTERINDUSTRY

AND FINAL TRANSACTIONS, WORLD II
79

levels. It will be recalled that iron and steel input into motor vehicles

(row 7A01 and column 11.01) had the direct technical coefficient of 0.08562 in

World I and 0.04323 in World II. In World III, this coefficient would be

0.07327 (see Table 11). The World I/I 1 1 difference (.08563-. 07327 = .01235)

would be entered as a social saving in column 11.01. However, as was true in

World II, there have been other adjustments in motor vehicle technology, so that the net social saving is shown as 0.01871 (Table 11).

Since changes can be made in either direction in going from the real

to the best practices situation, it is possible for some sectors to show

social costs (with a minus sign) in this row. This is true, for example, of

sector 2A04 (Underground Coal Mining) because best practices would involve

substantial increases in the use of roof bolts. It is also true of sector

3X05 (Fabrics, Yarns, Threads, and Soft Floor Coverings) which would use more

fiber. Other sectors showing social costs in World III (see Table 9) are:

6A01, Flat Glass

14A01, Fracture Control Instruments

19A04, Construction, Highways

20XB2, Finance, Real Estate and Advertising.

Calculated Outputs

Generally speaking, the calculated changes in World III will not be as greatly different from World I as are those in World II. Taking the

inverse of the cell for row 7A01 and column 11.01 as an example, it will be

recalled that for World I it was 0.18840, and for World II it was 0.0990; the

World III value is 0.15871 (see Table 12).

The Transactions Table . Using the same examples as before, World III

total outputs for iron/steel is estimated to be $54.2 billion; and for motor

vehicles it is estimated to be $143.4 billion (see Table 5). These are 83

percent and 99 percent of the corresponding World I values, respectively.

Iron/steel input into motor vehicles was $10.5 billion, 84 percent of the

World I value (see Table 13). This cell accounts for 19 percent of iron/steel

output and 7 percent of motor vehicle inputs.

In aggregate terms, World III GNP (measured as total industrial value

added) is estimated to be $2,220.7 billion, 99.0 percent of World I.

The above examples, stressing the relations between Sector 7A01, as a row, and Sector 11.01 as a column, are illustrative of the entire set of

possible interactions and their implications.

Model Outputs: The Difference Tables

There are many aspects of the costs of fracture that can be clarified

by discussions and computation such as those above. It will be noted that

many of these discussions have involved calculations of the differences among

World I, II and III values. For convenience, Appendix H includes, in addition
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TABLE 11. DIRECT TECHNICAL COEFFICIENTS, WORLD II
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TABLE 13. DOLLAR VALUES OF INTERINDUSTRY

AND FINAL TRANSACTIONS, WORLD II
83

to the referenced tables, three so-called "difference" tables. These tables

are derived from the three transactions tables in the following manner and are associated with the following cost-of-f racture concepts:

• Total Cost-of-Fracture Table is obtained by subtracting every cell

in the World II table from the corresponding cell in the World I table.

• The Presently Reducible Cost-of-Fracture Table is obtained by

subtracting every cell in the World III table from the

corresponding cell in the World I table.

• The Presently Nonreducible Cost-of-Fracture Table is obtained by

subtracting every cell in the World I.I table from the

corresponding cell in the World III table.

Interpreting the Tables

In these tables, positive and negative values must be interpreted

very carefully. One set of interpretations applies everywhere except the

Social Savings/Cost row. This row is particularly important to measurements

of the cost of fracture, and should be viewed in isolation.

General Interpretation . If the dollar value in a given cell in the

World I table is larger than the corresponding value in the World II or III,

the values of that cell in the difference table will be positive (i.e., will

be shown with no sign). If the reverse is true, the cell in the difference

table will show a negative value (i.e. , have a minus sign). These relationships are to be interpreted in the usual manner" A~~positive cell value in the

World I-World II table indicates that the input or output is higher in World I and is reduced as we shift to World II conditions. Thus, a positive cell

value would indicate a saving (a reduction in resource use) in moving from

World I to World II, from World I to World III, and from World III to World

II. A negative cell value would mean just the opposite.

Interpretation of Social Saving/Cost Row . This row tends to take the

opposite sign from other rows in the matrix. For example, if every input in a column is reduced in going from World I or World III conditions to World II conditions, the World II social savings entry, unlike those above it, will be

bigger than the corresponding World I and III values.* Thus, the corresponding value in the difference table will be negati ve . In other words, an entry

on the Social Saving/Cost row in the difference table must be interpreted in

the opposite direction to its sign, when compared either to other rows in the

difference table or to the Social Saving/Cost row in the transaction table for

* The reader is reminded that, in World I, every social saving entry, by

definition, is zero.
84

a single World. A minus sign on this row of the difference table means a social saving—that is, comparative reduction in the use of resources—while a

pi us sign means a social cost, a comparative increase in the use of resources.

The World I-World II Difference Table

This is the key table for measurement of the total cost of fracture

in the U.S. The only element in total fracture cost that is not included in

this table is the very small sum, generated by the Supplemental Models, that

will be added in Chapter VIII.

The total cost of fracture, in terms which involve no double counting

and are directly comparable with GNP, is obtained by summing across the Social

Saving/Cost row of the World I-World II difference table. The resources saved

in the productive process are summed when the Total Intermediate Output (TIO)

column intersects the social saving row. They amount to $72.3 billion. The

final demand reductions save an additional $14.2 billion (shown in this same

row in the Total Final Demand, TFD, column). All together, this totals to

$86.5 billion, or 3.9 percent of World I GNP ($2,243.0 billion). This implies

that, in the complete absence of fracture within design, as hypothesized for

World 1 1

, we would have an additional 3.9 percent of GNP, now diverted to the

prevention or offsetting of fracture, available for other uses.

If desired, the use of this table permits breaking the $86.5 billion

cost of fracture into the contributions of particular markets or technologies.

For instance, $9.2 billion results from resources saved by the motor vehicles

sector, of which $6.3 billion is saved in the form of reduced iron and carbon

steel inputs.* We can also qo over to the final demand side of the table and

say that, of the $14.2 billion saved by no-fracture reductions in demand, $3.5

billion are accounted for by reductions in consumption, and $289 million of

that comes about through reduced purchases of motor vehicles.**

A further step can also be taken in analyzing these savings. In addition to reduced direct purchase of cars, trucks and parts from sector

11.01, consumers also reduced their use of auto repair and services (sector

21.05) by $185.7 million. Sector 21.05 also purchases motor vehicles and

parts (row 11.01, column 21.05) and these purchases were reduced by $629

million. This type of back-tracing can be carried as far as anyone needs or

desi res.

* The $9.2 billion appear (with a minus sign) in the Social Savings/Cost row

for column 11.01. If we go up that column to the 7A01 row, we find the

$6.3 billion (as a positive entry).

** The $3.5 billion is the Social Savings/Cost entry in the Personal

Consumption Expenditure (PCE) column. Reading up that column to row 11.01, we find $288.9 million.
85

The World I-World III Difference Table

Just as the World I-World II table allows the evaluation of total

costs of fracture, the World I-World III table allows the evaluation of the

presently reducible costs. These costs are $21.1 billion from TIO and $4.6

billion from TFD for a total of $25.7 billion. This tells us that, if we put

into practice all we now know about fracture control and prevention, we could

save almost 30 percent of the total resources currently lost to fracture. The

remaining 70 percent of those costs are currently nonreducible and, by definition, none of the resources which they represent could be saved until future

research and development activities have improved on present best practices.

Other analyses and tracings of costs can be carried out with this

table, just as they were with the World I-World II table. However, there is no need to pursue the analysis until a later chapter.

The World Ill-World II Difference Table

Just as the World I-World II table describes total costs of fracture

and the World I-World III table describes the presently reducible costs, this

table describes the presently nonreducible costs--that 70 percent which cannot

be affected by present best practices. There is no need to undertake any

further numerical analyses of this table at present, since all three tables

are structurally similar.

It is very important, however, to point out that this World Ill-World

II table sets out many of the elements which must be taken into account if we

are to plan well for future R&D directed toward fracture reduction and control. The amounts of benefit that can be gained by successful R&D in various

directions fall within the limits indicated in this table.

For instance, the most that we can hope to save by improved fracture

related practices in the manufacture of motor vehicles cannot exceed $2.7

billion (the Social Savings/Cost entry in column 11.01), but there are no other sectors which offer as much potential direct saving. However, if R&D

effort is directed toward improving the material qualities of iron/steel, the

potential economy-wide savings in resources could be as much as $10.8 billion

(the TO entry on the 7A01 row).

In Chapter VII, we take up some of the potential savings that can accrue to the national economy through future R&D. These so-called "future

reducible costs of fracture" represent a very important purpose for which this

study was undertaken. It is interesting to note that potential savings with

respect to fracture include both the presently reducible and the future

reducible costs. The discussion of Chapter VII can be anticipated to the

extent of pointing out that both are substantial. However, while savings via

presently reducible costs require education and technology transfer, savings

via future reducible costs require R&D, additional education, and additional

transfers of the yet-to-be-developed technologies.
86

VI. SUPPLEMENTAL MODELS

The calibration of the Supplemental Models involved the collection

and assimilation of substantial bodies of data. The general procedures and

steps followed in the process of arriving at final cost estimates are presented below. Details of the Supplemental Model methodologies and assumptions

that had to be made for their use in this study are provided in Appendix E.

Data

The most critical feature of the data sets assembled to run the Supplemental Models was their highly variable level of detail. For example,

industries monitored by government agencies or which are more highly regulated

had much useful, detailed information on the number of accidents of given

types as well as the causes and consequences of those accidents; this was not

the case for the nonregulated , nonmonitored industries. For these latter,

problems of nonreporting, partial reporting, and questionable or misleading

reporting created substantial difficulty in the use of available data. The

extreme variability in the data resulted in having to make more simplifying

assumptions than originally anticipated in screening the events data (as

documented in Appendix E). While the degree of assumption required for estimation of different events data was directly related to the degree to which

data were available, it is felt that, even in cases where minimal data were available, reasonably accurate estimates have been made.

Generally, data were collected from a variety of government and

industry reports, academic sources, interviews with public and private officials, and through numerous telephone contacts (a complete list of references

appear in Appendix E.)

In structuring the data, accidents were divided into classes of

events (See Table 14). Events were chosen after trying to strike a balance

between types of data available and breadth of coverage of fracture-caused

incidents. It is noted that, even within a class of events, extreme variability in data detail was found. For example, railroad data provided information

on the types of injuries that resulted from fracture, while marine data only

permitted estimates of the total number of injuries. In the latter case,

costs were calculated in terms of an average marine accident injury, rather

than for specific types of injuries. Similarly, as information on specific

property that was damaged was often not available, total property damage cost

estimates were made, where appropriate. Environmental degradation information

was even scarcer, which necessitated the positing of even further levels of

assumptions, the details of which also appear in Appendix E.

The remainder of this chapter discusses two techniques utilized to

supplement the direct data that were gathered: the maximum/minimum approach,

and the translation of findings between types or groups of events. In these

ways, orde r-of-magnitude estimates were produced for fracture events, as presented in the final section of this chapter.
87

TABLE 14. LIST OF EVENTS

Accident Type

Trans po rtati on-Related

Work -Re la ted

Home-Related

Public-Related

Other

Events

Rail road

Pi pe lines

Auto

Other motor vehicle

Ai r Transport

Mari ne

Construction

Agriculture

Mini ng

Manufacturing

Home Product Failure

Houses

Ut i li ti es Public Structures

Military

Communications -re la ted

Medical-related

Storage-related

Recreat ion- related
88

Maximum/Minimum Approach

The lack of specificity in much of the available data required that an approximation be used to set ranges on the numbers of events which were appropriate to the study. In the examination of the records of any single

type of event, the basic concept of Scope provided some guidance in selecting

maximum and minimum numbers of these events. To the extent supported by notes

on investigations or assignments of responsible causative factors, a single

class of events could be examined to estimate:

(1) that fraction which were clearly identified with material or component fract ure--thereby providing a minimum percent of such

events which needed to be included in the analysis; and

(2) that fraction which were clearly identified as being caused by

factors other than fract ure--thereby establishing a maximum

percent of such events which should be included.

The level of detail relative to any one class of events varied

considerably among the different sources of data. However, selected sources were sufficiently documented such that further refinement of the maximum

percent could be achieved; that is, considerations of fracture within scope

could be applied, thereby reducing the maximum percent and narrowing the range

of events which were germane to this study.

Minimum and maximum estimates were applied in all the supplemental

models. When data deficiencies required making an assumption regarding the

percentage of a given type of event that was caused by fracture within scope,

both upper and lower bound estimates for this percentage were made, utilizing

percentages from other events. Later, when estimating costs associated with

property damage in this same event, maximum and minimum cost estimates were

again established. All lower estimates were then multiplied together to

provide a minimum cost for this event. Similarly, all higher estimates were multiplied together to produce the maximum cost for this event. This range was then included in the results.

This method, while not exact, is responsive to the needs of this

study for three reasons. First, since the data are often inadequate for the

strict application of all the Supplemental Models, it does not put undue

emphasis on any one inaccurate number. Second, it does provide an order of

magnitude estimate for these fracture costs to society: "the costs are at

least [an amount] and may be as high as [an amount]". Finally, this approach

allows comparisons between events to be made in a general sense. That is, more costly events may indicate a need for more fracture prevention

techniques, or for additional research, etc.

Translation of Findings Between Events

Another technique utilized to make better estimates was the translation of information between events. In simple terms, this meant that findings
89

relating to one class of events and reported from one area of the economy were applied to the same class of events as reported from other areas. For example, the Department of Defense maintains extensive records on all accidents

that occur (as well as their causes and consequences) on military bases,

including those accidents which occur in base housing and in base communities.

By revi ewi ng this rather detailed data base, information on the percentage of

accidents due to fracture was obtained. Where applicable, results from

on-base, home-related accidents could then be applied to the more general

class home-related or other civilian-related events, especially when it was

the only reasonable information that could be obtained. Overall, the technique of supplementing information on one event with findings from a different,

yet basically similar, type of event allowed estimates to be made that

otherwise would have been less accurate, at best, or nonexistent, at worst.

Results

Supplemental Model results for all events are described in Table 15,

which details World I results. Since, by definition, no fracture events within scope can occur in World II the results in Table 15 also represent the

difference between World I and World II. The maximum/minimum cost ranges for

each entry are shown.

Note that the costs are divided into "resource" costs and "imputed"

costs. The latter include disability and pain and suffering associated with

injuries, the cost of death, and environmental degradation (costs which are

not included directly in the Input/Output analysis). Also included in imputed

costs are nonrecoverable cargo losses (goods lost in transit as a result of a fracture event), which also appear in the I/O table as a separate column of

Final Demand. Resource costs, including medical costs, insurance administration costs, and environmental cleanup costs, are directly included in the I/O

model. To avoid double counting, these costs ( $228. 5-$732. 8 million) should

not be added to the I/O results. On the other hand, the imputed cost total

"[$286.8 million to $1,084.9 million) should be added to the World I -World II fracture cost difference reported by I/O model results.

Supplemental Model results for the World I-World III differences were

also calculated on an event-by-event basis with the totals presented in Table

16. Here, total imputed costs (to be added to the I/O results) are $27.6 to

$122.7 million; resource costs (not to be added) are $25. 7- $78. 3 million.

It is noted that the fracture-related costs derived from all the

events represents a very small, and almost negligible, fraction of those

estimated from the I/O analysis. That this should be the case appears reasonable on two counts. First, regardless of how tragic, spectacular, or news- worthy, these events do not occur with great frequency. Second, the Supplemental Models represent sporadic and di scontinoous events, while the I/O model

defines situations where fracture or the use of resources in their prevention

are routine aspects of all production processes and all end uses throughout

the entire economy. Thus, while many fracture events create public awareness

of fracture problems, they represent only a small portion of the total

societal cost of fracture.
90

TABLE 15. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS WORLD II DIFFERENCES

(Million of 1978 Dollars)

Injuries

Deaths

Property

Environmental

Total

Resource Costs

$44.7 - 132.8

0

$183.8 - 600.0

*

$228.5 - 732.8

Imputed Costs

$223.2 - 570.6

$63.4 - 454.3

$22.2 - 28.2**

$0.2 - 60.0

$309.0 - 1,113.1

Source: Appendix E, Table E-24.

* See Environmental Clean-Up Sector in I/O Model.

** This figure, although included as an imputed cost, has been entered into

the Input/Output as a "LOSS" sub-vector of Final Demand.

TABLE 16. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS WORLD III DIFFERENCES

(Millions of 1978 Dollars)

Injuries

Deaths

Property

Environmental

Total

Resource Costs

$4.5 - 17.0

0

$21.2 - 61.3

*

$25. 7 - 78.3

Imputed Costs

$22.5 - 65.2

$5.1 - 51.2

$3.40 - 4.10**

$0.02 - 6.0

$31.0 - 126.8

Source: Appendix E, Table E-26.

* See Environmental Clean-Up Sector in I/O Model.

** This figure, although included as an imputed cost, has been entered into

the Input/Output as a "LOSS" sub-vector of Final Demand.
91

It is appropriate to note, at this point, an additional comment

relative to both the scope and the objectives of the present study. Estimates

by the National Safety Council (see Table E-2) indicate that the cost of

automobile-related accidents alone amounted to $34.3 billion in 1978, a value

nearly 20 times as great as the maximum of that estimated for all resource and

imputed costs in this analysis. Furthermore, NSC's accounts of all accidents

(motor vehicle, work, home, public recreation and other transportation) were

greater than the maximum Battel le estimate by a factor of nearly 40.

Two significant conclusions may be drawn from these comparisons.

(1) Events which result from fracture within scope, even when

considering any errors that might arise from the approximations

made in this study, contribute only a small fraction of the

costs of all events; and

(2) The reduction in societal costs associated with the vast majority of events can come about only through the efforts of parties

other than those concerned directly or indirectly with fracture

technology. Specifically, research in this area is most properly under the purview of organizations that are concerned with

efforts in the fields of human and institutional factors.
92

VII. THE IMPACTS OF FUTURE RESEARCH

From the outset of this program, the objectives have been basically

two-fold: (1) the estimation of the costs of fracture, and (2) the estimation of the potential impact of research on these fracture costs. As noted in

Chapter II, and shown schematically in Figure 2, the present costs of fracture

contain two components that suggest the need for further efforts at fracture

prevention.

First, there is a component of presently reducible costs (designated

as World I-World III) which may be addressed through broader application of

known technologies. This potential annual cost reduction, including those

calculated from both the Input/Output Model and the Supplemental Models,

amount to $25.6 billion--not an unsubstantial target. By the definition of

World III, this figure represents the cost savings which could accrue through

extensive technology transfer, education, adaptation, and procedural modification. This activity does not require the conduct of additional research on fracture.

However, it must also be emphasized that no estimates have been made

of all the costs that would have to be incurred in order to attain World III.

At the present stage, no estimates have been made--nor were they to be made

under the scope of the present NBS project—of the social investment needed to

satisfy the conditions of World III. No figures are available to approximate,

e.g., the costs (to society or to the firm) of effecting a broad-scale technology transfer activity, providing and absorbing the necessary information in

a usable form.

Second, there is the remaining $60.9 billion difference (exclusive of

the nondupl icated costs associated with the fracture-relevant events) which

represent the presently nonreducible costs of fracture, that amount which

represents a target to be pursued through future research. By the very definition of the Worlds and the differences among them, it follows that the

conduct of selected research programs may result in the enhancement of a basic

store of knowledge and practice such that the differences between World III

and World II may be diminished. Future research, in the context of the

schematic diagram of Figure 2, would permit a decrease in the future World

Ill-World II gaps. Dissemination and application of known research results

will serve to decrease the World I-World III gaps regardless of how these gaps

change with advanced research.

What we have termed "World IV" is the state of the economy which can

be attained as a result of undertaking and completing future research in

fracture control and prevention. World IV is a world in which future best

practices have been determined and achieved. It can almost be conceived as an ultimate best practice world, although, strictly speaking, we cannot know (we can only conjecture) what the ultimate would be.

Before delving into the specifics of the World IV considerations, we must reemphasize that the accomplishments achieved by future research will not come free of charge. Not only will there be an investment required to define

World IV, but also there will be that investment required to attain World iV.
93

Factors for Consideration

In estimating the potential impact of research on future costs of

fracture, we consider two avenues of emphasis: (1) the choice of generic

research to be pursued, and (2) the selection of the most appropriate sectors

for further study.*

The procedure adopted in estimating the impacts of future research

consisted of seven steps:

(1) selection of broad categories of research areas, maintaining

consistency with the definitions of World II and the scope of

the program

(2) identification of major candidate sectors

(3) identification of more specific research needs pertaining to the

chosen sectors

(4) aggregation of those needs into subclasses of the broad

categories of (1) above

(5) estimation of probabilities of accomplishing research goals and

the assignment of weights to individual goals

(6) estimation, by sector, of a weighted reduction factor applicable

to targeted dollar-flow differences

(7) extension and application of the technique to all sectors and

estimation of the total World Ill-World IV, Future Reducible

Costs.

In many respects, this approach is similar to the data collection process

which was employed in characterizing Worlds II and III: high-priority sectors were selected for detailed study; principal features and factors were identified and evaluated; generalizations based upon these factors were developed

(the row rules); and these generalizations were applied to the remaining

sectors (with appropriate modification, where necessary).

Selection of General Research Areas

With an appreciation of fracture

factors which contribute to fracture, and

forth to preclude undesirable fracture, a

phenomena, the vast number of

the efforts which are presently put

sampling among research scientists

* It will be seen later in this Chapter that--just as in the case of the row rules--all sectors eventually can be included in the analysis.
94

and practitioners could produce a list of potential fracture-prevention

research projects that could be pursued. To be sure, the failure of materials

and structures can be caused by so many different factors that virtually

hundreds of di f ferent types of programs could be undertaken to reduce the

probability of fracture.

Rather than undertake such a survey, it is more appropriate for this

study to define generic research areas and to apply the findings to three sets

of sectors: (1) those which represent the largest potentials for cost savings

(measured either in terms of social savings or in terms of total output); (2)

those which represent, or are closely associated with sectors where failure

has severe or highly visible consequences; and (3) all others.* In order to

achieve a consistency in approach, the generic definitions of research areas

(at two levels of specificity), were established by a reconsideration of the

conditions used to define World II. To facilitate the discussion, we repeat

(from Chapter II) the eleven basic conditions imposed on World II:

(1) Each material's properties will have no variability.

(2) Each material's mechanical properties will be defined as being

four standard deviations above the mean of the distribution

which is now achievable. The mechanical properties include the

yield and ultimate strengths at the temperature of interest.

(3) We assume no unfavorable influence on any one of a material's

mechanical properties as we reduce the variability of its other

properties.

(4) A material may be substituted, if, in 1978, the primary reason

for its not being used in that same application was its susceptiblity to fracture.

(5) It is assumed that materials do not fracture under any conditions unless design specifications are exceeded.

(6) Design will either be load or stiffness limited.

(7) A safety factor of unity will be applied in any case.

(8) Design is carried out with perfect knowledge.

(9) Inspection for fracture relevance is not necessary.

(10) There will be no residual stresses.

(11) There will be no crack initiation, growth, or fracture, either

as a result of processing or of service.

* The criteria for selecting these classes of sectors will be described below.
95

Since these were the conditions that defined World II (our no-fracture World),

it follows that desirable fracture-related research should be directed toward

their attainment.

Inspection of these eleven conditions suggests four broad categories

of research:

t Research on Materials

• Research on Production and Fabrication

• Research on Design

t Research on Reliability.

Further refinement within each of these four groups, again considering the

conditions defining World II, was undertaken after we had identified the

sectors showing the greatest potential for fracture reduction.

Sector Selection

As originally conceived, the impacts of future research were to be

estimated for sectors selected (either as rows or as columns) representing the

largest targets of opportunity, i.e., those in which World Ill-World II dollar

flow differences were greatest. Inspection of the dollar flow tables (as

presented in Appendix H) permits a straightforward identification of the

twenty rows and twenty columns that contributed most to the presently nonre- ducible costs of fracture. We can safely assume that future research with

respect to these sectors is most likely to generate future savings related to

processes (columns) or to products (rows).

This approach has merit in that each candidate column can be targeted

in terms of its potential cost savings, and the inputs to that column can then

be evaluated on the basis of their probable contributions to that potential.

Similarly, identification by the row allows us to identify those purchasing

sectors for which the effects of changes in the row input would be greatest.

An alternate selection process that was considered involved the

identification of the largest cells in the World Ill-World II Dollar Flow

difference table. This would have identified specific uses of selected

inputs; however, to concentrate on cells instead of sectors in setting

research priorities would not serve the broader purpose of this study. Thus,

the final criteria for identifying sectors for individual study were: (1) the

20 largest row sectors in terms of World Ill-World II differences in total

output; (2) the 20 largest column sectors in terms of World Ill-World II Social Savings; and (3) additional sectors chosen either on the basis of their

visability or on the basis of their perceived social significance.*

* In addition to the above selection exercise, we also identified the 400

largest individual cells in the World Ill-World II difference table. As

expected, the vast majority of those cells were already included in the

selected rows and columns.
96

As a result of this process, 51 sectors were selected for initial

screening (see Table 17).

Identification of Sector-Specific Research Topics

The senior project staff team, augmented by other Battel le research

specialists, considered those research topics deemed to be most promising and

pertinent to fracture in each of the highest priority sectors. The initial

effort in this subtask was directed toward those sectors which have been

selected because of (1) their column contribution and (2) their potential to serve as bases for generalization.

Extensive discussions and examination of the difference tables

resulted in the development of two cross-matched sets of judgments. First

there are the twenty potentially fruitful research areas listed in Table 18,

grouped into four broader categories. Second, there are 33 potential savings

objectives specifically applicable to the selected set of sectors. In Table

19, these objectives are distributed among 17 principal sectors and the twenty

research areas.

As an example of the utility of information in Table 19, we note

that:

• More Reliable Castings (Objective #4), would benefit several

aspects of Sectors 7B01, 7.03, and 7X04

t Improved Performance of Fabricated Components (Objective #14),

would benefit Sectors 8A05, 10.02, 11.01, and others

t Elimination of Potholes (Objective #28), would benefit Sector

19A04.

Other similar kinds of savings would be expected to result from research in

the general areas of Defect Elimination .

One can thus read across the rows of Table 19 and obtain a qualitative indication of the types of benefits or savings to which any one of the

twenty principal areas of research might lead. Inspection of this same table

from a col umn perspective identifies the general and specific areas of

research which might result in substantial reductions in each Sector's inputs.

Probabilities of Research Benefits

The prediction of future trends, activities, and consequences is

hardly an area which is subject to detailed analysis. And in few fields of

endeavor is prognostication riskier than in scientific and technological

research. The history of science can give guidance only where there are records of trends in development that may be expected to continue into the
97

TABLE 17. CANDIDATE SECTORS FOR WORLD IV CONSIDERATION

SECTOR TITLE CRITERIA FOR SELECTION

ROW COLUMN VISIBILITY

2.01 Iron and Ferroalloy Mining

2A04 Underground Coal Mining

2A05 Crude Petroleum

2.06 Stone and Clay Mining

3A01 Beverages

3B01 All Other Food and Kindred Products

3X05 Fabrics, Yarns, Threads and Soft Floor Coverings

4.07 Pulp, Paper and Paper Products, Except Containers

5.01 Petroleum Refining and Related Products

5.03 Industrial Organic and Inorganic Chemicals

P. 07 Plastics Materials, Resins and Synthetic Rubber

P. 13 Tires and Inner Tubes

6A01 Flat Glass

6C01 Automobile and Truck Windsflields 6B03 Structural Concrete Products and Ready-Mixed Concrete

6D03 Clay and None! ay Refractories

7A01 Iron and Carbon Steel

7B01 Alloy Steel 7.03 Aluminum

7X04 All Other Nonferrous Metals

8.01 Metal Cans 8A05 Structural Metal 8C05 All Other Fabricated Structural Products

8.06 Screw Machine Products and Stampings

9.02 General Industrial Machinery and Equipment

10.02 Construction Machinery

11.01 Motor Vehicles and Parts

11 .02 Aircraft and Parts

11.03 Ship and Boat Building and Repair

16.01 Ordnance and Accessories

16A02 Sporting Goods and Toys

17.01 Railroads and Related Services

17.02 Local and Other Highway Passenger Transport

17.03 Motor Freight and Warehousing

17.04 Water Transportation

17.05 Air Transport

17.06 Pipelines

18.02 Electric Power

18.03 Gas

19.01 Construction, Residences

19.02 Construction, Nonresidential Buildings

19A03 Construction, Railroads

19B03 Construction, Pipelines

19C03 Construction, Other Public Utility

19A04 Construction, Highways

19B04 Construction, Bridges

19C04 Construction, Dams

20.01 Wholesale and Retail Trade

20XB2 Finance, Real Estate and Advertising

20C05 Environmental Cleanup

20D05 All Other Business and Professional Services

(X)

(X)

X

X

x.X

X

X

X

X

x
98

TABLE 18. RESEARCH LEADING TO POTENTIAL SAVINGS

Intrinsic Materials Research

This area includes research to improve the base-line properties of

existing materials and to develop new materials. It includes:

Fatigue : increased endurance limits and slower crack growth rates.

Strength : higher yield strengths (or fracture strengths for brittle

materials). Also higher strength/weight ratios.

Toughness , higher fracture toughnesses including lower ductile/

brittle transition temperatures. Particular attention to higher

toughness/strength ratio.

Temperature : higher softening temperature, longer stress-rupture

life, and increased resistance to thermal shock.

Envi ronment : reduced sensitivity to environmental cracking of

non-metals. (Note that environmental cracking of metals is outside

the scope of this study.)

New materials*: new composites, amorphous metals, and other

advances.

Production and Fabrication Research

This area includes research to produce more efficient and reliable

components. It includes:

Joining : improved strength and reproducibility of welds, adhesive

joints and mechanical joints.

Residual Stress : reduced residual stresses in welds, castings, and

mechanically-fabricated parts.

Defect Elimination : decreased reject rates due to elimination of

strength-limiting defects, improved surface finishing.

Process Control : reduced scatter of fracture-related properties.

Process Development : improved fracture behavior due to advances in

casting, deformation processing (including machining), sintering, and

composite manufacturing. Also, development of new manufacturing

technol ogy

*See Note, end of Table.
99

TABLE 18. (Continued)

Design Research : This area includes research to develop lighter and more effective designs. It includes:

Material Testing : improved accuracy of prediction of structural

behavior from laboratory test data.

Energy-Absorbing Design : improved methods of reducing stresses due

to impact loads.

Computational Efficiency and Accuracy : less expensive and more reliable stress analysis methods.

Fracture-Prevention Design : more effective design of stiffeners and

other crack arrestors. Design of joints with higher efficiency.

Reliability Research : This area includes research into the suitability and

service performance of manufactured products. It includes:

Testing : more efficient testing of structures and parts.

Particularly important is improved fatique life prediction.

Inspection : more sensitive detection of flaws and cracks, and

detection of local damage accumulation.

Maintenance : prevention of service overloads arising from changes in

operating performance.

Repai

r

: improved lifetimes due to better repair of defects.

Protection : longer lifetimes due to better packaging, handling and

overload protection. Includes shielding non-metals from aggressive

environments and improved thermal shielding.

*N0TE. The category of "New Materials" does not imply a search for breakthroughs or entirely new concepts. In the context of this analysis, "New

Materials" include those basic materials concepts which have already been

established and demonstrated, but where specific development programs have yet

to be undertaken.
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Notes to Table 19.

1. Development of fatigue-resistant materials

2. Development of tougher materials

3. Improvements in welding

4. More reliable castings

5. More reliable casting and rails

6. Greater material uniformity

7. Improved casting technology particularly important

8. More reliable rails

9. Development of strong alloys

10. Development of more creep-resistant alloys

11. Higher yield strength/elastic modulus ratios

12. Improved voidability of aluminium

13. General improved voidability

14. Improved performance of fabricated components

15. Developments of continuous castings

16. Better means of limiting loads to design levels

17. More complete and accurate knowledge of local stresses

18. Development of fracture-proof designs

19. Better test methods, particularly for life prediction

20. Improved sensitivity of defect and damage detection

21. Improved maintenance

22. Improved repair

23. Improved air bags, pressure release valves, governors, etc.

24. Materials substitution for ships

25. Materials substitution for electric power generation

26. Improved plastic pipe

27. New and improved paving materials

28. Prevention of potholes

29. Methods of reducing environmentally-caused deterioration of highways

30. Improved methods of limiting overloads

31. New and improved dam materials

32. Elimination of structural defects in dams

33. Improved crashworthiness
103

future; but forecasts are impossible where major breakthroughs and discoveries

have altered historical trends. Experimental and theoretical investigations

have advanced the state of the art in discontinuous sequences, disrupting an orderly advance and replacing it with entirely new directions or unexpected

frameworks of understanding.*

While the histories of science can document the existence of breakthroughs and the conditions under which they occurred, such accounts offer no means of predicting when or if new breakthroughs will occur. One can only be

assured that they may occur, thus, as we consider the extent to which future

research can affect presently nonreducible costs of fracture, we must confine

our consideration to what might be expected from the complete success of a systematic approach, given the trends already established. That is to say,

the question addressed is: Barring unexpected developments in our basic

understanding and application of physical processes, to what extent would

continued, advanced research in [a particular field of study] alter presently

nonreducible costs of fracture?

We return now to the differences between Worlds II and III. World

III is a situation that could be realized if everyone followed currently known

(1978) best practices in the avoidance of fracture. World II, on the other

hand is a situation in which we have relative levels of perfection without

having to work for them . This means that, while successful R&D can move us toward World II, by definition we can never quite achieve it. In no particular instance, however, do we know precisely where that limit is beyond which

R&D cannot take us. Nevertheless, we assume that a targeted 100 percent

success in research will eliminate a given World Ill-World II di f ference--but

we know that success will never exceed, say, 90 percent. We make this assumption separately for each of the Sectors and each of the research subareas

shown in Table 19.

Referring, for example to the column for Sector 7.03 (Aluminum), we have assumed that the World Ill-World II difference would disappear if complete success (known impossible) could be achieved in each of the broad

categories of research (Materials, Production and Fabrication, Design, Reliability). Moreover, complete success in Design would be accomplished if it

were achieved in the single subarea, Material Testing.

* The popular expression "...taking a quantum jump..." has spread into use by

all manner of statesmen, politicians, educators and nontechnologi sts, with

little or none of its original meaning.
104

To choose another example, in Sector 10.02 (Construction Machinery),

Materials research is not a critical category. However, the Sector will be

affected by all three of the remaining broad areas*. Similarly, Sector 17.05

(Air Transport) is critically affected only by the broad area of Reliability

research. **

We may now examine each of the nonzero cells of Table 19 individually

in terms of two related questions:

(1) What is the probability of attaining complete research success with regard to the subarea (row) as applied to the sector

(column) ?

(2) To what extent would complete success in this cell affect the

World Ill-World II differences if this were the only cell under

consideration?

The results of this inquiry are shown in Table 20, which may be

interpreted in the following ways: the numbers in this table represent a best

judgment on a scale of 1-10. Therefore, it follows that, for example, if"

Process Control were the only subarea of research required in connection with

Sector 8A05, it is estimated that complete solution of the outstanding process

control problems of this Sector would result in a 30 percent reduction in the

World Ill/World II difference. Similarly, if Inspection were the only subarea

of research, then 80 percent of the difference could be saved. And, finally,

if both Process Control and Inspection problems were solved, the reduction in

this Sector's World Ill-World II difference would involve a weighting factor

proportional to the relative contributions of the two broad research areas,

Production and Fabrication Research and Reliability Research.

To determine the final weighted reductions in World Ill-World II differences, as applied to the seventeen high priority sectors of Table 20, we must take two steps. First, the total of 100 percent must be divided among

the four major areas of research. A detailed statistical analysis of failure

modes, assignment of the most critical factors leading to failure, and a mass

of expert opinion probably would be required for a completely defensible

distribution. Lacking such data, judgmental estimates were made. As a first

approximation, the total 100 "points" were divided among Materials, Production

* We note that Sector 10.02, involves the processes of constructing heavy

machinery (see Appendix C), given the materials that are available.

Material research is performed by other sectors and only indirectly impacts

Sector 10.02.

** Care must be exercised to avoid falling into a common trap by assuming that

this sector (17.05, Air Transport) must surely be concerned with, for

example, research in Joining or Fracture Prevention Design. While airline

and airplane maintenance staff certainly have more than just a passing

interest in these subjects, the definition of the sector precludes the

direct involvement with these research areas.
105

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and Fabrication, Design, and Reliability Research in the proportions of 30,

30, 30, and 10*.

Where any major research area was excluded from consideration in

connection with any sector (Sectors 8A05 and 19B04, for example, had no Materials Research; and Sector 19A04 showed no contribution from Design

Research), the 100 points are divided among the remaining areas in accordance

with the ratios established in the 30/30/30/10 distribution.**

It was then necessary to distribute the points assigned each major

generic area among the individual (four to six) subareas. Again, no detailed

analyses were available to guide this process, wherefore the available points

were distributed evenly among those areas noted to be important for the given

sector.

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twenty research areas and the seventeen primary sectors is shown in Table 21,

where the individual cell entries indicate the percentage by which the World

Ill-World II costs of fracture may be reduced, for each column sector, by the

successful completion of the cited research. Similar results for the 14 next

most important sectors are shown in Table 22.

Translation to All Sectors

The approach detailed above was carried out essentially as a column-specific exercise for the highest priority sectors, as chosen according

to criteria stated earlier.

The same level of detail was not pursued with the remaining sectors.

Instead, using the same concepts as applied to the row rules described in

Chapter IV, all other sectors were divided into groups such that each group

could be treated as similar to one or more of those listed in Tables 21 and

22. The total reducible fractions derived in Table 21 and 22 were then

applied to these remaining sectors.

Application of the Reduction Fraction

As noted above, the reduction fraction, RF, is a factor which

represents an estimate of the extent to which presently known fracture-related

technology will advance in the foreseeable future, without consideration given

* Sensitivity analyses showed that the 30/30/30/10 distribution was not a significant determinant of the eventual weighted averages. A distribution

of 30/20/30/20 or 25/25/25/25 gave essentially the same answers. The total

projected impact of future research is the crucial factor.

* Thus, for Sector 10.02, the three major areas (Production and Fabrication,

Design, and Reliability Research) are weighted (0/43/43/14) respectively,

and, Sector 17.05, the weightings are obviously (0/0/0/100).
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109

to breakthroughs. Any application of RF must then be made relative to

existing technology, i.e., that technology which is avai Table regardless of

whether it is fully employed in all sectors of the economy.

In order to apply RF to the analysis, one must first note the

significance of the Social Savings/Cost coefficient in the intermediate input

matrices. It has been shown elsewhere in this report that the Social Savings/

Cost coefficient in a single sector for, say, World III (expressed herein as

S 1 1 1 ) represents the fractional dollar's worth of inputs to that sector that

could be saved by employing best fracture control practices. Similarly, Sj j results from having a no-fracture World. Hence, the difference Su-Sm

is a measure of the fractional dollar's worth of inputs which would accrue in

the "transition" from World III to World II, both measured in terms of

deviations from World I technologies and practices .

The entire rationale for defining a World IV is to estimate the

dollar changes that could result from the conduct of R&D beyond that which

characterizes present technologies, with the assumption that these advances

would then be translated into practice. The concept of World IV thus translates into that asymptote which is, in reality, a "future World III".

In order to estimate the position of that future World III, (relative

to World II and III), we first apply the potential social savings difference

for each individual sector (Sj j-Sj 1 1

)

-| to the total output of that

sector in World III (TOjjj -j), multiply that value by the corresponding

reduction fraction, and sum over all sectors. Thus,

World Ill-World IV =Z(S m - S n )i T0 in ,i (RF)

j

i

This approach yields a value of $18.5 billion (measured in 1978

dollars) which might be saved strictly through the conduct of R&D in a variety

of fracture-relevent programs. In addition, the calculation shows that

nonreducible future costs sum to $55.6 billion. The sector detail for these

figures is shown in Table 23.

The total figure above ($55.6 billion) is somewhat smaller than that

calculated from the World Ill-World II difference tables ($60.9 billion, see Appendix H) and as also shown in Table 24 (following Chapter). That such

should be the case is readily understood from the fact that this summation is

based on social savings coefficients (resulting from technological change) and

does not incorporate any changes in demand.

We wish to reemphasize that these World IV calculations are not the

result of the rigorous simulation effort which characterized the other three

Worlds. As was stressed in Chapter I, the mere summation of fracture-relevant

processes and events would have underestimated the total cost of fracture,

because it would not have accounted for the complex interindustry transactions

which describe the U.S. economy. For this same reason, the calculations of

World IV are, at best, only approximations. However, they involve
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sufficiently detailed analyses of the economy to provide guidance concerning

the impacts of future research.

Final Comments

During the investigations that identified the principal candidate

research areas, a wide range of topics was covered by the Battel le senior

team. The results of these discussions have taken into account both the

research areas and the materials or processes to which such research would be

di rected.

The analyses and calculations shown earlier (see Table 21 and 22)

indicate, as would be expected, that no single research area will "cure" the

problems of fracture; there are many different and important problems which

must be solved before significant resource savings can be achieved. There

are, to be sure, many fields which have an obvious, direct relationship to

fracture phenomena, not the least of which include research on improved

materials, more reliable and reproducible processes, and higher resolution

flaw-detection devices. In addition, there are those research areas from

which advances in understanding or technique—while not pursued specifically

for fracture prevention—can have major supporting roles. Among them we include, as examples: research on improved sensors and feedback devices to aid

in process control; new equipment for chemical and metallurgical analysis; and

nondestructive evaluation devices, indicators and instrumentation. These and

other ancillary research areas can be readily identified. However, it was neither possible nor within the purview of this program to trace their

potential impact on the future reducible cost of fracture.
115

VIII. ANALYSES OF RESULTS

In this chapter we intend to examine some of the results of this

study, primarily as they are embodied in the several difference tables. This

will serve two purposes: first, it will provide some general findings as to

the costs of fracture in the total economy and in some of the more important

sectors; and, second, it will provide some guidance with respect to uses that

can be made of these data and results.

Aggregate Fracture Costs

Taken together, the I/O and Supplemental Models provide an unduplicated cost of fracture of $87.6 billion in full employment 1978. Table

24 shows the details of this estimate. This total is made up of both resource

costs (98.7 percent), estimated by the I/O model, and imputed costs (pain,

suffering, etc.), estimated by the Supplemental Models. Viewed in other

terms, this total can be said to be 29.4 percent presently reducible (by the

adoption of best practices), with the remainder (70.6 percent) presently

nonreducible.

In regard to the resource costs alone, we find that 83.6 percent are generated in the intermediate economy (i.e., are generally technological in

nature) and 16.4 percent involve final demands. This contrasts sharply with

the Corrosion Study, in which 29.7 percent of total costs were intermediate,

and 70.3 percent involved final demands. There is a further difference

between these two studies that should be noted. In the Corrosion Study,

Personal Consumption Expenditures (PCE) was almost equal to Private Fixed

Capital Formation (PFCF, or private investment). In the Fracture Study, PFCF

is more than twice as large as PCE. Technological, rather than demand factors

clearly dominate the costs of fracture, while the opposite was true for costs

of corrosion.

Costs in Sectoral Terms

When the total costs of fracture are examined in sectoral terms,

there are several problems that intrude. One obvious problem is posed by the

fact that a sector may be very important in its contribution to, say, total

cost, but much less so in its contribution to presently reducible cost. Still

another problem derives from the fact that row costs and column costs of a given sector are not necessarily related to each other. For instance, a particular material may be relatively unimportant in its contribution as a col umn to total fracture costs; but as a row it may impose costs (or permit

savings) throughout the economy. A third type of problem involves the basic

power of the I/O table, namely, that it accounts for both direct and indirect

cost/saving elements. For example, a small technological change in a sector's
116

TABLE 24. MAJOR COMPONENTS OF FRACTURE COSTS, 1978

Mi 1 1 ions of Dol 1 ars

Total

Costs of

Fracture

Presently

Reducible

Costs

Presently

Nonreducibl

Costs

Total Costs of Fracture 87,627.5 25,759.3 61,868.1

Imputed Costs of Events 1,113.1 126.8 986.3

Resource Costs 86,514.4 25.632.5 60,881.8

Total Intermediate 72,282.8 21,075.8 51,207.0

Total Final Demand 14,231.6 4,556.7 9,674.8

Pers. Cons. Exp. 3,539.4 1,460.3 2,079.2

Priv. Fixed Cap. 8,421.0 2,935.2 5,485.8

Exports —

Federal -Mil itary 1,036.6 294.7 742.0

Federal -Ci vi 1 ian 315.8 -69.1 384.9

State & Local 890.9 -68.0 959.0

Net Invent. Ch.

Cargo Losses 27.8 3.8 24.0

Source: Difference Tables, Appendix H.

Note: Details may not add because of rounding.
117

column may relate to large dollar savings simply because of the heavy demand

for this sector's products (across the row).*

Sectoral Analysis of Total Fracture Costs

The total costs of fracture (World I-World II) are single counted

when examined in column terms (Social Savings), but are multi-counted when

examined by the row (Total Output). In Table 25 we contrast these two

perspectives in terms of the ten largest sectors as chosen by each criterion.

The 10 highest ranking sectors in terms of World I-World II differences in Social Saving are the sectors most affected by changes in their

own technologies. The 10 highest ranking sectors in terms of World I-World II differences in Total Output are the sectors most affected by demand (i.e., by

changes in the technologies of other sectors into which they enter as inputs).

The first group generally consists of processing or fabricating sectors, the

second of material or component sectors. There are four sectors common to

both groups (Motor Vehicles, Nonresidential Construction, Other Nonferrous

Metals, and Petroleum Refining). Regardless of anything else, these four are large sectors by any criteria.

On the average, at about the 150-order level of detail, Total Outputs

are double-counted. Thus, it is not surprising to see that the summed Total

Outputs of the second group are approximately twice as large as the summed

Social Savings of the first. Taken all together, the sum of all World I-World

II differences in Total Outputs is $127 billion, 1.47 times the single-counted

Social Savings shown in Table 24.

If we examine this selection of sectors, which probably is reasonably

representative, it may provide us with some insights into the relationships

between technology and demand (i.e., between column aspects and row aspects)

as determinants of fracture cost. First, however, to establish the setting,

just how representative are these sectors?

Taken as a group, these 16 sectors have a total social saving

difference of $36.3 billion. This is 42 percent of the total Social Saving

difference shown in Table 24. Viewed in terms of total outputs, these same sectors account for $68.3 billion, 54 percent of the $127 billion in the

difference table. Regardless of how we measure it, these sectors account for

a substantial part of total costs of fracture.

Table 26 shows, for each of these 16 sectors, the ratio of the Total

Output difference to the Social Savings difference. As this ratio rises above

the 16-sector average (68.3 -r 36.3 = 1.88), the sector may be viewed as demand

driven with respect to its contribution to fracture cost. As this ratio falls

below 1.88, the sector may be viewed as technology driven. By this criterion,

Sector 18.03 (Gas) is the most demand driven of these sectors. It will be

* The sectoral costs discussed herein are those directly measured by the

models. A further analysis, involving normalized data, is shown in the

Addendum to this Chapter, which follows directly in the text.
118

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119

TABLE 26. SELECTED SECTORS IN TERMS OF THEIR RATIO

OF TOTAL OUTPUT DIFFERENCE TO SOCIAL

SAVING DIFFERENCE, WORLD I-WORLD II

Sector Ratio

Taken

from

Array

2A05 Crude Petroleum 3.68 TO

3B01 Other Fd. & Kind. Prod. 0.29 SS

5.01 Petroleum Refining 2.30 SS, TO

P. 13 Tires & Intertubes 0.11 SS

7A01 Iron, Carbon St. & Coke 37.89 TO

7.03 Primary Aluminium 20.53 TO

7X04 Other Nonfer. Metals 3.87 SS, TO

8A05 Structural Metal 0.13 SS,

nt"hpp F^hr ^t*rnr Prnrl 0 ?R SS

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11.02 Aircraft & Parts 0.21 SS

17.03 Motor Frt. & Warehsg. 7.20 TO

18.03 Gas 57.40 TO

19.01 Nonfarm Res. Construction 0.023 SS

19.02 Nonres. Cosntruction 1.25 SS, TO

20.01 Trade 14.64 TO

Source: Calculated from Table VIII. 2:

Ratio - Total Output

Ratl ° " Social Saving

Note: SS = Social Saving difference

TO = Total Output difference
120

recalled from Chapter IV that several sectors used gas for annealing,

unnecessary in World II, and that it entered into a wide range of material

related processes. Thus, technological changes in other sectors both directly

and indirectly reduced the demand for gas. In contrast, Sector 19.01

(Construction, Residences) is the most technology driven of these 16 sectors.

The demand for housing, primarily for family use, is almost totally nonresponsive to fracture considerations; but all the material sectors enter as intermediate inputs, so that it directly achieves a considerable Social

Savi ng.

Sectoral Analysis of Presently Nonreducible Costs

The use of the ratio TO/SS as an analytical tool promises help for

subsequent analyses based on the results of this study. This is especially

true with respect to the World Ill-World II differences, where the ratio can help pinpoint the kinds of R&D that promise most benefit for particular

sectors. To illustrate this approach, we turn to the World Ill-World II difference table (shown in Appendix H) and find that the two largest sector

differences, using the Social Saving criterion, are:

Sector SS Difference TO Difference

11.01 Motor Vehicles $6,529.2 Million $1,813.1 Million

11.02 Aircraft 4,913.6 Million 654.4 Million

Using the Total Output criterion, the two largest sectors are:

7A01 Iron, Carbon Steel* $-492.2 Million $16,840.3 Million

7X04 Other Nonfer. Metals 893.4 Million 4,618.2 Million

These four sectors can be expected to behave in the same general

manner discussed above, making a repetition of that analysis unnecessary.

Suppose, however, we take three other sectors, all related to rail transport,

and examine them with this same approach:

Sector SS Difference TO Difference TO/SS

11.04 Locomotives, $216.0 Mil 1 ion $ 224.3 Million 1.04

Railcars, and

Rapid Transi t Cars

* Note the anomaly, to which attention has already been called, affecting this

sector. Nevertheless, if we ignore the minus sign of the SS entry, the

TO/SS ratio would be in the range expected for this sector in terms of the

World I-World II discussion, above.
121

17.01 Railroads and $356.7 Million $1,904.7 Million 5.34

Related Services

19A03 Construction, $206.1 Million $ 300.3 Million 1.46

Rail road

Note that presently nonreducible costs are particularly demand driven

for only one of these three sectors (17.01), while the other two are much more technology driven. It will be recalled from earlier discussions that the

demand for rail transport is affected by indirect factors, such as the weight

reductions which follow from the materials rules. Therefore, the kinds of R&D

that are most likely to reduce the future fracture costs of this sector would

be those permitting further shifts toward weight reductions throughout the

economy, not those directly affecting the railroads. For the other two

sectors (11.04 and 19A03), both of which are technologically sensitive, active

(direct) rather than passive (indirect) reductions in future fracture costs

are possible. R&D directed toward materials characteristics, manufacturing

processes and construction methods, would all have the potential for benefits.

Fracture Costs at the Cell Level

At many points in earlier discussions, particularly those related to

sector selections for World IV examination, the role of the individual cell

has been downplayed somewhat. This treatment of the cell had best be put into

a proper perspective. In making all the between-worl ds adjustments, the cell

has been the focus of activity: it is important, and nothing can reduce that

importance. Nevertheless, as an element of these analyses, the cell tends to

receive lower emphasis than either the row or the column, and rightly so: it

is difficult to generalize from a cell.

Still, the cell enters into these analyses, and some attention should

be given it at this point. A few illustrative cases, chosen somewhat randomly

will suffice.

Largest Cells . In an earlier discussion, it was pointed out that

positive entries occur in the World Ill-World II difference table when the

World III value exceeds the World II value, and therefore indicates an opportunity for future reductions in fracture costs. Among the very largest

cells in this table are several which involve Sector 7A01 (Iron and Carbon

Steel) either as a row or as a column.

The entry 2.01/7A01 (that is, iron ores into iron and steel) is $1.4

billion. Since this is an input of an essential raw material, it is a truly

technical requirement; but it cannot be significantly altered except by

changing the demand for iron and steel. In other words, the potential future

reductions in this use of resources will result from R&D affecting the use of

metal, not its production. Still another large cell in this 7A01 column is

the 7A01 diagonal, $2.1 billion. In the metals industries, the diagonal

generally involves the use of scrap in the production of metal (i.e.,

recycling). Obviously, recycling is socially desirable. It can be affected
122

from the technical side by altering or choosing primary/secondary metal

processes. Since, from the technological point of view, the only choice for

reducing the diagonal is to use more ore, we do not want to reduce this

diagonal coefficient . Therefore, the only way we can achieve desirable future

reductions in this fracture cost would again be by R&D affecting the use of

metal

Iron/steel as a row enters into several large cells, always as an important material for processing by the column sector. Four such cells are 7A01/8A05 (iron and steel into Structural Metal), $778 million; 7A01/8C05

(into All Other Fabricated Structural Products), $923 Million; 7A01/8.06 (into

Screw Machine Products and Stampings), $903 million; and 7A01/11.01 (into

Motor Vehicles and Parts), $4.4 billion. All these cells involve the direct

fabrication of iron and steel; and future reductions in them can be made by

R&D which either directly reduces the inputs of the metal into the products,

or indirectly reduces the demand for the products. In terms of fracturerelevance, only the former offers promise of significant reductions. These

future reductions may be achieved, however, by either of two main paths: (a)

improving the characteristics of the metal, so that less can be used in almost

any product; or (b) changing the design, processing, or use of the products so that they can function safely with less metal.

There is still a third path to future reductions in these materialrelated costs of fracture which should be discussed, but about which little

specific can be said. This involves the substitution of advanced polymers

(from P. 07) or ceramics (from various sectors in Group 6) for iron and steel.

The difficulty with this path is that the requisite R&D must take place in

connection with other materials and must achieve both fracture-relevant and

economic substi tutabi 1 i ty . This last condition will be very hard to meet for

a variety of reasons. First, R&D with respect to iron and steel has already

been highly successful, and many improvements exist that have not yet been

fully exploited. Second, it will be hard for other materials to match all the

other, nonfracture characteristics of iron and steel which make these latter

such dominant materials. Third, both productive technologies and capital

equipment must be changed as part of the material substitution, and these can

be quite costly. And fourth, producers are accustomed to iron and steel.

They think in those terms, are familiar with those suppliers, and may look

with suspicion on proposed substitutes.

Anomalous Cells . A negative cell in the intermediate matrix of the

World Ill-World II dollar difference table reflects an anomaly in that the

level of purchase in World II (the base World) is larger than it is in World

III (the best fracture-control practice world). There are three such

anomalies in this table: P.07/P.13 and PB14 (Plastics Materials, Resins and

Synthetic Rubber into Tires and Inner Tubes, and into All Other Rubber

Products), and 7A01/11.02 (Iron and Carbon Steel into Aircraft and Parts).

The first two derive from the fact that in the best practice World, natural

rubber will replace synthetic rubber, while in the no-fracture World there is no difference in their fracture characteristics and synthetic rubber will be

used (as it is in World I). The third derives from the fact that, in the

no-fracture World, carbon steel will have fracture strength that allows it to
123

be substituted for alloy steels and exotic metals. The presence of these

anomalies tells us nothing useful about the desirable paths to World IV.

Future Costs of Fracture

In Table 24, above, we summarized the statistical findings of the I/O

model with respect to costs of fracture. At this point, we need to add to

these findings those from Chapter VII concerning the future. Given all the

assumptions necessary for the estimation of World IV conditions, we have been

able to estimate one part of the future, namely the future reducible costs

measured on the Social Savings row across the intermediate matrix. This cost

element, $17.0 billion, is shown in the fourth column of Table 27. With this

value and a few simple assumptions it becomes possible to summarize the

elements thought to affect fracture costs.

Future Reducible Costs

The average ratio of Final Demand to Intermediate resource costs in

the three cost elements from the I/O model is 0.203. If we assume that this

relationship holds for future reducible costs, Final Demand changes would add

$3.5 billion and total Resource Costs would be $20.5 billion. In the three

modeled elements, the ratios of Imputed to Resource costs average to 0.0113.

If we assume that this ratio holds for future reducible costs, Imputed Costs

would be $231.7 million, and All Costs would be $20.7 billion. By definition,

future nonreducible costs would be the remainders after subtracting future

reducible from presently nonreducible costs.

The Issue of Reliability/Sensitivity

The evaluation of the findings of the "Cost of Fracture" study

requires an assignment of confidence intervals to the results. In order to

address this issue, it is first necessary to consider a fundamental difference

between the measurement of physical science parameters and those of the nonphysical sciences. Measurements in this latter category (including the social

sciences) are far more methodologically complex and may also be subject to

influences that preclude direct comparison with the physical sciences.

Examined below are some of the elements that cast doubt on this analogy; also

indicated are the procedures that will be followed in evaluating the present

study.
124

TABLE 27. SUMMARY OF ELEMENTS IN THE COST OF FRACTURE

Mi 1 1 ions of Dol lars

Presently Future

Kind of Cost

Total

CostU)

Reducible

Cost( 2 ) NonreducibleCost( 3 ) Reducible

Cost(4)

Nonreducible

Cost(5)

All Costs 87,627.5 25,759.3 61,868.1 20,737.8 41,130.3

Imputed Costs 1,113.1 126.8 968.3 231.7 736.6

Resource Costs 86,514.4 25,632.5 60,881.8 20,506.1 40,375.7

Intermediate 72,282.8 21,075.8 51,207.0 17,045.8 34,161.2

Final Demand 14,231.6 4,556.7 9,674.8 3,460.3 6,214.5

Source: Tables 23 and 24.

Notes:

(1) Total Cost = World I-World II.

( 2 ) presently Reducible Cost = World I-World III.

(3) Presently Nonreducible Cost = World Ill-World II.

(4) Fut ure Reducible Cost: Intermediate costs generated from World IV

Final Demand = 0.203 x Intermediate

Resource = Intermediate + Final Demand

Imputed = 0.0113 x Resource

All Costs = Resource + Imputed

(5) Future Nonreducible Cost (on each line) = Presently Nonreducible Costs - Future

Reducible Cost.
125

The Observed/Observer Problem

It has been said that asking a person to examine and draw inferences

from socioeconomic situations is like asking a hydrogen atom to write a chemistry book. In dealing with the world of nature, the scientist is removed to

the degree that objectivity is relatively easy to achieve; in dealing with

social phenomena, the scientist is immersed in and is a part of his data base.

Moreover, in the natural world, the basic unit of reaction (the atom or molecule) is so small that even the smallest sample is subject to the statistical

"law of large numbers". In the social world, the basic unit of reaction (the

person, family or firm) is no smaller than the scientist—and often may be

larger—and samples of one are often all that are available.

The Indeterminacy Principle

Heisenberg's principle that the act of observation alters the thing

being observed is far more fundamental to the social sciences than to the

natural sciences. When we construct a model in the social sciences, we must

operate with observations that are essentially cross-sectional snapshots of a smooth flow. Moreover, unlike the world of short-term physical phenomena in

which universal constants (parameters) exist, there are no parameters in the

social sciences—only variables that change more slowly than other variables.

The I/O model, probably the most complete description of a total

economy that has ever been devised, is obviously only an approximation of the

real world. First, it is linear; reality may well be curvilinear. Second, it

is highly aggregated in its statement of interindustry flows; reality is many

orders of magnitude more disaggregated. Third, it is static; reality is

dynamic. Despite all this, the I/O model does provide results that are descriptive of reality. The question is, to what degree? In all likelihood,

this question can never be answered fully for the following reasons:

• The above-mentioned observed/observer relationship.

• The fact that human (and therefore social and economic) history is

open-ended to the extent that the past is never precisely

repeated. That is to say, we never have an opportunity to measure

anything twice.

The Problem of Aggregation

When we attempt to quantify economic relationships, especially relationships involving levels of or changes in technology, we are faced with the

fact of aggregation. Regardless of how finely we define a product or group of

products, there are always two or more alternative processes by which it can

be produced. In the real world this means that, for any feasible level of

sectorization, there are probably several different processes by which a sec- tor's output is being produced—older processes which are not yet discarded

and newer ones which are just diffusing into general use.
126

Different technologies imply different coefficients. Thus, at any

point in time, the coefficients for any given sector are, by definition, the

weighted averages of the coefficients that would describe the several separate

technologies. To the extent that production decisions affect them differentially, these separate technologies will have weights that vary continuously

(and perhaps even erratically) over time. For example, if demand for a product falls off and/or if its market price declines, manufacturers will tend

to shift production away from currently more costly processes to those that are less costly. Therefore the coefficients for that sector will vary with

the degree and nature of capacity utilization, even though no new capacity is

created or old capacity retired.

The consequences of this are that different data sources may differ

extensively, but still correctly—as to the coefficients (or changes in

coefficients) to be applied to a given sector. This fact leads to the con- clusion that in the social sciences, quite unlike the physical sciences,

accuracy of observations may not be correlated with the reliability which can

be ascribed to them in use.

Some Inferences with Respect to Model Reliability

In the physical sciences, given careful calibration of instruments,

systematic error is probably less important with respect to the reliability of

a given measurement than is random error. In the social sciences, the same thing probably would be true if there were any way in which the measuring

device (the model) could be calibrated in the same strict sense of the term.

Unfortunately, however, the above-discussed three influences apply to the

cal i brat ion as well as to the measurement. For this reason, no absolute base

can be provided--or even assumed—that allows the calculation of confidence

limits from which reliability may be inferred.

Suppose, therefore, that we begin by stating a series of goals in

terms that permit us to assess the reliability of cost-of-fracture

measurements:

1. Since absolute measurements of level are so obviously subject to

unknown errors, we attempt to cope with error by measuring

fracture costs as differences between levels.

2. To the greatest degree possible, we try to achieve independence

in determining the values by which we introduce differences into our models. This will at least lead to more randomized errors,

especially as to the directions (+) of the several errors.

3. The I/O Model, by which we make most of our cost estimates, is

mathematically a very conservative model. This implies that errors introduced in changing the model's "parameters" (coefficients and final demands) tend to be damped, rather than accen- tuated, in their impacts on final results.
127

4. Since the nature of our data gathering procedure makes it heavily

dependent upon the interaction of interviewees and interviewers,

and since the use of a fairly large number of interviewees is

forced by subject matter diversity, we minimize the variety of

interactions by minimizing the number of interviewers.

5. To the fullest extent possible, we further reduce the diversity

of interactions by consciously briefing the interviewers as uniformly as we can.*

Comparative Reliability of Worlds

As has been noted in other contexts, World I (the peacetime, fullemployment, real world) can be reasonably well estimated by the I/O Model as modified to the needs of this study. In World I, technologies are generally

estimated by industry experts and finally modified to fit 1978 observations.

Final demands are estimated as the full-employment equivalence observed in the

1978 National Accounts. It should be noted in this connection that the

demands for capital and other durables are influenced by all of the material

failures that occurred, regardless of whether caused by design, by human

error, or by catastrophic overload.

The modifications of World I technologies and demands for durable

goods to those that characterize the hypothetical no-fracture world (World II)

is probably much simpler and easier to accomplish than is the similar modification to the best-practice situation (World III). The proportionate changes

in materials inputs that follow from ideal physical characteristics can be

directly estimated, given the assumed conditions of World II. Many of the

other types of inputs (e.g., transportation) are directly calculable as functions of the changes in material inputs. Others (e.g., inspection) are assumed away by the definitions of World II. In the case of best fracture

control practices, however, the actual degree to which they are already being

followed in World I is not precisely known, so the basis of the proportionate

change from World I to World III is much less definite.

The World I to World II changes in demand for durables are not as clear as the input changes. The nature of these demands in World I is a function of failures which are not altered by World II definitions as well as failures which are. For instance, the destruction of capital by catastrophic

forces--e.g. , by stresses far in excess of designed loads—as well as by human error and other out-of-scope factors, either must be retained in World II or must be estimated and removed from the World I-World II differences if we are

to avoid an overestimation of total fracture costs. The specification of

"scope", as described in Chapter II, has alleviated this problem.

* The last two goals were also promoted by the use of the modified ex ante

approach (i.e., the development of row rules), as described in Chapter IV.
128

"Direction" of Measurement Errors

Although in any problem involving measurement an important aim is

always to minimize error, there are many situations in which the direction of

the error is significant and should be taken into consideration. In fact, it

may be important that effort be made to assure that certain measurements err

in a given direction. This study of the cost of fracture has two aspects that

are especially significant in this respect.

I/O Model Errors . In order to achieve credibility, the errors made

in the I/O Model results should always be on the low side. This is to say

that, if we have any choices in establishing the differences between World I costs and those of Worlds II or III, we should always minimize that

difference. This course of action assures that the costs of fracture which

derive from technological and/or demand factors are always determined as being

at least the volume derived. In other words, it is better to underestimate

TFan to overestimate the technical and demand-related costs of fracture.

In generating the I/O model changes, many fracture-related

considerations involved capital redundancies for the purpose of avoiding

downtime or losses of output. Many of the capital failures which require

these redundancies have nonfracture causes; many of the fracture-related

causes may still be outside of project scope (human error, etc.). The

remainder of the failures, those which should be ascribed to fracture within

design, has been made as small as possible, given available information. We

consciously strive, in other words, to minimize our estimate of the costs of

preventing fracture.

Supplementary Model Errors . The costs that society bears because

fractures have occurred are both visible and subject to considerable

sociopolitical sensitivity. The events caused by or ascribed to fracture

especially such events as the DC- 1 0 crash or the Kansas City Hyatt Hotel

col 1 apse--shock because of their catastrophic nature. They should not be

played down; in fact, it is important that steps be taken at once to assure

that they never recur. Credibility of measurement therefore requires that

these costs be estimated on the high side—that we maximize their importance

within the limits supported by our data.

Summary . In interpreting these two sets of costs, we should view them

in the fol 1 owing ways:

• The costs to society in order to prevent fractures from occurring

are at least this much .

• The costs to society because fracture events cause injury and

destruction can be as great as this.
129

In this way we avoid the two clangers of (a) exaggerating the

technical significance of fracture-related activities, or (b) understating the

human and social importance of fracture-caused events.

General Note on Sensitivities and Errors

Before taking up questions of model sensitivity and probable errors

of measurements, it is important to note that some estimates of error in this

study cannot be approached with the same perspective as would the measurement

of physical parameters. The "Observed/Observer Problem" referred to above is

not the only difficulty faced in this endeavor. Additionally, this entire

modeling approach is still a pioneering effort: the application of I/O

modeling to problems such as "The Cost of Fracture" is still an evolving

field.

Furthermore, while the present study has benefitted from the

experience gained in the earlier "Cost of Corrosion" project, that earlier

effort has been modified by the development and application of a different--

and more internally consi stent--data collection procedure. Just as specific

procedures have been altered, there has also developed a need for further

analysis of the types of errors which may be introduced in applications of the

model. It is clearly desirable that we conduct a detailed investigation of

the individual and cumulative effects of error introduced by estimated changes

in coefficients, outputs, final demands, and other parameters of the model.

Such a study should be undertaken, but was not possible given the resources of

this program; it is more reasonable that we undertake this type of evaluation

separately.

Sensitivity of the Model

The I/O model, as noted above, is very conservative in its structure.

This is to say that a datum error anywhere in the central model tends to be

diluted and diffused by the complex interactions within the overall modelling

program. As a result, even a large error in a single cell often has a small

proportionate impact on the model's output. The technical note that follows

elaborates on this basic characteristic of the Battelle model as it is being

used in this study.

Technical Notes on Model Sensitivity* . Though we cannot use physical -mathemati cal analogies to assess the reliability of the model's

results, we still may exploit them to show how errors in particular parts of

this model will propagate.

* These technical notes are based upon analyses by Professor A. Brody, of the

Hungarian Academy of Science, and by Dr. E. Passaglia, of the National

Bureau of Standards. Professor Brody was a visting scholar at Battelle

during the initial stages of this project. However, responsibility for the

final combination of their inputs remains with the authors.
130

By assigning standard errors to initial observations and data, we

will be able to derive standard errors for the computed results and determine

whether such errors in data will accumulate, remain the same, or tend to be

canceled out during computation. To do this, we must separately consider the

constituent parts of the computation, because separable assumptions will be

warranted for different bodies of data going into the computer.

The final results (sector total outputs) are produced by multiplying

an inverse matrix (the reliability of which will be discussed later) by the

vector of noncapital final demands. We may properly assume that the expected

(average) error of the component elements of final demand is small, but that

certain error dispersion, d, (a standard error probably up to + 10 percent)

may be anticipated in such a way that errors in any one component will be

independent of errors in other components.

Probability theory now teaches us that, because total output is a nonnegative algebraic combination of the components of the noncapital final

demand vector, the resulting quantities will be free of error (their expected

error will remain small) and their dispersion will vary inversely with the

square root of the number of component elements:

resulting dispersion = d/ VTT

Sinc e n i s the number of sectors in the model —in our case, 150 —it

follows that Vl 50 = 12. This is to say that the reliability of the results

will significantly improve over the reliability of the final demand estimates

As a matter of fact, we know from the law of large numbers that the distribution of the errors of the results will be practically Gaussian, regardless of

the shape of the distribution of the initial errors in the final demand

vector*.

In this respect, therefore, the computation can be considered

"self-improving" and practically exact in the first three significant digits

it produces. The estimates for final demand can be kept within a 10 percent

standard error and these errors would therefore be reduced by the computation

to one-twelfth their original size.**

* When the number of sectors exceeds 60, we have every right to consider it as a fairly large "sample", and we know that the sum of independent

distributions tends strongly toward the Gaussian distribution, whatever

their original quality.

* The expression for the resulting dispersion is only a special case. As

noted by Passaglia, this result is realized only if all elements of final

demand, as weighted by the coefficients of the inverse matrix, are equal,

and if each element of final demand has the same fractional error. For

purposes of general discussion, Brody's overall expression is sufficient;

however, and more detailed analysis would require, at a minimum,

examination of the effect of realistic deviations from the simplifying

assumptions.
131

In this connection, attention is called to the fact that the

non-capital final demands do not change significantly for the majority of

sectors. To be sure, there are several individual sectors in which changes

occur—although not to the extent noted in the earlier "Cost of Corrosion"

study—and these contribute to the measurement of the total costs of fracture.

As is the case throughout all manipulations of the model, it must be realized

that adjustments for World II or World III are made in terms of the difference

from a given World I value. Hence, for example, World II final demands are

not "measured" (with an error range) and subtracted from corresponding World I final demands; they are determined first as a di f ference—a conservative fractional increase or decrease—and the World II value is the derived result.

Thus any uncertainty in the value of a given World II final demand is not

magnified by comparison with the World I - World II difference, but, rather,

is reduced in significance by the comparison.

Turning now to the question of errors in the flow and stock matrices

(i.e., the A matrix and the B matrix), a new element is introduced. Here we have to distinguish between two types of error.

The first type can be considered purely random and unbiased, again

with an expected average value of zero. This stems from the nature of assessment errors in coefficient changes. These will be truly independent and, as will be shown, they cause an error propagation that maintains almost the same relative size of errors throughout our computations. Therefore we can state

that, if we assign a 10 or 20 or 50 percent standard deviation to the initial

data changes from World I to Worlds II and III, almost the same order of

standard deviation will be reproduced in the results.

There also exists a second type of error that is biased, though it

affects only a particular data set connected to the stock matrix: that of the

changing capital replacement needs which are derived from useful life considerations (i.e., the U matrix). Here the situation is more complex. Although

certain mathematical limits can be worked out, these seem to be much too coarse to be helpful. Therefore, an actual sensitivity analysis promises to

be much more informative. Besides changes in average useful life, the sensitivity analysis should be run with changes in values for maximal and minimal

life spans. Besides the already discussed qualitative problems, the outcome

of computations will also hinge considerably on our judgments as to the

changes in useful life that occur as we move between the different worlds.

Attention is also called to the fact that there could be a general

tendency for the technological changes introduced into the A, B and U matrices

to understate the costs of fracture. This derives from the fact that all

cells that should change might not be altered by the data gathering process.

In a study of this complexity, the limited project resources would usually be

used to change first those sectors considered most fracture relevant; and, if resources are not available to treat every sector, some that should change may

not. The same would be true of speci f ic eel 1 s in a given row or column:

attention would be directed first to the most fracture relevant, and some of

the less important cells may not be changed. Although some of the changes

that are introduced might err in the direction of overstating fracture costs,

others err in the opposite direction. Thus there will be a tendency for
132

"active" errors to cancel out, while "passive" errors will cumulatively

increase the degree of underestimation of costs.*

In summarizing this technical note, we can say that noncapital final

demands will introduce almost no overall error into the model's output

(although, as noted earlier, some errors might be introduced into the estimate

of differences), and that error will be reduced by a factor of about twelve.

The errors introduced by changes in the A and B matrices will be those of the row data used in determining the changes themselves; they will remain propor- tionately the same throughout the computation. The most important errors from

a computational point of view are those introduced by changes in useful lives,

which deserve further discussion.

We state useful lives as a range, the upper limit of which probably

is more nearly a function of technological obsolescence than of anything else.

Certainlyi, considerations of fracture will primarily affect only the lower

limit of that range. Shifts in the lower limit will enter the replacement

matrix through reductions in the number of replacement rates (each a reciprocal function of the involved year of life) that are averaged. Thus, the

average will shift by proportionately less than will the number of years

themselves. Nevertheless, because the replacement rate is a reciprocal

function, there is a tendency for errors in useful life to grow in computation. It is, however, unlikely that, in the aggregate, this error will lead

to an overs tatement of fracture costs, given the general bias toward under - statement in the A, B and U matrix changes.**

The Supplemental Models

The Supplemental Models are potentially quite different from the I/O

model in terms of reliability. As has been pointed out in other connections,

the Supplemental Models relate to the I/O model in two different ways: (a)

they measure imputed (nonresource) costs which are not measured at all in the

I/O model, and (b) they measure some resource flows that may either supplement

or duplicate I/O model results. The first set of measurements are independent

of the I/O model insofar as reliability is concerned. The second, however, is

not; and it may introduce additional errors into the final results through the

double counting of particular resource flow.

* It is noted, however, that the emergence and application of the row rule

approach (see Chapter IV) reduces the amount of understatement that might

have occurred. These rules are, however, all very conservative; hence, the

final results probably are still understated.

* These discussions, so far so they concern the U matrix, are more relevant

to the corrosion than they are to the fracture study. As will be recalled

from Chapter IV, no changes have been made in the U matrix from World 1 to

establish World II or III conditions.
133

Events vs. Useful Lives . When we consider all the fracture related

events that occur during a given year, it is obvious that many of them are routinely taken into account by business. For example, the fact that

particular items (especially capital items) break or tear in the regular

course of business is taken as a matter of fact. An inventory of spares will

be kept on hand so as to minimize down time or inconvenience. It does not

matter in the business context whether the particular failure is ascribed to

human (operator) error, to accidental overload, or to a material failure of

the kind with which this study is concerned, namely, "unintended fracture".

For many durable but fracture-potential items, business normally

takes account of fracture rates (regardless of cause) in terms of: (a) intermediate activity, such as maintenance and repair, over-inventories of breakable inputs, or insurance; (b) redundant capital or (c) shortened useful

lives, i.e., earlier replacement. To the extent that our coefficient changes

take full account of all these practices, the I/O tables will account for all

relevant resource flows and the corresponding outputs of the supplemental

models are redundant. It should be noted, however, that this is not true of

any imputed costs.

Costs of Medical Care . The medical care of persons injured in

fracture caused events is completely covered in the ful 1-empl oyment I/O table

for World I. To the extent that the fracture-related events occur in

industrial settings, these costs show up as intermediate inputs into the

relevant industries from sector 21.07 (Medical and Health Services) and,

perhaps, from sector 5.09 (Drugs). To the extent that the accidents are not

industrial, the costs would show in the final demand subvectors (PCE or Government Expenditures) on the same row(s).

In the Supplemental Models, medical costs are part of the output of

the Injury Cost Model. To the degree that these estimated costs are complete,

they can be subtracted from the World I totals to obtain corresponding costs

in Worlds II and III. However, the precision of this value is a function of

the separation of "all" events into "fracture-caused" and "other" events.

The problem of separation has been taken into account by establishing

ranges of frequencies for all types of events. This has already been

discussed in Chapter V, with greater detail provided in Appendix E. If we take the high estimates, only, as our measure, we can be sure that they

certainly equal (and are likely to exceed) the totality of these costs. Total

injury costs—estimated to be $132.8 million—include both medical services

and drugs, plus other, miscellaneous costs. The total outputs of these two

sectors in the I/O table (World I) are estimated to be $82.8 billion (drugs + medical services = $12.8 billion + $70.0 billion = $82.8 billion). Thus, the

Supplemental Models' results account for no more than 0.2 percent of the

total. This is typical of the relationship between the two models.
134

Property Losses vs. Final Demands . When a fracture caused event

leads to a loss of property— cargo/content , the fractured item itself, or other subsequent destructions—one must make up for that loss. If the

destroyed property is a capital item, final demands must include its

replacement, probably through the mechanism of the replacement (R) matrix or

of the capital/output ratio. To the extent that these matrices are already

properly adjusted in going from the I/O table of World I to those of Worlds II or III, the property losses from the Supplemental Models will tend to be

redundant.

To the degree that the destroyed property was not technically shown

as a part of World I —as, for example, the loss of petroleum moving through a pipeline from well to refinery—either it would result in an underestimate of resource costs, or it would have to be added to World I final demands as an entry into the new "loss" column. This latter has, in fact, been done.

Sensitivity of the Supplemental Models . Given the relatively small

sizes of costs measured by the Supplemental Models and the minimum/maximum

ranges within which they have been determined, it is safe to assume that the

Supplemental Models do not contribute significantly to the error of the total

cost measurement. For that reason they will not be considered further in this

context.

Overall Reliability of the I/O Model

It should be noted in this connection that changes were made in the

I/O procedure from that outlined in the Phase I report* (see Chapter IV), and

that these changes affected the proposed procedure for determining the model's

reliability. For this reason, we have undertaken this task in a quite

different fashion.

Data Collection

In collecting the data for column-specific adjustments of World I coefficients, it was planned to record eight kinds of information on the data

forms. The first six of these** identified and recorded the data. The

seventh item (authority for the change) was to provide the basis for assigning

sector reliability tags; and the last (further explanations) was primarily

expository and clarifying. Only the seventh item was to be used in assigning

reliability tags; however because of changes in the method of obtaining

* The Economic Aspects of Fracture in the U.S. Economy: Phase I Report , Battel le Columbus Division, December, 1980.

* (1) Type of data and place acquired; (2) field interviewer; (3)

identification of source; (4) affected cells; (5) nature of the change; (6)

proportional change.
135

information, these data were only partly collected. For the 60 sectors that

were treated as column-specific, all the change data were based on the

industry experience of the informant or on results of research carried out for

industry sponsors. These sectors therefore can be assigned relatively high

rel iabil ities--i ,e. , probability ratings of +_ 10 percent--wi th respect to the

changes (World I to Worlds II and III) in their A matrices. The other 90

sectors were less important in fracture terms and were adjusted by means of row rules based on the collected data and on the judgment of Battel le senior scientists. Since these changes did not have the benefit of as much

direct industry contact (even though the sources of the adjustments were eminently qualified to provide it) we will arbitrarily assign them

reliability ratings of +_ 20 percent.

Confidence Ranges

The technical notes (see above) imply that the probability ratings

assigned to the sectors are essentially unchanged in their impact on the

model. We assume, therefore that they become:

, J 60 x (.10)

2+ 90 x (.2Q)

2

+ w 1 l , a j$q

i— = +_ 16.7 percent

This average 16.7 percent probability then is assumed to characterize all the

coefficient changes.

Since the noncapital final demands change by very little, and since

the total output errors calculated from final demand are "self-improving", to use Brody's language, we assign a + 5 percent error to the effects of stipulated final demand. The capital demand involves the B and the R matrices* and,

under these circumstances, should be those of the B matrix changes (+ 16.7

percent) only. Again, we assume that the average error will apply. Our

weights, based on World I relationships, will be 15 percent capital and 85

percent stipulated, giving for the average final demand confidence limits:

±V85x A 15 X (.167)

2

= 7 9 pepcent

Assuming the worst, then the overall confidence range would be +_ (1.167 x 1.079 ) -1 or +_ 26 percent. In this connection, however, attention is

called to Brody's final remarks (see above) about the error effects of the

matrix adjustments. After pointing out that all changes that should be made

may not be made, he concludes the paragraph with:

Note that, since we did not introduce changes into the useful lives, the

biases through the U matrix (emphasized by Brody) do not enter.
136

"Although some of the changes that are introduced might err in the

direction of overstating fracture costs, others err in the opposite

direction. Thus there will be a tendency for 'active' errors to

cancel out, while 'passive' errors will cumulatively increase the

degree of underestimation of costs."

It appears therefore that in the final balance, the true values of

these estimates would fall somewhere above those given, but below the given

values multiplied by 1.26.

Furthermore, since the same data bases and procedures entered all

adjustments, the errors in total costs of fracture and presently reducible

costs of fracture are the same. It is not possible to assign an error range

to World IV and future reducible costs of fracture ; but it is undoubtedly

greater than + 26 percent.

Final Assessment of Fracture Costs

To conclude this assessmentof the costs of fracture in the United

States, it is necessary that we take the cost breakdown of Table 27, above,

and estimate a most likely level of costs, using the just-established confidence range. It must be emphasized throughout this assessment that, for two

reasons, we feel certain that the model results understate t he costs:

t Brody's point concerning the tendency of the World adjustments to

understate in the aggregate

• The deliberate policy, adopted throughout the adjustment process,

of working at the low end of indicated ranges of coefficient

change.

We still do not know the most likely levels of I/O model results as they apply to World II and III or the resultant World I - World II and

World I - World III differences. However, the conservative and consistent

approach to coefficient changes would indicate that the calculated differences

in model outputs would be minimized; i.e., the actual differences in outputs

could be no less than those calculated or as great as 1.26 times those

cal culated.

Here again a much more detailed assessment of individual errors and a tracking of such errors through the model would be instructive, and should be

carried out in the context of general applicability of the I/U technique.

Lacking that, a "most probable error"--averaged over all individual sectorscan be taken at half the value of the expected (positive) error band. Thus we

can set the total cost of fracture 13 percent above the level calculated from

the model

With respect to the Supplemental Models, there is no way in which

confidence limits can be set. The data bases for these models are of such

variable quality, detail, and completeness that they cannot be evaluated. The

Supplemental Model Task Team determined the absolute upper limits of every

possible range: that is, they eliminated from consideration only those events
137

that obviously had to be outside of scope, and assigned maximal rather than

minimal values to events. Still, we have no way of knowing whether the

results do, in fact, overstate these supplemental costs. Since every effort

has been made to err on the high side with respect to these costs (in sharp

contrast with the technical costs from the I/O Model), we will assume that

these costs, also, are subject to the same correction (+ 13 percent) applied

to the I/O results. Regardless of how they are treated, these supplemental

costs remain relatively small.

The analysis and forecast of World IV conditions, i.e., the ultimate

future results of fracture-related research and development, were subject to

the same intellectual constraints imposed on the I/O Model. Since this, too,

represents a set of technical considerations, every effort was made to under- state the benefits of future research. There is absolutely no basis for

assigning confidence limits to World IV results. However, for convenience, we

will apply the same +13 percent adjustment to these estimates.

Adjusted Costs of Fracture

In Table 28 we have taken the Total Costs of Fracture (displayed in

Table 27) and adjusted them for understatement. This figure has been distributed over its four component elements and also related to 1978 GNP (real

world, full employment) as calculated by the model for World I.

This places the most likely total cost of fracture at $99.0 billion,

or 4.4 percent of GNP. Of this, $29.1 billion is treated as presently reducible (through education, technology transfer and adoption of best practices)

and $23.4 billion is treated as future reducible (through research plus

education, etc.). In other words, $52.5 billion (or 53.1 percent) of these

costs are considered reducible and the remainder, $46.5 billion (or 46.9

percent) are considered to be totally irreducible by presently known means.

If anything happens to further reduce that remainder, it will involve breakthroughs in areas that would be totally surprising to today's community of

fracture researchers.
138

TABLE 28. MOST LIKELY VALUES. COST OF FRACTURE

IN THE UNITED STATES, 1978

Elements of Fracture Cost

Adjusted

for Confidence*

($ mil lion)

Percent

of "All

Costs"

Ratio

to

GNP**

All Costs 99,019.1 100.0 .0441

Presently Reducible 29,108.0 29.4 .0130

Presently Nonreducible 69,911.0 70.6 .0312

Future Reducible 23,433.7 23.7 .0104

Future Nonreducible 46,477.2 46.9 .0207

Source: See Notes.

Notes

* Column totals from Table 27 multiplied by 1.13.

** 1978 Full Employment GNP estimated to be $2,243.0 billion (see Chapter

VI).

Details may not add because of rounding.
139

ADDENDUM TO CHAPTER VIII. NORMALIZED ANALYSES

As an integral part of the Corrosion Study, a set of so-called

"Industry Indicators" was computed for the purpose of supporting normalized

analyses of sectoral association with corrosion. Experience with the use of

these indicators convinced several persons, both at the National Bureau of

Standards and at Battelle, that they did not fully or effectively serve their

intended function. It was therefore decided to forego the calculation and use of Industry Indicators in the Fracture Study.

One element that was proposed by the Bureau, in part for the purpose

of supplying data that would substitute for the Indicators, was the so-called

"World IV" projections, discussed in Chapter VII, above. Another approach to

this same purpose involves special manipulations of row and/or column data

with the intent of isolating technological fracture-relevance from demanddriven fracture impacts.

Brief discussions follow of the normalization approaches to the

separation of technology and demand. In turn, they will be followed by a few

selected analyses using these data and methods.

In constructing a transactions (dollar flow) table for the economy,

it's A matrix columns are multiplied by the total outputs already derived by means of the inverse and the final demand. This is to say that

x ij = a ij x

j

Specifically, to obtain x^ 2* the coefficient 2 is multiplied by X2;

and to obtain the column of values x-j 2 > every a-\2 is multiplied by X2.

If we symbolize the intermediate dollar flow matrix as [x] and designate the

Worlds by subscripts I, II and III, we would indicate this derivation:

[x]

T = AjXj

Cx] n

= A n

X n

[x] m = A nI X nI

We have already noted that both the row and column relationships in the

several difference tables (I-II, I— I II, 1 1 1 — 1

1

) are complicated somewhat by

the fact that direct changes in coefficients are modified because of indirect

changes in demands, that is, because Xj f X

j

j f Xjjj. In order to

eliminate this source of confusion and to simplify both row and column com- parisons between worlds, we have normalized the technological relationships

between worlds by the following change in derivations:

Mi = [x]j = AjXj

[x]n = A I j X

1

Mm = A i 1

1

x 1
140

Note that while World I transactions values are unchanged, those of Worlds II and III are made directly comparable with World I and with each other by the

substitution of Xj for both X

j

j and Xjjj. Now, when the columns are compared in terms of the social savings entries (SS*) and the rows are com- pared in terms of their respective total intermediate outputs (TIO*), the

column comparisons are no longer complicated by changes in demand nor the row comparisons by the indirect effects of technological changes. These differences between worlds are brought together in Table 29 and will be used in

analyses of selected sectors.

In Table 29, the normalized data for technology are found in columns

2, 4, and 6. Column 2 contains the normalized dollar social savings difference for World I-World II; column 4 contains the normalized dollar savings

difference for World I-World III; and column 6 contains the normalized difference for Worlds 1 1 1 — 1 1 . Set in our cost-of-f racture terminology, we can

say that these three columns show the technologically normalized values of

total cost, presently reducible costs, and presently nonreducible costs. In the language used in connection with the Indicators, these technologically

normalized costs are the "direct" cost of fracture.**

The normalized data for the analysis of demand are found in columns

1, 3 and 5 of Table 29. The World I-World II difference is in column 1; the

World I-World III difference is in column 3; and the World Ill-World II difference is in column 5. These would be total costs, presently reducible

costs and presently nonreducible costs, respectively. In the terminology of

the Indicators, these would be "indirect" costs of fracture.**

Analysis

We may now illustrate analyses of these normalized relationships in

terms of four illustrative sectors with data taken from Table 29. These data are shown in Table 30.

Sector 2A04, Underground Coal Mining

In this sector, the need for additional inputs (particularly, of

labor) in order to achieve best practices makes presently nonreducible costs

appear greater than total costs in real world terms. This paradox is easily

resolved by the understanding that best practices are not strictly economic in

the short-term sense. Since best practices here relate to savings of life and

preservation of resources that are at risk in the real world, direct costs in

Normalized values are indicated by the asterisks.

It should be noted that these values are all "total" in the Indicator

language. There are no "per unit" values calculated here. If any are

needed, they can be obtained by dividing each sector's values by Xj.
141

TABLE 29. DATA FOR ANALYSIS OF NORMALIZED FRACTURE COSTS

SECTORS (1)* (2) (3) (4) (5) (6)

L&Ol 11]?E$IK*1JV!$TJ« MOCyCTS 373.77 -429.21 lf>0.6C -212.J7 213.16 -216.65

1.02 FIELO ORCHARD CROPS 596. 7* -399.97 109.86 -198.20 486.89 -201.77

1*03 FORESTRY PRODUCTS 21.93 -6.29 -334. 50 -3.08 356.44 -3.21

1103 FISHNG,HUNTNG»TRAPPING 4.60 -20.70 2.30 -6.9* 2.30 -13.77

1.04 A6RI, FPR S T FIS H SERVC 9,78 -6,23 4,64. -3._76 5. 14 -2.47

2.01 IRON FERROALLOYS ORES 182. 36 -79.92 119.70 -27.90 62.66 -51.02

2X02 NON F ERROUS ORES MIN E 55 ._5? =44.90 29.25 - 18.06 26.34 -26. 85 2A04 UNDERGROUND COAL MINE 94.48 -253.15 262.69 266.50 -168.21 -519.65

2804 STRIP COAL PINING 82.95 -65.69 98.69 -31.52 -15.93 -34. 17 2C04 OTHER COAL MININ6 .38 -1.27 .27 -.60 .11 -.67

2A05 CRUDE PETROLEUM 41_?.43_ -88 3_._9_1 206. 98 • -359.79 209.45 -524.12

2805 NATURAL GAS 1.19 -178.43 .60 -72.69 .60 -105.74

2.06 STONE CLAY MINING 537.40 _ _-119._9_l -16 . 69 -53.9 1 _ 554.09 -66.00

2.07 CHEM FERUZR MINERALS 60.99 -15.95 26.47 -6.54 34.52 -9.41

3A01 BEVERAGES 76.71 -1358.39 22.74 -361.23 53.97 -997.16

3801 OTHER FOOD+K INDRED PRD 3<>0.33 -2593.04 175. C4 -1215.64 215.29 -1377.41

3.02 TOBACCO MANUFACTURE S 10.85 -83.99 .00 . j^4_6 _ ,J_0__85__. -83.52

3X03 LEATHRUEATHR PRD 9.32 -63.36 4.72 -1.14 4.60 -67.22

'3X05 FAB fY ARN fTHRD+SFLQQR CO V 133.51 -1001.02, 58 .26, 19.2*2.1 75 . 25 -1193.23

3A07 METAL TIRE CORD 335.46 -45.94 -26.16 -11.76 361.63 -34.18

3.07 OTHER. CQPD*t1ISC TE XT PJB 231.14 -50.50 -4.61 -10.23 235.74 -40.26

3X08 APPRL*1ISC FAB TEXT PRD 41.86 -234.90 20.71 -92.23 21.16 -142.68

4.01 SAWMILLS PLANING MILL S 8 79.94 _ _-161,9J 440.41 _ -62.40 439.43 -99.50

4.02 VENEER* PLY WOOD* LAM WD 37.91 -216.18 18.87 -91.11 19.04 -125.07

4.03 OTHER LMBR4-WD EX CONTNRS 2.44*32. =203,96 117.53 =71_2_i_ ._ .._U7j^9 - 130. 5 9 4.04 WOOOEN CONTAINERS 19.88 -44.41 .76 -18.78 19.12 -25.63

4XA5 WOOD FUPNITUR*FIXTUR 13.07 -484.68 6.48 -208.91 6.58 -275.78

4XB5 METAL FURNTR+F IXTUR ES 2.57 -200.65 1.16 -80.92 1.41 -119.72

-4.0 7 PUL P»P APR_ PRO EX CONORS. _ _4M.__5_. _-l 271.03. 228.76 -567.75 _ 253.23 =7$J_..35_

4.08 PAPERBRD COhTAINERS+BOX 230.02 -180.85 19.41 -52.18 210.61 -128.66

5.01 PET ROL REF NG R FLT D PRD 1__1____ .-1891 ,_47_ _ _4____C9 ____________ 1324.47 -1031.22

5.02 PAVING MIX+ASPHALT PRD 7.21 -44.32 3.92 -19.38 3.29 -24.94

5.03 INDUSTRt I NDRG»QRG CHEM 457.3" -1374.98 -65.08 -527.77 522 .46 -847. 21 5X04 AGRICULTURAL CHEMICALS 11.11 -80.35 4.99 -22.52 6.13 -57.84

5A06 AOHE SIVES 31 .80 „„_-„121.3fl _53_ . =44.00_ 31,27 -77*38,

5B06 OTHER CHEMICAL PRD 31.72 -67.47 6.83 -25.37 24.89 -42.09

_1»_9 DRUGS 7,47 -152,51. 2 t99_ =5_.»__1 __4__47 -100. 29 5X10 CLEANING»TOILET PRE P 11.72 -217.44 5.10 -83. 35 6.61 -134.09

5.12 PAINTS+ALLIFD PRO 23.40 -137.84 11.10 -60.80 12. ?1 -77. 05

P. 07 PLAST MATR.RESIN + SYN RUB 1769.39 -97.11 1070.97 -16.21 698.41 -80.90

P.OB ORGANIC MA N MADE FIBERS 200,10. -114.24 -156,08 -.9.50 _356_t.18_.__ = 104,74

P. 13 TIRE S*INNE R TUBES 20.10 -1825.11 9.80 -43.11 10.30 -1782.00

PA14 IND USTRIAL R UBBER BELT S 45.54 -90.28 13.94 -16.01 __ 31.60 -74,27

PB14 OTHER RUBBER PRD 12.38 -140.31 5.96 -36.48 6.42 -103.83

PA15 PLAS TIC PIPF 14.47 -573.70 5.94 -63. 45 Ltli -490. 25 PB15 PLASTIC CONTAINERS 33.75 -261.35 14.36 -89.20 19.40 -172.15

PC15 OTHFR MANF PLA STIC PRD 75^44 -440. 42 14,18 _.=151, 18 _61__.6 ~23Sj31

6A01 FLAT 6LASS 10.63 -168.14 5.17 6.48 5.46 -174.62

6B01 GLASS CONTAINFRS ..__?____ -506.63 26.62 -57.05 43.25 -44 9.5.8 6C01 AUTOTRUCK WINDSHIELDS 5.73 -36.06 2.87 -3.17 2.87 -32.89

6D01 OTHF R GLASS PRD 10.32 -181.29 4.81 -29.95 __51 -151,33

6.02 CEMENT+LIME+GYPSUM PRO 94.89 -62.75 43.33 -23.23 51.57 -39.52

6A03 STR riAY pen FX RF F P Al* 11.57 -306.70 5.95 -59.76 5.62 -246.94

6B03 STR CONCRFT PRD+CEMFNT 396.49 -852.05 -725.40 -218.77 1121.86 -633.29

6C03 POTRY*MHTWR + pnRCLN PRD 4__4 _ _. -1Q3 ,_22 1_9.6_ ____8_1.6 _2,_.9 -75.06

6D03 CLAY+NCLAY REFRACTORIES 628.61 -583.27 66.64 -321.01 561.77 -262.27

6A04 ABRASIVFS INC GRIND WH 23.05 -75.84 ___11 -21.06 10.94 -54.78

6B04 OTHER NONMET HINE-RAL PRO 17.21 -61.02 9.70 -22.91 7.51 -38.11

7 A01 IR.QN. C ARBN S TE EL*COK E 202C2.C* -1266.53 8113.47 -1462.98 12086.61 196 .45 7B01 ALLOY STEEL 1179.27 -90.36 372.32 -60.56 806.94 -29.80

7C01 STAINLFSS STFFL 945.6 4 -47.16 31fl__7 -28.31 5_1.27 -16.85

7.03 PRIMARY ALUMINUM 3660.03 -545.55 1356.40 -251.85 2303.63 -293.70

* See Legend, End of Table
142

TABLE 29. (Continued)

SECTORS 0/ (2) (3) (5) (6)

7XO«i OTHER NONFFPOUS METALS

4.01 METAL CANS

8.02 METAL 8 ARR F L S, OB UM P 4 I L S fl.03 h£T SAN1T+PLUM8IN3 PRO

8.0*. NONELFC MFAT1NG FOUIP

8A05 STRUCTURAL METAL 8B05 BOILER SHOP PRO BC05 OTHE R FAB STRUCTRL PR

8.06 SCRW MACH PRD+STAMPNGS

6.07 FABRICATED HETAL P R O 9.01 ENGINES TURBINES

9.02 GEN I NDUS MACH+EQUIP

9.03 MACHINE SHOP PRD 10.01 FARM MA CHINE RY . 10.02 CONSTRUCTION MACHINERY

1 * 7 1 . 9*

9i . 93

7 . 33 5.01

1 2.04 6.52

5.55 61,51

6 79.58 130.62

2 7*3.79

•1055.7S

-230.85

-33.19

1762. CI 32.12

3.13

2.61

-1096.2*

-395.23

-32. *1 -5.37

3709.95

59,71

*.21 2.*0

-10*. 95 -1856.21

-359.76

-227*. 39 -187*. 05 -355.96

5.66

3.31

2. 33 26. 73_ *6.55

58. *6

-21.98

-690.68

-133. 70 -8*9.26

-731 .02 -80. 36

-16*7.55

-660.A8

-1*8.**

-27.83

6. 38

. 3_2L_ 3.23

3*. 78 633.02

72.16

-92.97

-116 5.5* -226.06

-1 *25. 1JL -11*3.02

-275.60

63.10

t sr>. 91

1 08.63 26,30

251.53

-766.9*

ill.* 5,* 9 -31*. 32 __4.ie.57

-1055.29

37

35. 79

7*_.9.Q_ 57.26

13.18. 126. *9

-308.78

-585.55

-115. *2 - 159. *8 -387. 95

25. 30

7 6.03

51.38 13.12

125.0*

-*58. 16 -959.9*

-198.90

- 259.09

-667.3*

10.0* OIL FIELD MACHINERY 22.19 -91.07 10.11 -29.6* 12.08 -51. *3 10.05 MTR L-HNOLNG MACH E X TRUC 313.17 -50*. 16 157_C3 -18*. 1* 156.1* -320.02

10.06 INOUST TRUCKS TRACTORS '1.06 -183. *6 10. 60 -66.86 10. *5 -116.60

10.07 METAL WORKING MACHINERY 612.36 -525.63 66.11 -186.59 5*6.25 -339.0*

10.08 SPECL INDSTRY MACHINERY 200.22 -773.70 38.67 -279.21 111.55 -*9*.*9

11.01 MOTOR VEHICLES PARTS 1127.15 -9*22.88 563.72 -2709. 12 563. *2 -6713.76

11.02 AIRCRAFT PARTS 61.99 -5095.0* 30.99 -27. *1 30.99 -5C67.6*

11.03 SHIP+BOAT BLOG REPAIRS *6.*5 -***.32 23.22 -77.95 -366. *6 11.0* LOCOHS*R AIL+RPO TRNST 33.83 -39 5 .97 16.93 -1*8. 5* 16.90 -2*7. *3 11.05 CJfCLE_i».TP A ILE_RJ» E_TC 20. 53 -*33.6* 10.27 -158.95 10.26 -27*. 69 12.01 ELEC MEASURING INSTRUCTS 12.** -30.93 *. 85 -12.08" 7.59 -18.85

12A02 ELEC MOTRS*GENRTRS» PO*PL 1.37 -17.33 . 68 -5.31 .68 -12.02

12B02 OTHER ELEC MOTR S+GE NR T R58.6* -338.71 29.2* -115.87 29. *0 -222.8*

12.03 INDUS C_0_N TPL»TRANSFM»ET 93.63 -101.61 *1.70 -10. *6 *1.93 -91.16

12.0* ELECTRIC LAMPS 6.89 -87.7* 3.3* -35.56 3.55 -52.18

12.05 LI GUI FIXI+iWlPING OEVICt 95.11 -379.99 *7.55 -138.83 *7.56 -2*1.16

12.06 ELECTRNC C OMPNTS* AC CESS 23.79 -191.10 11 .02 -8*. 79 12.77 -106. 31 12A07 X-RAY EQUIPMENT 3.92 -9. *7 . 1

-2,77 3.17 -6.69

12B07 OTHER NISC FLEC MACH

13.01 SE.RVC INDUSTRY MACHINERY

13.01 HOUSEHOLO APPLIANCES

13.03 RADIO/TV* CD MMUN EQUIP

1*A01 FRACTURE CONTROL I N S T R 1*B01 OTHER SCNC INSTR.ETC

1*.02 MEO#SURGCL» DENTAL INSIR 1*.Q3 WAT CHE S jlC LQC K S P A R T S 1*.0* OPTIC AL + OP TH ALM IC GOODS

l*_t05J>H0T0 EQUIP SUPPLIES

15.01 COMPUTING* PEL AT MACHINES

59.60

32.«3

5. 2S

4C..6?.. 10. 69

t<\ . 1 5

-206. 36 -619.70

-519.99

-29*. 83 -2 5.7* -553 .99

29. 1C 16_18

2.62

20.fl8_ 3.28

22.98

15.00

2.76

5. 50 20. *1 98 . 77 105.36

-138 .02 -31.9*

-56. 56 -13*. 53 -165.96

-9*.*8

7.C5

I .J 5 1.86 9.e6

*7.37

-73.9*

-212__8

-180.87

__1_3._8_

.51 -186.10

-*2.*2

-9.J6 -2*. 63 -37.60

-66.67

30. *9 16.65

2.62

20 ._6_0_ 7.*0 25.17

7.96

_1.j4.0_ 3.6* 10.15

51. *1

-132. *2 -*07.*3

-339.11

-241.1 5 -26.25

-367.90

-95.60

-22.58

-31.9*

-?6j_93 -99.29

15.03 OFFICE SUPPLIES *». 3* -26.8* *.07 -12.23 39.27 -1*.62

16.01 ORDNANCE ACCESSOR IES 6.93 -396, 28 2.97_ -113.6*. ... 3,86 -222.64

16A02 SPORTING GOOO+TOYS .27 -279.52 .13 -103.83 .1* -175.70

16B02 OTHER MISC PRD *.92 -201.01 2.52 -6*. 22 2.*0 „_1_36__79 17.01 R AILROADS+RELATO SERVCS 1031.70 -*65.13 297.38 -63.9* 73*. 32 -*01.19

17.02 LOC AL*H IGHWAY PASSNGP TR .01 -332.85 .00 -126.58 .00 -206.27

17.03 MOTOR FPEIGHT+WAREHOUSE 1960.9" -5*0.76 50*. 0* -191. *9 1356. 86 -3*9.28

1-7__0_l_MAI E__..LP>N_POfi TAT I ON £17.51 _ _33_.*I -1&5.B9 _ 16*. 63 -226. 59 17.05 AIR TRANSPORT 2.99 -652.67 1.** -69.05 1.5* -583.62

1Z..___^J___._LS__ 10.27 -2 7.96 5.11 -10,20 5.16 -17.76

17.07 TRANSPORTATION SERVICES .35 -10. *1 .09 -.07 .26 -10.3*

18.01 TELECOMMUNICATION 37.53 -122.59 13.62 -*6.33 23.71 -76.27

18.02 ELECTRIC POWER 362.93 -2*2.3* 87. 32 -68.15 275.61 -15*. 20

18..02. GAS 1059.63 -70.05 99. 18 -28.79 960.45 - -41. 2

18.0* WATER SANITARY SERVICE ?*. 36 -36.86 1*.26 -3.05 20.10 -33.81

19.01 NEW CONST. NONFARM RES ID 0.00 . ___*56 0_J2 0,00 -260. OQ Q..PQ. _-4__0_3__

19.02 CONST, NONRESID BUILD 2 79 . *

-2896.72 -69.63 -135.73 3*9.03 -2761.00

See Legend, End of Table
143

TABLE 29. (Continued)

btCTORS (1 )* (2) (3) (4) (5) (6)

19*03 CONST, RAILROADS 13.35 -348.71 -6. 60 -~109.80 T<>. 94 -238.92

19B03 CONST, PIPELINES .91 -91,32 -j 42 -31..46 1.33 -59.86

19C03 OTHER PU, CONST 11.89 -1814.63 -5.94 -516.41 17.83 -1298.21

19A04 CONST, HIGHWAYS 6.14 -524.03 -.17 162.25 6.31 -686.28

19B04 CONST, BRIDGES . *9 -169.74 -.45 -47.02 1.34 -122.71

19C04 CONSL, DAMS l t 34 -28,56 -t67 -7,62 2,0_2_ -20.95

19004 CONST, ALL OTHER 14.4* -291.85 1.51 -103.50 12.92 -188.35

20.01 WH0LE5ALE*»ETAIL TRAO= 313.97 -204.79 149j 33 -81.72 164.64 -123.08

20XA2 INSURANCE 26.71 -2.52 10.00 -.92 16.71 -1.59

20XB2 FINANCPEAL EST+ADVERTSG 340. 2? -144. 30 151.32 37.95 188.89 -182.25

20A05 FRACT RESEAR+DEVEL 106.44 0.00 5.55 -.57 600. 89 .57 20B05 OTHER RESEARCH DEVEL 246.06 -203.32 94.97 -75.05 151.09 -128.28

20C05 ENVIRONMENTAL CLEANUP ^7.97 -1.39 43.96 - 3 46 43.91 -.93

20005 OTHR BUSNS+PROFESNL SERV 589.08 ^10_3_.J2_ 418.10 . -50,26 170.98 -53.46

20.06 BUS TRAVEL* ENTER+GIFTS 100. 80 -4.18 30.95 -2.07 69.84 -2.11

21.01 PRINTING PUBLISHING 5?. 71 -248.63 19.72 -122,53 32.99 -i?6.;o

21.02 RADIO TV BROADCASTING .01 -.04 .00 -.02 .00 -.02 21.03 HOTELS LODGING PLACES .26 -29.08 .12 .13 -18.33

21404 PERSONAL SERVICES .83 -6.73 .41 -2.78 .42 -3.95

21804 REPAIR SERV* EXC AUTO 227.31 -7.11 113.66 -2.69 113.65 -4.42

21.05 AUTOMOBILE REPAIP+SERVC 127.35 -573.43 63.89 -285.07 63.45 -288.36

21.06 AMUSEMENTS .07 -23.38 .02 -7.44 .04 -15.93

21.07 MEDICAL HEALTH SERVICE 4.30 -48.52 1. 16 -20.23 3.14 -28.29

21.08 EOUCAT SERVC+NONPROF ORG 14.81 -5 2.07 5.51 -1.04 9.29 -51.03

22.01 POST OFFICE 17.37 -26.24 7.74 -10.74 9.63 -15.50

(1) = Total Intermediate Output Difference: TIO

j_ j j (2) = Social Savings Difference: SSj

jj

(3) =TI0

I . III

(4) = SSj.jj,

(5) = TIO ni-n

(6) = SS nI _ n
144

TABLE 30. NORMALIZED DIRECT AND INDIRECT COSTS OF

FRACTURE ASSOCIATED WITH SELECTED SECTORS

2A04

Underground

Coal Mining

Technology (Direct Costs)

(1) SS*NII (TC)

(2) SS*NIII (PRC)

(3) SS*in_ n (PNC)

Demand (Indirect Costs)

(4) TlO^.n (TC)

(5) TIO*i_in (PRC)

(6) TIO*in _ii (PNC)

•253.15

266.50

519.65

94.48

262.69

• 168.21

7.03

Al uminum

11.02

Ai re raft

and Parts

-545.55

-251.85

-293.70

-5095.04

- 27.41

-5067.64

3660.03

1356.40

2303.63

61.99

30.99

30.99

17.05

Ai r Transport

•652.67

• 69.05

583.62

2.99

1.44

1.54

Notes: * Normalized values from Table 29.

TC = total costs

PRC = presently reducible costs

PNC = presently nonreducible costs

Attention is called to the fact that negative entries in Social

Savings differences and positive entries in Total Intermediate Output

differences both indicate the same thing: a reduction in resource

fl ows.
145

World III are substantially higher than in World I, while those in World II are substantially lower.

Moreover, almost all these costs associated with coal mining are directly part of the mining technology. Comparisons of lines 1 and 4 indicate

that total direct costs are about three times as great as the total indirect

costs. In the case of presently reducible and nonreducible costs, direct and

indirect costs move in opposite directions because of the behavior of World

III.

Sector 7.03, Aluminum

Since aluminum is a widely used material, it is to be expected that

high indirect fracture costs will be associated with it. For all three

categories of cost, indirect costs are about 6/1 larger than direct.

Sector 11.02, Aircraft & Parts

In this sector, fracture costs are overwhelmingly direct and presently nonreducible. It must be emphasized, however, that the R&D activities

which have the best chance of reducing these costs in the future may not be

directly associated with aircraft design, but may relate to characteristics of

materials used in their production.

Sector 17.05, Air Transport

Here, again, fracture-related costs are predominantly direct and

presently nonreducible.

Intersectoral Comparisons

If we shift attention from the columns in Table 30 to rows 2, 3, 5,

and 6, the full benefits of normalization becomes apparent. This entire study

has been undertaken for the purpose of guiding future effort —both in R&D and

in technology transfer--to reduce fracture costs. Thus, any analyses that

improve our understanding of these opportunities are valuable. Ignoring the

total costs of fracture, suppose we consider the future choices among just

these four sectors with respect to technology transfer (the achievement of

best practices) and R&D (the attack on presently nonreducible costs).

Technology Transfer . Without any doubt, the best opportunities for

achieving cost reductions through best practices lie with Sector 7.03 (Aluminum), although a great need for technology transfer exists in Underground Coal

Mining (Sector 2A04). The decision with respect to division of effort between

these two sectors would have to be made in terms of intent: Are we anxious to

achieve the highest levels of mine safety, or are we solely concerned with

reducing real world uses of resources? If the former, then coal mining would

receive more effort; if the latter, then aluminum.
146

Future R&D . Overwhelmingly, the leading direct opportunities for

cost savings through future R&D are related to the aircraft sector. However,

as has been noted before, we will have to go "inside" this industry's technology before we can answer the key question: Is it aircraft technology or the characteristics of inputs into aircraft that should be emphasized in this

research?

In a near tie for second place for R&D effort, we find the technologies of the two sectors, air transport and coal mining, with aluminum

following. However, the indirect fracture costs associated with the demand

for aluminum closely follow the direct costs of aluminum.

The example presented for these four sectors have been included for

purposes of illustration. The analysis can be extended to all 150 sectors

and, to be sure, could be carried out as a guide to the establishment of

individual research agendas. Whether the results of this investigation are to

be used by Federal agencies or by the private sector, a more individualized

inspection of the overall direct and indirect costs—as well as the individual sources of these costs--can provide important insights into the potential

benefits of new research or technology transfer programs.
147

IX. CONCLUSIONS AND RECOMMENDATIONS

The eight preceding chapters have been devoted to discussions of,

first, methods of measuring the costs of fracture, second, the data upon which

the measurements could be based and, third, the measured costs themselves.

Although many inferences concerning the causes and significances of these

costs have been drawn, especially in the last four chapters, there has been no attempt systematically to generalize from our findings. It is now time to do

that.

In this chapter we will take up, in order, the following four sets of

generalizations: first, our findings, conclusions and suggestions concerning

the research methods employed; second, a summary of the costs and their implications as to the economic significance of fracture; third, the logical next

steps that should be taken to reduce fracture costs in future years; and

finally, the manner in which the findings of this research program can be used

to facilitate and guide those steps.

Method

The research program employed in this study made use of two dissimilar approaches in an effort to assure coverage of all the relevant contributors to the cost of fracture. On the one hand, the Battel le Input-Output

Model of the United States economy was used, in a manner closely similar to

its use earlier in the Corrosion Study, to measure the resource costs assumed

in order to prevent fracture or to prevent any business losses because of

fracture. On the other hand, as a distinct innovation and extension of the

measurement, the Supplemental Models were used to measure the nonresource

costs of fracture and the resources that were lost or destroyed by fracturecaused events. Much has been added to our understanding of the strengths and

limitations of these two approaches.

The I/O Model

The general effectiveness of I/O and the device of simulating Worlds

I, II, and III was clearly demonstrated by the Corrosion Study. Therefore, it was the method of choice for this investigation. A way had to be found,

however, for dealing with the best practice world (World III) that was as effective as the handling of World II. This was accomplished in the fracture

study by treating these two worlds together, at every step, for every sector,

instead of completing every step for World II and then returning in an attempt

to complete World III. So far as can be determined from the probability

analyses of the Model, these two worlds fall within the same confidence

1 imi ts.

Still another innovation was tested in this study as a means of

collecting essential data and putting it into the Model. This was the device

of "row rules" (though some were not actually entered by the rows). The

complexity of the fracture-cost problem proved so great, compared with the
148

Corrosion Study, that it would not have been economically feasible to complete

data-gathering by the ex ante (column-wise) approach. In fact, if dependence

had been placed solely upon sector-by-sector collection of data, it would not

have been possible to consider every sector, probably not even half of them.

However, by generalizing fracture-related technologies into applications

across the rows in blocks of columns, it was possible to (a) utilize the high

levels of scientific and engineering skills present in the Battelle Senior

Staff, (b) more completely benefit from the information collected (by the

columns) on an i ndustry-by-i ndustry basis, and (c) assure that every column

sector was fully considered.

In this connection, it should be noted, however, that the row rule

approach probably would not have been as effective in the Corrosion Study as

it was here. In the case of corrosion--and in any other case where an industry may create a very special and destructive environment for its capital

equi pment--the column-wise approach always will be best. Nevertheless, any

future measurement problem of this sort will benefit from judicious use of

this row-wise approach.

Two other improvements should be mentioned which were made in this

study: (a) manipulation of the R (replacement) matrix rather than the U (useful lives) matrix in going from World I to Worlds II and III, and (b)

dividing single-cell entries in stipulated final demands into two components,

purchases of capital goods (by consumers or governments) and purchases of

supplies and/or services. If these two devices had been available for the

Corrosion Study, it is possible that certain reliability problems would have

been lessened.

Taken all together, we feel that the reliability of the fracture

study has been significantly improved over that of the Corrosion Study. The

reliability of total cost appears to have been about doubled, and that of

presently reducible (avoTdable) costs increased much more. Any future

applications of this approach will be significantly strengthened by these

innovations. And, speaking of confidence limits, considerable emphasis should

be given the innovations provided (through the contribution of Professor

Brody , embodied in Chapter VIII) with respect to the reliability analysis of

I/O models. To the best of our knowledge, this approach carries the fracture

study quite a bit further in this regard than had been possible at the time

the Corrosion Study was evaluated.

The Supplemental Models

With the exception of human injury costs, modeled by T+E and provided

under subcontract, none of the Supplemental Models existed before this study.

Thus, there had not been any previous systematic study of the costs of accidental events caused by such as fracture or corrosion. We feel that the

present investigation performs a valuable service, therefore, by putting these

costs into a clear perspective for the first time. There have been, without

question, many serious problems raised in this connection by the lack of

detail with regard to a full spectrum of events. Nevertheless, with respect

to fracture, this lack of detail proved to be no great loss, mainly because

the consequences of fracture-related events turned out to be small.
149

It is noteworthy that the National Safety Council estimated the total

costs of automobile accidents (human and property losses) to be on the order

of $34.3 billion. We do not have all the details that entered into this

estimate, but we know that is includes all kinds of accidents, many of which were caused by other than fracture. Even after deliberately setting

frequencies and costs of fracture events at maximal limits, the most that

could be ascribed to automobile events caused by fracture was $614 million--

less than two percent of the Council's total.

Attention is called also to Table 24 in Chapter VI 1 1 • This table

shows that total imputed costs of fracture events, estimated by the

Supplemental Models, amounted to about 1 percent of the resource costs

estimated by the I/O Model. And the cargo losses, estimated by the

Supplemental Models and added into stipulated final demands, amounted to less

than one-half of one percent of the stipulated final demands. By any

measurement, the cost of fracture-related events is very, very small.

This is not to say, however, that the Supplemental Models are unimportant or that these kinds of costs will prove small in every context.

It was important to make these measurements because now we can see them in

their proper proportion. Regardless of their social value, which may be very

great because of pain and suffering, the economic costs of these events is

low. In some future measurement of a different set of consequences they may

be dominant.

Attention should be called to some other costs that still have not

been measured. We have not attempted in this exercise to measure the costs of

inconvenience , local losses of business and other local impacts of fracture.

For instance, when a bridge collapses, in addition to direct or human losses,

there are others which we have not modeled: the time and fuel required to

drive to the nearest standing bridge; sales lost because customers are diverted to a now-closer store; and the like. These costs are not easily

supported by data. They may or may not be large enough to be significant--we

simply do not know.

Important to all our measurements, but more important here because it

helps explain the small size of the supplemental costs, is the concept of

"fracture within scope". As has been pointed out in several places, there are many nonfracture events; but there are also many fracture-related events that occur because of forces outside the scope of fracture within (or despite)

design. When we eliminate all the nonfracture causations, the relevant

numbers of events is greatly reduced, even if the second (scope) screening is

not carried out.

Summary of Fracture Costs

Referring to the data displayed in Table 28, we can say that total

cost of fracture in the United States in 1978, after adjustments for probable

underestimation, was $99.0 billion. Of this total, over half (53.1 percent)
150

is potentially reducible, either by education and technology transfer or by

R&D that is yet to be undertaken.

In the case of fracture, unlike that of corrosion, the bulk of these

costs is technology driven and can be reduced by actions taken within the

industry with which they are associated. The rather small remainder consists

of costs that are demand driven and are only indirectly affected by the

actions of the associated industry.

What Next?

Given the estimates of fracture costs, what remains to be done?

There are two paths of action, by which these costs can be reduced. We

examine them at this time. But over and above these steps, there are further

analyses that are needed to guide these steps, and we will take them up in our

final remarks.

Presently Reducible Costs

$29.1 billion of the total cost of fracture are reducible by means of

adoption and use of present best practices. This is to say that practices

which are already known and used by some sectors should be made known to

others, so that they too can achieve best practices in fracture control,

prevention or reduction. Since these technologies are already known, little

if any R&D needs to be undertaken concerning them. What is required is

technology transfer and education.

When we speak of technology transfer, we usually think of "hardware"

items, that is, the use of new kinds of capital or new ways of operating

existing capital. We think of changing inputs of materials or energy. And in

many best practices these would be needed. There are other technology transfers that involve "software"--how the same things done now can be done

differently. For example, the Chicago DC-10 crash was caused by an improper

repair procedure. There are several ways in which this kind of fracture

prevention can be approached. But, certainly, one of them would involve the

provision of repair/operation manuals which emphasized why certain things

should be done in only one way.

Generally speaking, best fracture control practices are good

business. They save resources (which cost money) for either the producers or the users of various goods and services. Therefore, they either save the

practicer money (enhancing profits) or save his customer money (enhancing good

will). These best practices can be achieved through the private sector.

Technical, scientific or trade associations generally provide the best avenues

of action.

There were, however, in the World I - World III difference tables,

many negative entries. These would imply that the adoption of best practices

in regard to a single cell or sector would cost money, not save it, although

there are overall societal gains. Where there are large societal benefits

that do not accrue to the firm or sector, the government may need to provide
151

a proper incentive for the adoption of best practice. We also note that some negative entries merely represent a tradeoff with positive entries in the

sector, with or without societal benefits. Such tradeoffs represent the fact

that in the adoption of any new technology or practice by any producer, there

can be "winners" and "losers" among all other sectors.

Future Reducible Costs

The analysis of World IV (in Chapter VII) throw considerable light on the kinds of R&D that will have to be undertaken successfully if we are ever

to attain future best practices that are significantly better than those now

possible. The $23.4 billion in 1978 terms that probably can be saved by those

future best practices are substantial and certainly justify the requisite

effort. It must be pointed out, however, that these savings will be more

costly to achieve, since they will require R&D in addition to education and

technology transfer. Our present evidence indicates that there are three

areas of R&D that are most promising in this regard: first, process developments that will result in higher quality and more uniform materials; second,

the development of new basic materials for high-volume uses--this includes the

possibility of improved characteristics that allow these new materials to

substitute for those presently in use; and third, the development of better

instruments and procedures for nondestructive evaluation (NDE). The judgments

that lead to these conclusions take into account past trends and achievements

in R&D, the kinds of R&D currently being undertaken and their likelihood of

success, and the needs for better technologies that are indicated by current

testing programs.

Special Sectoral Analysis

If the steps are to be taken that are capable of reducing fracture

costs, they will have to be guided by information concerning the sectors

associated with the several kinds of costs and the precise nature of those

associations. In the Corrosion Study, a device termed the Industry Indicators

was proposed for this use. Unfortunately i, however, these Indicators were distorted by certain conventions necessary to operate the I/O tables, that did

not actually reflect technological reality. We have attempted to improve on the Indicators by using normal i zed row and column relations to separate

technology-driven and demand-driven sector costs. These normalized costs are described in the Addendum to Chapter VIII.

Someone will have to undertake the systematic analysis of sectoral

cost relationships, if public and private efforts are to be effectively

guided. There are at least two alternative paths for the accomplishment of

this work: (a) The Bureau undertakes it, utilizing the results of this

research program (as it did with the Corrosion Study); or (b) Battel le

undertakes it in the form of an industrially sponsored study or program of

studies. The data that can support such an effort—regardless of by whom--are

provided by this report, and especially by the tables in Appendix H. We have

tried to provide both a guide for these analyses and actual examples of the

analyses and their results, especially in Chapters V, VII and VIII.

A-1

APPENDIX A. GLOSSARY

"A" Matrix: matrix of direct technical coefficients (q.v.), also

called the flow matrix; the value of each coefficient indicates the (fractional) dollar's worth of inputs from the row sector necessary to produce one

dollar's worth of the column sector's output.

Annual Replacement Rate: the average, annual rate at which existing

capital stock (private or social) is replaced. See "'R' Matrix".

"B" Matrix: a matrix of capital -to-output coefficients; also called

the capital matrix (q.v.).

Base (for determining cost of fracture): See "World II".

Capital (or Producer Capital): in the context of this study, this

term refers only to physical plant and/or equipment that is not directly

consumed or changed in form, but is used in the production of goods and

services, either for sale or for consumption. By general usage, all items of

capital have a useful life of one year or more.

Capital Matrix: a matrix of capital -to-output coefficients; also

called the "B" Matrix. Each cell indicates the value of capital produced by

the row sector and used by the column sector.

Capital/Output Coefficient: the value of capital equipment required

by an industry in order for it to produce one dollar's worth of annual output.

The coefficient is measured in terms of capital replacement value and at the

usi ng sector 's full capacity.

Cell: a single value or entry in a matrix or vector. A cell is

defined as the intersection of a row and column.

Consumer Capital: equipment, structures, and other durable goods

owned and used by individuals for their own enjoyment.

Corrosion Study: an earlier NBS-supported project on "Economic

Effects of Metallic Corrosion in the United States". This project relates

directly to the present "Cost of Fracture" study in that the same general

methodology was applied. Significant differences between these two projects

are discussed in the text.

Depreciation: the incremental decrease in the value of capital

because of wear, aging or obsolescence.

Diagonal Matrix: a matrix which contains values only in the diagonal

cells, with zeros in all off-diagonal cells.

Direct Costs: the costs to an industrial sector that accrue as it

purchases inputs and produces its products. See also "Indirect Costs".

Direct Technical Coefficient: a value which indicates the fractional

dollar's worth of input from the row sector required to produce one dollar's
A

worth of the column sector's output. These coefficients are the cells of the

"A" matri x (q. v. ).

Disaggregation: the separation of an industrial sector (in the

Input/Output sense) into two or more of its component parts; the sector's row

and column in each of the Input/Output model matrices are separated into two

or more component rows and columns.

Dollar-Flow Table: see "Transaction Table".

Durable Goods: products which last in excess of one year and which

do not change form during their use. See "Capital".

Dynamic Inverse: a transformation of a matrix containing direct

technical coefficients, capital replacement requirements, and capital growth

requirements (I-A-B ® G-B ® R)" 1

, where "I" is the Identity matrix and the

other symbols are defined in this Glossary.

Econometric Model: a mathematical representation (approximation) of

an economic system.

Economic Costs: that group of social costs which can easily be

expressed in dollar (money) terms because they involve the use or consumption

of resources (materials, energy, labor, etc.).

Environmental Degradation Model: the supplemental model which

receives environmentally relevant inputs from the Events model (q.v.) and

calculates the associated costs to society. These costs can take either of

two forms, the economic costs of environmental cleanup or the imputed costs of

environmental degradation.

Event: any unplanned occurence -- breakdown, accident, natural

catastrophe, etc. -- which does or could involve fracture and which has

socially undesirable consequences.

Events Model: the supplemental model that categorizes events (q.v.)

according to fracture relevance, nature of consequences and severity of

impacts. According to the nature of consequences, this model feeds triggering

data into the Environmental Degradation, Injury Cost and Property Loss Models,

(qq.v.

Ex ante: a process of determining past, present, or future model

parameters through use of expert knowledge and opinion rather than through the

manipulation of existing statistics. Literally, the Latin term means "from

before.

Ex post: a process of estimating model parameters through use of

historical, existing statistics. Literally, the Latin term means "from

after."

Final Consumers: consist of private individuals purchasing for their

own satisfaction, governments, private investors, and parties receiving U.S.

exports.
A-3

Final Demand: in national income accounting terms, the consumption

attributable to private investors, individuals purchasing for their own private use, governments, net inventory change, and exports.

Flow Coefficient: also called direct technical coefficient.

Dollar's worth of inputs required from a given industry for some other industry to produce one dollar's worth of output.

Fracture or Fracture/Deformation: material failure through separation or change of shape that does not involve corrosion or normal wear. Failures for reasons of fracture and/or deformation include those resulting from

application of loads which exceed original design and from such time-related

fracture processes as creep, fatigue and embrittl ement.

Future Best Fracture Control Practice: the most economically efficient use of labor, materials, energy, and technical expertise deemed possible

with ultimately available fracture control technology. This would embody the

level of technology toward which totally successful R&D might approach as an asymptote. Conceptually, "best practice" should be defined in terms of the

total society. See "World IV" and "Present Best Fracture Control Practice".

Future Non-Reducible Cost of Fracture: that portion of the total

cost of fracture that cannot be avoided by using either present or ultimate

future best fracture control practices. The difference between World IV and

World II (qq.v.).

Future Reducible Cost of Fracture: that portion of the total cost of

fracture which could be avoided if ultimate future best fracture control practices (in contrast with present best practices) were used. The difference

between World III and World IV (qq.v.).

"G" Matrix: a diagonal matrix of industrial sector growth rates.

GNP: the gross national product, that is, the value of the final

output of an economy, measured without double counting.

Growth Capital: annual capital equipment purchases which may be

attributed to the fact that the economy is growing.

Imputed Costs: that group of social costs which, while real, cannot

be directly evaluated in money or resource terms. For example, pain is a social cost; however, imputation is required to place a dollar evaluation on

it.

Indirect Costs: the costs which accrue in producing the inputs to a particular production process, and the costs of producing the inputs to the

inputs until the additional costs become negligible. See also "Direct Costs."

Industry Indicator: a special index used in the Corrosion Study

(q.v.) to help assign relative total costs of fracture to individual industrial sectors. This index and approach are not used in the present study,

having been replaced by an analysis which considered the potential impacts of

future research in a number of different areas (see World IV).
A-4

Injury Cost Model: the supplemental model which receives human

injury inputs from the Events model and calculates the associated costs to

society. These costs can take either of two forms: the economic costs of

medical treatment and/or of lost human productive effort, or the imputed costs

of pain and suffering.

Input: a necessary element in the production of a sector's output.

In general, inputs consist of raw materials, energy, intermediate components,

supplies, purchased services, and value added. The total value of a sector's

inputs is equal to the total value of its output.

Input/Output: a particular methodology used in modeling an economic

system. It consists of a set of simultaneous equations which may be solved

for the system's total output.

Intermediate Consumers: those industries purchasing products which

are to be transformed into different products. Compare with "Final

Consume rs.

Inverse: a transformation of the "A" Matrix. Each cell in the

inverse indicates the total dollar's worth of inputs from the row sector

necessary in order for the column sector to deliver one dollar's worth of

output to its own final demand.

Inversion: the process by which a matrix is transformed into its

i nve rse.

Matrix: a table consisting of rows and columns. In mathematics, a "short-hand" way of expressing a set of simultaneous equations.

Output: the result of the productive process; the totality of goods

and services produced and sold by a sector. The value of a sector's output is

equal to the total value of all its inputs.

Present Best Fracture Control Practice: the most economically

efficient use of labor, materials, energy, and technical expertise possible

with presently-available fracture control technology. Conceptually, "best

practice" should be defined in terms of the total society. See "World III."

Presently Non-Reducible Cost of Fracture: that portion of the total

cost of fracture which cannot be reduced by application of best current

fracture control practice. The difference between World III and World II (qq.v. ).

Presently Reducible Cost of Fracture: that portion of the total

costs of fracture which could be avoided if best fracture control practices were used. The difference between World I and World III (qq.v.).

Primary Products: in terms of the Standard Industrial Commodity Code

(SIC), primary products are those products in terms of which an industry is

defined. For example, mi 1 k is a primary product of the dairy industry; if

produced outside the dai ry industry, milk will be termed "secondary" to that

other industry.
A-5

Private Fixed Capital Formation: the annual purchase of physical

capital (plant and equipment) by private investors for reasons of growth and

replacement.

Process Sectors: industrial sectors of the Input/Output model which

use one technological process to produce a homogeneous product (or group of

products)

.

Producer Capital: See "Capital".

Property Loss Model: the supplemental model which receives property

loss or destruction inputs from the Events model and calculates the associated

costs to society. These costs can take either of two forms: either the

economic costs of the destroyed property or the imputed costs of business

del ays.

"R" Matrix: a matrix of annual average capital replacement rates;

each cell indicates the average annual replacement of capital produced by the

row sector and used by the column sector.

Replacement Capital: annual capital purchases which are made to

replace obsolete, worn-out, or broken plant and equipment.

Replacement Life: the time in years to first replacement of a piece

of capital equipment.

Row Rules: a set of technology-based or practice-based generalizations that may be applied across all columns of a given matrix (e.g., "A",

"B", etc.), and which reflect input changes characteristic of each World.

Selected column-specific deviations from the Row Rules are made to account for

special exceptions or applications.

Sector: an industry, part of an industry, or group of industries

that is treated as a productive unit in an Input/Output table. Within the

context of this study, a sector is defined as the process or group of pro- cesses which produces primary products (q.v.) only.

Social Capital: equipment, structures and other durable goods that are owned by public (governmental) agencies and used for the general benefit

of society.

Social Savings: an accounting mechanism in the modified Input/Output

model used in this study. The social savings account for real resources being

consumed and value added accruing because fracture occurs.

Stipulated Final Demand: the value of goods and services which

accrue to individuals, government, net inventory change, and exports.

Stock Coefficient: also called capital coefficient; indicates the

value of capital stock of a certain type required for an industry to produce

an additional dollar of its output.
A

Supplemental Models: in the context of this study, four separate

submodels that permit estimation of the costs to society of several important

categories of "events" that are either caused or complicated by fracture. See

also "Events Model", "Environmental Degradation Model", "Injury Cost Model",

and "Property Loss Model".

Total Cost of Fracture: the total resources consumed in our economy

because of the fact that fracture occurs. The difference between World I and

World II (q.v.).

Total Output: the value of the total goods or services produced by some industrial sector.

Transaction Table: the usual form in which an Input/Output table is

expressed; also called the "Dollar-Flow Table" (q.v.). In it, each cell

displays the total dollar value of the products, services, etc., that the row- sector sells to the column-sector or to the column-element of final demand.

Conventionally, all these dollar values are expressed in producer-prices.

"U" Matrix: a matrix in which the useful life is indicated for each

capital item. This matrix has an entry for every non-zero entry in the "B"

Matrix. Useful lives are entered as a range of discrete years and indicate

the life of that capital before it must be replaced for reasons of breakdown,

wear, or technological obsolescence.

Useful Lives: in the context of this study, the span of years over which durable goods of all sorts can be expected to be used before being

scrapped or discarded. The useful life of a durable item is ended by major

failure (beyond economic repair), by wear, or by obsolescence. See also

"Replacement Life."

Value Added: the additional value accruing to a sector's inputs as they are fashioned into the product itself; included are wages, salaries,

rents, profits, interest, taxes, and depreciation. It can also be defined as the value of the productive factors contributed by the industry itself, rather

than purchased from other industries.

Vector: a single row or column of values.

World I: the present environment and economy as they now exist.

World II: a hypothetical environment and economy in which no fracture occurs.

World III: a hypothetical economy in which present best fracture

control practices exist and are universally applied.

World IV: a hypothetical economy in which future best fracture

control practices exist and are universally applied. Note that for purposes

of this study, World IV is never established in Input/Output table form.
B-1

APPENDIX B. THE INPUT/OUTPUT MODEL

Input/Output modeling of an economy permits an accounting of the many

and varied transactions which occur in that economy during a typical year.

Through a detailed description of interindustry sales and purchases, the I/O

approach considers all the transactions required for intermediate inputs to

productive processes, as well as for the replacement, expansion, or maintenance of capital equipment. And finally, the model describes all the other

final demands that must be satisfied by the productive sectors, along with the

flows of resources which pay for labor, taxes, interest, depreciation, and

profits.

General Framework

The Input/Output (I/O) model, as it will be used in this study, can

be separated into two basic components:

• the direct technical coefficient matrix (A matrix)

• the capital module (B, G, and R matrices).

The relationship which ties both components together is

X = AX + B®GX + B®RX + "FTJ (B-1)

where

X is a vector of total output

A is a matrix of direct technical coefficients

B is a matrix of capital /output coefficients

G is a full matrix of industry growth rates, with each entry

in any column being equal to the growth rate of that column sector

R is a matrix of capital replacement rates

FD is stipulated final demand (personal consumption expenditures,

exports, and inventory change; excludes capital), and® is the

symbol for the Kroenecker matrix operator.

Equation (B-1) states that an industry's total output is distributed

among intermediate consumers, purchasers of capital (for both growth and

replacement), and final consumers. The term AX is the output consumed by

intermediate users, B®GX is the output which is allocated to growth capital,

B®RX is the output allocated to replacement of worn out capital, and TTJ is

the output accruing to final consumers. Equation (B-1) may be solved for

total output, X, by the following:

X = [I - A - B®(G + R)]"

1 * FD (B-2)

where [I - A - B®(G + R)]"

1 is an inverse matrix.
B-2

Equation (B-2), often termed the dynamic inverse, is key to the I/O

formulation used in this study. It treats the capital stock coefficients B®G

and B®R as if they were flow coefficients and combines them with the direct

technical coefficients, allowing capital purchases to be a function of stipulated final demand. The resulting inversion permits the specification of the

output required from each sector, both directly and indirectly, to support the

production of one unit amont of final demand for the products of another

sector.

Mod!e]_ As sumptions

Assumptions implicit to the I/O model used in this study include:

• linearity assumption : an industry's inputs are proportional to

its outputs, i.e., requirements are not related to firm size,

volume of output, etc.

• homogenous product assumption : each I/O sector produces a slowly

changing, average bundle of products (assumes away rapidly changing product mixes with diverse production technologies).

• inelasticity assumption : eliminates cross elasticities of substitutions among input requirements.

• steady growth assumption : stipulates that all sectors have been

growing at their long term rate of growth.

• average technology assumption : implies that each industry's production function can be represented by average 1978 technology for

the sector in which it is included.

© full employment assumption : corrects the base, real-year 1978 I/O

table to "full employment" output levels, i.e., final demands and

outputs become slightly higher than actually was the case in 1978

so as to represent the full potential capacity of the national

economy (and thus the full costs of fracture).

• import transferability assumption : assumes that foreign imports

of directly substatutable products are treated as being purchased

as inputs by the column sectors that would have produced them; all

such imports are carried outside the intermediate and inverse

matrices so as to maintain the technological integrity of input

coefficient relationships.

We have also used the technique of defining a Social Savi ngs/Soci al Cost subvector of Value Added. This accounts for reductions in GNP that would

result from less or no fracture, and accumulates (outside the A matrix)

materials and labor resources which otherwise would have been employed toward

eliminating or reducing fracture. The resultant savings can be assumed to be

directed toward other unidentified purposes in the national economy.
B-3

The A Matrix

The A matrix, or matrix of interindustry transactions, shows the

amounts of purchases and sales between and among different producing sectors

of the economy. These transactions involve primary and intermediate goods and

services, accounting for all required inputs to each respective productive

process. Each sector is shown, on the one hand, as selling parts of its outputs to other producing sectors and, on the other, as buying from other producing sectors the inputs that it needs.

Listed as rows, the productive sectors of the economy represent

sources of supply. Reading across a given sector's row details the sales

which that sector makes in distributing its output. These same sectors,

listed as column headings, represent markets. Thus, reading down any single

column indicates the sources from which that particular sector purchases its

inputs—that is, the supplies, raw materials, power, etc. --which it then

combines with its own contributions to create its group of products. Therefore, any given cell (i.e. the intersection of a given row with a given

column) shows what the industry defining the row sold to the industry defining

the column; or vice versa, it shows what the industry defining the column purchased from the industry defining the row.

After dividing each column entry by its total value, each cell value

(direct technical coefficient) is expressed in terms of proportions. Thus,

each column sum of the A matrix plus the sum of Value Added (plus imports and

social savings) is equal to one. Similarly, the sum of the column coefficients in the A matrix is equal to the column sector's use of domestic

intermediate inputs per dollar of its own output and comparable imports.

The General Concept of the Capital Module

Private fixed capital formation (PFCF) is one of the subvectors of

final demand in the I/O model, representing the demand from the entire economy

for the equipment, machinery and structures used in all productive processes

as well as the structures resided in by consumers.

The formation of new plant-and-equi pment capital by industry can be

thought of as triggered by need for growth, by need for replacement (due to

obsolescence or degradation), or by government requirements (e.g., for

environmental protection). Growth refers primarily to the growth of demand

for an industry's output, regardless of whether the demand is final or intermediate, foreign or domestic. Replacement refers to both replacements

due to technological change and replacements which result from the age

structure of existing capital. Additional capital changes result from

governmental regulations which, for the study, will be estimated with

reference to policy directives and added to our modular estimates.
B-4

In order to estimate the amounts of new capital which each capitalusing sector will purchase from each capital -produci nq sector during a given

year, the following matrices are manipulated:

§ The stipulated (noncapital) final demands which each sector must

satisfy (TD)

t The matrix of capital coefficients (B)

• The capacity growth rate matrix (G)

• The capital replacement rate matrix (R)

• The matrix of direct technical coefficients

Each of these is discussed generally below.

The B-Matrix . Generally, the capital matrix shows how much capital

the column sector (capital -user) will purchase from each row sector (capitalproducer) in order to create new capacity to produce one dollar's worth of

output per year. It is expressed in 1978 dollars and price relationships.

The B-Matrix used in this study is a current best-practice (as of

1979-80), balanced-expansion, stock matrix in 150 sector detail which assumes

optimal engineering requirements but no excess capacities. Thus, to increase

an industry's output by one percent, every capital input must increase by one

percent. This means that when the associated capital /output ratios are used

to convert total outputs to total capital already in place, it is implicitly

assumed that all plant and equipment is optimal from an engineering point of

view. Another way of stating this is that capacity is expressed in terms of

its current replacement value.

The Growth Matrix . The growth matrix is a diagonal matrix which

determines how much new capacity must be formed in the economy to keep up with

its long term demands. Each sector's rate of growth is approximated in terms

of the direct plus indirect growths of general demand based on total output.

In the actual program, total output is taken from Battel le's full employment

trend tables.

The Replacement and Useful Life Matrices . Since we have no precise

vintage composition of total capital, we assume that the age-structure of each

capital -usi ng industry's existent stock of capital results from its steady

growth rate (g). Replacement rates would therefore be a function of the

growth rate and the replacement life of that stock. We have used the Internal

Revenue Service's Bulletin F as our source of the replacement life expectancies of each sector's plant and equipment.

The replacement rate (r) for each sector is taken as a joint function

of both replacement life expectancy and sector growth. The R matrix is a full
B-5

matrix, like the B matrix. It is derived in turn from a corresponding matrix

of replacement lives (U) by the following procedure.

Working from entries of depreciation life Bulletin F, every cell

U-jj corresponding with a nonzero cell in B is assigned a replacement life

expectancy value. The assigned value may take the form of a given number of

years or of a range of years. Average annual growth rates for each column

sector are then derived and used to describe the entire cycle of replacement

1 ives.

In actually setting up the replacement matrix, R, we establish a value of r-jj for each corresponding value of u-jj. If a given cell has a single replacement life (e.g., 5 years) there will be only a single replacement rate. However, if a particular cell is shown as having a range of

replacement lives (e.g., 5-10 years) there will be a range of replacement

rates (one for 5 years, one for 6 years, and so on); and the corresponding

single value entered in the R-matrix will be the simple mean of these

replacement rates.

Final Demands . Final demands account for the third major component

of the Input-Output model. They represent the final disposition of goods and

services produced by the economy.

Specifically, the stipulated final demands used in this study may be

separated into expenditures for:

t Personal Consumption

t Government (Federal, state, local) purchases

• Exports

• Net inventory change.

Normally, the sum of the final demands is equivalent to GNP. In this

study, however, the stipulated final demands must be adjusted in order to

achieve a sum equivalent to GNP. The adjustments include adding gross private

domestic investment to, and subtracting imports from, the sum of the above

categories.

The Final Capital Matrices . After total outputs (X) have been com- puted via the dynamic inverse and the stipulated final demand, the detailed

capital transactions matrices are computed from the following relationship,

which is graphically presented in Figure B-l.

X = [I - (A + B®(G + R) )] * FD

In this form, given the long term growth rates (G) mentioned above,

the equation permits the computation of total output.
B-6

u y R

A = Direct Technical Coefficients

B = Capital Coefficients

G = Diagonal of Growth Rates

U = Useful Lives (ranges in whole years)

R = Replacement Rates

(I-A-B@G-B@R)

_1

= Modified Dynamic Inverse

FD = Noncapital Final Demands

TO = Total Output

FIGURE B-l. MATRIX FLOW OF INPUT/OUTPUT MODEL
B-7

In matrix form, these tables provide capital market data that show

how much capital goods must be purchases by each capital -usi ng sector from

each capital -producing sector, if the capacity of the economy is to satisfy

all final demands.

The column of row sums of the total capital matrix enters the Capital

Formation column in the final demand vector of the I/O transactions table.

When the total capital matrix is added, eel 1 -by-cel 1 , to the intermediate and

other final transactions matrix of the I/O table, this provides us with a com- plete market profile for every row sector, regardless of the nature of its

output.

Details of the various matrices derived in this study are presented

in Appendix (H).

Special Features

There are two most important features that merit special attention.

First, the Battelle I/O Model approach is based upon the technologies of

product ion. Changes in such technologies are reflected in terms of changes in

the purchases by one sector from another. Second, it can be readily seen from

Equation (B-2) that a change in any element of the matrices A, B, G, or R will

have an impact- -however small--on each of the elements of vector X. Thus, any

single factor which affects the technology of production in any sector will

filter its way throughout the economy.

Sectoral Format

The standard format of the Battelle Input/Output Model divides the

productive economy into 126 productive sectors and six final demand subcategories. This format is, however, readily altered by the aggregation or disaggregation of specific sectors to provide the kinds and degrees of detail

most useful in dealing with particular problems. For the present study of the

costs of material failures (fractures and deformations) in the United States,

the sectoral format has been modified to consist of 150 productive sectors and

eight subcategories of final demand. These elements are set forth and defined

in Appendix C.

C-1

APPENDIX C. I/O SECTORS: SIC's, DEFINITIONS AND NOTES

1.01 Livestock and Livestock Products

Includes agricultural processes involved in raising, feeding, and

selling livestock defined as animals and animal specialties, such as cattle, poultry, fish, and fur bearing animals, and bees -- and/or in extracting

their products (milk, eggs, fur, honey). Also includes selected services,

such as breeding, milk testing, etc.

Related SIC's: 02, parts of 01 (especially in 0191) and parts of 07 (See

1.04, below).

1.02 Field and Orchard Crops

Includes agricultural processes involved in raising, harvesting

field and orchard crops, including flowers, mushrooms, sod, and plants. Also

includes farm management, soil preparation services, and farm labor

contractors.

Related SIC's: 01, parts of 02 (especially in 0291) and parts of 07 (See

1.04, below).

1A03 Forestry Products

Includes processes involved in forestry operations (but not

lumbering) but does include the collection of forest products such as gums, barks, Spanish moss, saps, etc.

Related SIC's: 08, except 085

1B03 Fishing, Hunting and Trapping

Includes processes involved in commercial marine and fresh water

fishing and fish hatcheries (but not fish farms). Also includes commercial

hunting and trapping, the operation of fish and game preserves, and wild

1 i fe management.

Related SIC's: 09
C-2

1.04 Services to Agriculture, Forestry and Fishery

Includes all services to the above processes, except those provid

ing commercial activities integral to them. E.g., commercial harvesting is

included with 1.02, above, but operations to prepare harvested crops for

market are included in 1.04.

Related SIC's: parts of 07, especially 0723, 0724, 074, 075, 078

2.01 Iron and Ferroalloys Ores Mining

Includes processes of mining, milling and benef iciating iron and

ferroal 1 oy ores.

Related SIC's: 101, 106, parts of 108

2X02 Nonferrous Ores Mining

Includes processes of mining, milling and benef iciating all

nonferrous ores.

Related SIC's: 102-105, 109, parts of 108

2A04 Underground Coal Mining

Includes processes of mining, breaking, and cleaning coal from

shaft mines.

Related SIC's: parts of 11 and 12

2B04 Strip Coal Mining

Includes processes of mining, breaking and cleaning coal from

surface (open pit) mines. Includes removal and replacement of overburden

and restoration of land surface.

Related SIC's: parts of 11 and 12

2C04 Other Coal Mining

Includes processes of auger and contour mining of coal, plus

breaking and cleaning.

Related SIC's: parts of 11 and 12
C-3

2A05 Crude Petroleum

Includes processes involved in locating and extracting crude petroleum from wells or from oil sands and shales. Includes all contract services

provided up to the point of shipment from the producing property; does not

include pipeline transportation or refining.

Although this sector includes extraction from oil shale and oil

sands, by definition, coefficients in column 2A05 do not yet reflect such

technol ogi es

.

Related SIC's: part of 13

2B05 Natural Gas

Includes processes involved in locating and extracting natural gas

(including natural gas liquids) from wells. Includes gathering lines, but

not pipelines; includes condensation, but not fractionating or refining, of

natural gas liquids.

Related SIC's: part of 13

2.06 Stone and Clay Mining

Includes processes of mining/quarrying, milling and otherwise preparing for further use all nonf uel , nonmetallic minerals, except chemical and

fert il izer mi neral s

.

Related SIC's: 141-145, 149 and related parts of 148

2.07 Chemicals and Fertilizer Minerals Mining

Includes processes of mining/quarrying, milling and otherwise

preparing for future use all nonf uel , nonmetallic chemical and fertilizer

mi neral s

.

Related SIC's: 147 and related parts of 148

3A01 Beverages

Includes processes of producing beverages for human consumption,

including malt beverages, wines, liquors, soft-drinks, and flavoring

extracts, and their containerization into pressure-resistant vessels of

glass, plastic and/or metal.

Related SIC's: 208
C-4

3B01 All Other Food and Kindred Products

Includes processes involved in the manufacture, and containerization of all food products, except beverages. Also includes preparation of

animal feeds.

Related SIC's: 20, except 208

3.02 Tobacco Manufacturers

Includes processes of preparing tobacco for use in manufactures

(including stemming and redrying) and producing cigarettes, cigars, chewing

and smoking tobacco, and snuff.

Related SIC's: 21

3X03 Leather and Leather Products

Includes all processes involved in the tanning of hides and skins

and the production of leather products for industrial or consumer use. Includes footwear and luggage. Capital items include protective shoes,

luggage.

Related SIC's: 31

3X05 Fabrics, Yarns, Threads, and Soft Floor Coverings

Includes all processes related to producing fabrics for the needle

trades and yarns and threads for input into all textile products. Primarily

involves spinning, weaving, dyeing and finishing of natural and manmade fibers. Also includes all processes involved in weaving rugs and carpets from

yarns, and in braiding and hooking rugs and mats from a variety of

materials.

Related SIC's: 221-4, 226, 227, 228

3 AO 7 Metal Tire Cord

Includes all processes invloved in producing metal cords and fabric

for reinforcing tires and flexible belting. Does not include the metal cable

in tire beading (See 8.07).

Related SIC's: part of 2296

3B07 Other Tire Cord and Miscellaneous Textile Goods

Includes all processes involved in producing nonmetallic tire cords

and fabrics, plus a variety of miscellaneous other textile products such as
C-5

felts and other non-woven fabrics, laces, coated fabrics, wastes, cordaye and

twine, nets, etc.

Related SIC's: 229, excluding part of 2296

3X08 Apparel and Miscellaneous Fabricated Textile Products

Includes all processes involved in the needle trades, knitting, and

machine embroidery.

Related SIC's: 225 and 23

4.01 Sawmills and Planning Mills

Includes all processes involved in converting logs into dimensional

1 umber.

Related SIC's: 242

4.02 Veneer, Plywood, and Laminated Wood

Includes all processes involved in converting logs into veneers and/or plywood. Also includes manufacture of hardboard, chipboard, and

laminated wood products.

Related SIC's: 2435, 2436, 2439, and part of 2499

4.03 All Other Lumber and Wood Products, except Containers

Includes timber cutting and the processes of producing a variety of

milled, treated and other wooden products, except containers.

Related SIC's: 241, 2431, 2434, 245, and 249, except part of 2499

4.04 Wooden Containers

Includes all processes involved in producing wooden boxes, barrels,

pallets, and other containers.

Related SIC's: 244

4XA5 Wooden Furniture and Fixtures

Includes all processes

furniture and fixtures with wood

of producing household, office, and business

and the primary structural material.
C-6

Related SIC's: 2511, 2512, part of 2515, 2517, most of 2519, 2521, part of

253, 2541, and part of 259

4XB5 Metal Furniture and Fixtures

Includes all processes of producing household, office and business

furniture and fixtures with metal as the primary structural material.

Related SIC's: 2514, part of 2515, part of 2519,- 2522, part of 253, 2542,

and part of 259

4.07 Pulp, Paper, and Paper Products, except Containers

Includes all processes in making and converting paper, except

the manufacture of paperboard containers. Includes paper building products.

Related SIC's: 261, 262, 263, 264, 266

4.08 Paperboard Containers and Boxes

Includes all processes in the manufacture of containers and boxes

from paperboard and fiberboard, including vulcanized fiber.

Related SIC's: 265

5.01 Petroleum Refining and Related Products

Includes all processes of petroleum refining to produce gasoline,

kerosene, distillate and residual fuel oils, lubricants and other crude

petroleum derivative products.

Related SIC's: 291, part of 299

5.02 Paving Mixtures and Asphalt Products

Includes all processes of producing paving and roofing materials

from asphalt and petroleum derivatives.

Related SIC's: 295

5.03 Industrial Inorganic and Organic Chemicals

Includes all processes of producing basic chemicals such as acids,

alkalies, salts, dyes, solvents, and plasticizers.

Related SIC's: 281, 2865, 2869
C-7

5X04 Agricultural Chemicals

Includes all processes of producing nitrogenous and phosphatic

fertilizers and formulating and preparing herbicides, pesticides and other

agricultural chemicals.

Related SIC's: 287

5A06 Adhesives

Includes processes related to the manufacture of industrial and

household adhesives, glues, caulking and sealing compounds, and synthetic

cements.

Related SIC's: 2891

5B06 All Other Chemical Products

Includes processes involved in producing natural gum and wood

chemicals, explosives, printing and writing ink, heat insulating compounds,

corrosion preventive lubricants.

Related SIC's: 2861, 289 (except 2891)

5.09 Drugs

Includes all processes involved in the manufacture of medicinal

chemicals and pharmaceutical products, including blood derivatives for human use and the milling of botanicals.

Related SIC's: 283

5X10 Cleaning and Toilet Preparations

Includes processes related

cleaning and polishing preparations,

tics, and other toilet preparations.

to the manufacture of soaps, detergents,

natural and synthetic perfumes, cosmeRelated SIC's: 284

5.12 Paints and Allied Products

Includes processes of manufacturing paints, varnishes, lacquers,

enamels; woodfillers and sealers; paint and varnish removers and cleaners and

other allied paint products.

Related SIC's: 285
C-8

P. 07 Plastics Materials, Resins, and Synthetic Rubber

Includes processes involved in the manufacture of both cellulosic

and noncel 1 ul osi c plastic materials and resins, and synthetic rubber (vulcanizable elastomers). Does ncrt include processes of molding and fabricating

plastics into shapes and finished products.

Related SIC's: 2821, 2822

P. 08 Organic Manmade Fibers

Includes processes related to the manufacture of cellulosic and

synthetic organic fibers in the form of monofilament, yarn, staple or tow

suitable for further manufacture on textile processing equipment.

Related SIC's: 2823, 2824

P. 13 Tires and Inner Tubes

Includes all processes of making solid and cushion tires, pneumatic

casings, inner tubes, and repair and retreading materials for all types of

vehicles.

Related SIC's: 301

PAH Industrial Rubber Belts

Includes processes involved in the manufacture of rubber industrial

belting (conveyor, elevator, transmission, etc). Also includes synthetic rubber (neoprene) V-belts, which are often misclassified as plastic belts.

Related SIC's: part of 3041

PB14 All Other Rubber Products

Includes processes associated with the manufacture of rubber foot- wear and repair materials (e.g., heels), rubber outerwear, hoses, floor tile,

life rafts, baby pants and other miscellaneous rubber specialties and

sundries.

Related SIC's: 3021, 3021, part of 3041, part of 3069

PA15 Plastic Pipe

Includes processes associated with the manufacture of all types of

plastic pipe and fittings. Includes plastic irrigation systems.

Related SIC's: part of 3079
C-9

PB15 Plastic Containers

Includes all processes related to the manufacture of plastic

containers except bags. Includes bottles, jars, boxes, drums, and tanks.

Related SIC's: part of 3079

PC 15 All other Manufactured Plastic Products

Includes processes related to the molding of primary plastics into

sheets, rods, and monofilaments and their fabrication into miscellaneous finished plastics products, including kitchenware and tableware, hardware and

fittings, insulating and cushioning materials, siding and gutters, plastic

bags and tubing, among others.

Related SIC's: part of 307

6A01 Flat Glass

Includes all processes of producing flat glass, including structural, insulating, plate, sheet, window, and laminated glass.

Related SIC's: 3211, part of 3231

6B01 Glass Containers

Includes all processes pf producing glass containers for commercial

packing and bottling, and for home canning.

Related SIC's: 3221, part of 3229, part of 3231

6C01 Automobile and Truck Windshields

Includes processes associated with the manufacture of safety,

tempered, and laminated glass for motor vehicle windshields.

Related SIC's: part of 3231

6D01 All Other Glass Products

Includes processes related to shaping, blowing and pressing of

glass into a variety of finished (mirrors, vases, drinking vessels, cookware)

and intermediate products (TV tube blanks, lighting glassware, lens blanks).

Does not include optical and ophthalmic lenses, which are in 14.04.

Related SIC's: part of 3229, part of 3231
C-10

6.02 Hydraulic Cement, Lime and Gypsum Products

Includes all processes of producing hydraulic cement, lime, and

products composed wholly or chiefly of gypsum, including plaster and plasterboard.

Related SIC's: 324, 3274-5

6A03 Structural Clay Products, except Clay Refractories

Includes processes of producing brick and structural clay products

including ceramic wall and floor tile and clay sewer pipe.

Related SIC's: 3251, 3253, part of 3259

6B03 Structural Concrete Products and Ready-mixed Concrete

Includes all processes of producing concrete building blocks,

bricks, products composed of a combination of cement and aggregate (with or without metal rei nforci ngs) and the mixing and delivery of ready-mixed

concrete.

Related SIC's: 3271-3273

6C03 Pottery, Whiteware and Porcelain Products

Includes processes related to the manufacture of chinaware, earthenware, plumbing fixtures and bathroom accessories, and molded porcelain

parts for electrical devices, such as insulators and spark plug parts.

Related SIC's: 326

6D03 Clay and Nonclay Refractories

Includes processes of producing clay firebrick and other heat

resisting clay products, plus refractories and crucibles made from materials

other than clay, including graphite refractories.

Important to note :

1. We have treated the main sources of fracture for these products

as being (a) breakage in delivery

(b) heat cycling in use.

2. Most 6D03 failures, however, result from corrosion.
C-ll

3. There are two main types of using sectors:

(a) Those which manufacture capital equipment in which

refractories are components.

(b) Those which operate such capital and purchase refractories

as replacements.

4. Note that, for refractories, the replacement purchases come from 6U03 and not from the section providing the capital into

which they go.

Related SIC's: 3255, part of 3259, 3297

6A04 Abrasives, Including Grinding Wheels

Includes all processes of producing natural or synthetic abrasive

products, including grinding wheels, sand paper, steel wool, and buffing and

polishing wheels.

Related SIC's: 3291

6B04 All Other Stone and Nonmetallic Mineral Products

Includes processes of cutting, crushing, grinding or otherwise

preparing of all other stone, clay or ceramic minerals, producing asbestos

products and sealing devices, and all processes of producing mineral and

glass insulation wool.

Related SIC's: 3281, 3292, 3293-3296, 3299

7A01 Iron and Carbon Steel

Includes processes of smelting and refining carbon steels and the

production of basic shapes. Includes the production of pig iron, coke,

forgings and castings. The specialized production of ferroalloy additives

has been assigned to this sector.

Since rolling mills are included with the primary metal activity,

rails are treated here as a basic shape and are produced only in 7A01.

7B01 Alloy Steel

Includes processes of producing alloy steels (excluding stainless

steel), tool steels, and basic shapes. Includes forgings and castings.
C-12

7C01 Stainless Steel

Includes processes of producing stainless steel and basic shapes,

including forgings and castings.

7.03 Al umi num

Includes the processes of smelting and refining aluminum and its

alloys, and basic shapes, forgings and castings.

7X04 All Other Nonferrous Metals

Includes the processes of smelting and refining all nonferrous

metals except aluminum, and producing their basic shapes, forgings and

casti ngs.

8.01 Metal Cans

Includes all processes of producing cans and other metal food

containers.

Related SIC 's : 3411

8.02 Metal Barrels, Drums and Pails

Includes processes of producing ferrous and nonferrous shipping

barrels, drums, pails and other container forms.

Related SIC's: 3412

8.03 Metal Sanitary Ware and Plumbing Fittings

Includes processes of producing enameled iron and metal sanitary

ware, plumbing fixture fittings and trim, including plumber's brass goods.

Related SIC's: 3431, 3432

8.04 Nonelectric Heating Equipment

Includes processes of fabricating nonelectric heating equipment

including gas, oil and coal fired equipment for the automatic utilization of

these fuels.

Related SIC's: 3433
C-13

8A05 Structural Metal

Includes processes of fabricating iron and steel or other metal for

structural purposes such as bridges, buildings and sections for ships, boats

and barges (but not the completed structures or vessels).

Related SIC's: 3441

8B05 Boiler Shop Products

Includes processes of cutting, forming and joining metal plates,

bars, sheets, pipes and other mill products for producing boilers, pressure

and nonpressure tanks, weldments and other similar products.

Related SIC's: 3443

8C05 All Other Fabricated Stuctural Products

Includes process of producing structural metal products and components for buildings such as metal doors and sashes, sheet metal work, architectural metal work and prefabricated metal buildings. Also includes stove

pipes, light tanks, and steel concrete reinforcing bars.

Related SIC's: 3442, 3444-344'

8.06 Screw Machine Products and Stampii.,

Includes processes of producing screw machine products, bolts,

nuts, washers and special industrial fasteners. Also includes such metal

stampings as kitchen utensils, metal boxes, metal curtain walls, etc.

Related SIC's: 345, 346

8.07 Other Fabricated Metal Products

Includes all processes of producing cutlery, hand tools, general

hardware and miscellaneous fabricated metal products, (wire, pipe fittings,

springs, and metal foil), plus electroplating, polishing and coating, and

plating. .

Related SIC's: 342, 347, 349

9.01 Engines and Turbines

Includes processes of producing steam, gas, and hydraulic turbines,

including those for complete turbine generator set units; plus internal
C-14

combustion engines, not elsewhere classified, except commercial and military

aircraft engines. Does not include motors in household appliances.

Related SIC's: 351

9.02 General Industrial Machinery and Equipment

Includes all processes of producing machinery, equipment and

components for general industrial use, including pumps, ball bearings,

compressors, blowers and fans, furnaces and ovens*, gears and other power

transmission equipment, and industrial furnaces and ovens*.

* "Off-the-shelf" items

Related SIC's: 356

9.03 Machine Shop Products

Includes all processes of producing carburetors, pistons, valves

and machinery and parts not elsewhere classified, such as amusement park

equipment and fluid power cylinders.

Related SIC's: 359

10.01 Farm Machinery

Includes processes of producing machinery and associated equipment

for all farm, garden and lawn uses. Does not include hand tools (See 8.07).

Related SIC's: 352

10.02 Construction Machinery

Includes processes of producing heavy machinery and equipment

primarily used by the construction industries such as bulldozers, cranes, and

excavators. All standard earthmovers are produced here.

Related SIC's: 3531

10.03 Mining Machinery .

Includes all processes of producing heavy machinery and equipment

used primarily by the mining industry such as drilling equipment, crushers,

mining cars, and loading machines. Walking cranes, draglines and excavators

(custom built for open pit mining) come from this sector.

Related SIC's: 3532
C-15

10.04 Oil Field Machinery

Includes all processes of producing machinery and equipment for use

in oil and gas fields as well as for drilling water wells.

Related SIC's: 3533

10.05 Materials Handling Machinery, Except Trucks

Includes processes of manufacturing materials handling machinery

and equipment such as elevators (including passenger), conveyors, and industrial hoists and cranes.

Related SIC's: 3534, 3535, 3536

10.06 Industrial Trucks and Tractors

Includes processes of manufacturing industrial trucks, tractors,

trailers, stackers, and related equipment used for handling materials on floors and paved surfaces in and around industrial and commercial plants.

Related SIC's: 3537

10.07 Metalworking Machinery (including cutting tools)

Includes all processes of manufacturing metalworking machinery

such as metal cutting and forming machine tools, power driven hand tools,

rolling mill equipment and machinery, and welding equipment.

Related SIC's: 354

10.08 Special Industry Machinery

Includes all processes of manufacturing machinery and parts and

attachments for such machinery for use by the food products, textile, woodworking, paper, printing, rubber, petroleum refining, and metal smelting

industries, among others.

Related SIC's: 355

11.01 Motor Vehicles and Parts

Includes processes related to the manufacture of auto, truck, and

bus bodies, all motor vehicle parts and accessories other than tires, motors,

batteries, etc., and their assemblage into complete passenger automobiles,

trucks, trailers, and buses.

Related SIC'S: 371
C-16

11.02 Aircraft and Parts

Includes all processes related to the production of aircraft parts,

auxiliary equipment including engines, and their assembly into complete

aircraft. Also included are guided missile and space vehicle propulsion

units and their related parts and auxiliary equipment.

Related SIC's: 372, part of 376

11.03 Ship and Boat Building and Repair

Includes processes of building and repairing all types of ships,

barges, lighters, and boats.

Related SIC's: 373

11.04 Locomotives, Railcars and Rapid Transit Cars

Includes all processes of building and rebuilding locomotive and

railroad, street and rapid transit cars and their associated equipment.

Related SIC's: 374

11.05 Motorcycles, Bicycles, Trailer Coaches, etc.

Includes all processes of producing motorcycles, bicycles, travel

trailers, mobile homes, and similar equipment and parts. Also includes other

transportation equipment such as snowmobiles, military tanks, and all-terrain

vehicles.

Related SIC's: 375, 379, 2451

12.01 Electrical Measuring Instruments

Includes processes of manufacturing instruments for measuring and

testing the characteristics of electricity (such as voltmeters, ammeters)

and equipment for the testing of circuitry.

Related SIC's: part of 3825

12A02 Electric Generators for Power Plants

Includes all processes of producing large electric power generators

and their components, for power plants.

Related SIC's: part of 3621
C-17

12B02 All Other Electric Motors and Generators

Includes all processes of producing electric motors and power

generators and control equipment, including their components, for nonpower

plant use.

Related SIC's: part of 3621

12.03 Industrial Controls, Transformers, etc.

Includes all processes of producing electric power transmission and

distribution equipment, including power switching equipment, circuit

breakers, metering panels, transformers and fuses. Also includes electric

welding equipment.

Related SIC's: 361, 362 (excluding 3621)

12.04 Electric Lamps

Includes all processes of producing electric bulbs, tubes, and

related light sources.

Related SIC's: 3641

12.05 Lighting Fixtures and Wiring Devices

Includes processes of producing all wiring devices including

insulators (except glass and porcelain) and lighting fixtures for all

residential, commercial and vehicular uses.

Related SIC's: 364 (except 3641)

12.06 Electronic Components and Accessories

Includes all processes of producing electron tubes, semiconductors,

resistors, connectors, electronic capacitors, indicators, and other electronic components. Also includes antennae, styl i

, blank recording tapes,

etc.

Related SIC's: 367

12AO 7 X-Ray Equipment

Includes all processes of producing radiographic, fluoroscopic, and

therapeutic X-ray apparatus and tubes for all applications; excludes X-ray

films and plates (which are in 14.05).

Related SIC's: 3693
C-18

12B07 All Other Miscellaneous Electrical Machinery

Includes processes of manufacturing miscellaneous electrical

machinery, equipment, and supplies, including batteries, spark plugs,

starting motors, generators, and alternators for cars and aircraft, extension

cords and electric light bulb parts.

Related SIC's: 369 (except 3693)

13.01 Service Industry Machinery

Includes all processes of manufacturing refrigeration and service

industry machinery including commercial, residential, and industrial

conditioning and warm air heating equipment, and commercial laundry, dry

cleaning and cooking equipment.

Related SIC's: 358

13.02 Household Appliances

Includes processes of manufacturing household appliances such as,

gas ranges, household refrigerators and laundry equipment, vacuum cleaners,

fans, and other appliances such as dishwashers, space heaters, hot plates and

sewing machines.

Related SIC's: 363

13.03 Radio, T.V. and Communication Equipment

Includes processes of producing radio and TV receiving equipment,

including phonograph records and tapes. Also includes communication

equipment such as telephone and telegraph apparatus and signaling and

detection equipment and apparatus.

Related SIC's: 365, 366

14A01 Fracture Control Instruments

Includes all processes of manufacturing instruments for measuring

stresses and for testing and analyzing fracture processes.

Related SIC's: part of 382

14B01 All Other Scientific Instruments, Measures and Controls

Includes processes of manufacturing professional and scientific

instruments and related equipment, including gyroscopes, laboratory
C-19

equipment, temperature and pressure controls, counting devices, and

surveying and drafting instruments.

Related SIC's: 381, 3822, 3823, 3824, part of 3829

14.02 Medical, Surgical, and Dental Instruments and Supplies

Includes processes related to the manufacture of surgical, medical,

veterinary and dental instruments, apparatus, and supplies, including false

teeth, wheelchairs, diagnostic equipment, and first aid supplies.

Related SIC's: 384

14.03 Watches, Clocks and Parts

Includes all processes of manufacturing and assembling watches,

clocks, clockwork-operated devices, and parts.

Related SIC's: 387

14.04 Optical and Ophthalmic Goods

Includes processes of producing optical instruments and apparatus

such as binoculars and magnifying instruments, and ophthalmic goods such as eyeglasses, contact lenses, frames, and parts.

Related SIC's: 383, 385

14.05 Photographic Equipment and Supplies

Includes all processes of producing photographic apparatus and

equipment, including all types of cameras, film, parts, attachments, and

accessories.

Related SIC's: 386

15.01 Computing and Related Machines

Includes all processes related to manufacture of electronic

computing equipment; calculating and accounting machines, cash registers and

other similar equipment.

Related SIC's: 3573, 3574
C-20

15.02 All Other Office and Business Machines

Includes all processes of producing typewriters and parts; scales

and balances, except laboratory; office machines and devices not elsewhere

classified such as duplicating and dictating equipment.

Related SIC 's : 3572, 3576, 3579

15.03 Office Supplies

A "dummy" industry which collects and distributes the output of

other industries for accounting ease.

16.01 Ordnance and Accessories

Includes all processes of producing and assembling small and large

arms and ammunition.

Related SIC 's : 348

16A02 Sporting Goods and Toys

Includes all processes of producing toys, games and amusements, and

all types of sporting and athletic goods.

Related SIC 's : 394

16B02 All Other Miscellaneous Products

Includes processes related to the manufacture of all products not

classified in any of the above major groups such as jewelry, silverware, hard

surface floor coverings, mortician's goods, musical instruments, matches,

notions, fire ext inqui shers , neon signs, and umbrellas, among others.

Related SIC's: 39, except 394

17.01 Railroads and Related Services

Includes processes related to the provision of railroad services,

including all line-haul freight and passenger transportation, railway express

services, and the operation of switching and terminal facilities; also includes the rental of railroad cars. Does not include construction, maintenance and repair of roadbed, rails and buildings.

Related SIC's: 40,474
C-21

17.02 Local and Other Highway Passenger Transport

Includes processes related to the provision of all local and

interurban highway passenger transportation, and for supplying terminal

faci 1 i ties.

Related SIC's: 41

17.03 Motor Freight and Warehousing

Includes processes related to providing for local or long-distance

trucking services including transfer, storage, and warehousing and the

operation of terminal facilities.

Related SIC's: 42, part of 4789

17.04 Water Transportation

Includes processes related to providing freight and passenger

transportation on the open seas or inland waters, including marine cargo

operations, terminal facilities, lighterage, towing, and canal operation.

Related SIC's: 44

17.05 Air Transport

Includes processes related to providing domestic and foreign air

transportation, including airport operations and/or terminal facilities.

Related SIC's: 45

17.06 Pipe! ines

Includes processes related to providing for pipeline transportation

of petroleum, natural gas, and other commodities. Does not include urban/

suburban distribution systems for water and/or gas.

Related SIC's: 46

17.07 Transportation Services

Includes provision of services incidental to transportation such as forwarding and packing services, the furnishing of travel information and the

arrangement of passenger and freight transportation, inspection and weighing

services, packing and crating, and tollroad and bridge operation.

Related SIC's: 47, except 474, part of 4789
C-22

18.01 Telecommunication

Includes processes related to the furnishing of point to point

communication services (except radio and television broadcasting, which are

in Sector 21.02), including telephone, wire or radio telegraph, phototransmission, ticker tape operations, and transradio press services.

Related SIC's: 48 (except 483)

18.02 Electric Power

Includes processes related to the generation, transmission and

distribution of electrical energy, including electricity generated by users.

Related SIC's: 491, part of 493

18.03 Gas

Includes processes related to the storage and distribution to

final users of natural and synthetic gas.

Related SIC's: 492, part of 493

18.04 Water and Sanitary Services

Includes processes related to the collection, treatment, and

distribution of water for all uses, including water supply systems for the

purpose of irrigation; and processes related to the collection and disposal

of refuse and wastes. Includes steam supply for power or heat.

Related SIC's: 494, 495, 496, 497, part of 493

19.01 Construction, Residences

Includes processes related to the designing, erecting, maintaining,

and repairing of all single and multiple unit dwellings; also includes the

performance of major alterations and remodelling of these units.

Related SIC's: parts of 15, 17, 6561

•19.02 Construction, Nonresidential Buildings

Includes similar processes to 19.01, but for industrial,

commercial, farm, and government buildings. Also includes construction of

blast furnaces and other industrial structures.

Related SIC's: parts of 15, 17
C-23

19A03 Construction, Railroad

Includes processes related to railway roadbed construction

including the laying of track, along with maintenance and repair of

roadbeds and track.

Related SIC's: part of 1629

19B03 Construction, Pipelines

Includes processes related to the laying and wrapping of all

pipelines, including maintenance and repair.

Related SIC's: part of 1623

19C03 Construction, Other Public Utility

Includes processes related to all other public utility construction,

maintenance and repair including power lines, pumping stations, sewers, cable

laying, and radio and TV transmission towers. Includes laying of gas utility

distribution systems (from utility to user).

Related SIC's: part of 16

19A04 Construction, Highways

Includes processes related to the construction, maintenance and

repair of roads, streets, sidewalks, guardrails, parking areas, and airport

runways

.

Related SIC's: 1611

19B04 Construction, Bridges

Includes processes related to the construction, maintenance and

repair of bridges, viaducts, elevated highways, and railroad bridges.

Related SIC's: part of 1622

19C04 Construction, Dams

Includes processes related to the construction, maintenance and

repair of dams, dikes, causeways, and other flood control projects.

Related SIC's: part of 1629
C-24

19D04 Construction, All Others

Includes processes related to construction, maintenance and repair

of all other nonresidential buildings and facilities not listed above in

19A04-19C04 including canals and channels, docks, harbors, and jetties;

subways ,reservoi rs , land drainage and other reclamation projects; ski tow

erection; and blasting and debris removal services not classified above.

Also includes drilling of oil, gas, and/or water wells.

Related SIC ;s : part of 16

20.01 Wholesale and Retail Trade

Includes processes related to the provision of wholesale/retail

services (trade margins) associated with delivery to plant gates or final

destinations of all intermediate and final consumers of goods and services.

Also includes eating places not integral to hotels or lodging places.

Important to note :

1. Technically, trade embraces services of break-bulk and title

transfer.

2. Many related services are also included, such as brokerage of

manufactured products (but not commodities) and commission

merchandising.

3. In intermediate transactions, many do not involve trade

intermediaries, being directly between producers and users.

4. Transportation margins are not in 20.01

5. Costs of the goods bought and sold are not included in output

of 20.01, but only the trade margins that pay for services of

(20.01).

Related SIC's: 50, 52-59, 7396

20XA2 Insurance *

Includes the provision of insurance services by carriers of all

types. To the extent possible, "insurance dollars" should reflect

administrative costs, not premiums or claims.

Related SIC's: 63, 64

20XB2 Finance, Real Estate, and Advertising

Includes the provision of services by banks and trust companies,

credit investment and other holding companies, securities and commodities
C-25

brokers and dealers; lessors, lessees, buyers, sellers, agents, and

developers of real estate; and services related to the preparation and

placement of advertising, including commercial radio and TV programs.

Related SIC's: 60, 61, 62, 65, 66, 67, 731

20A05 Fracture Related Research and Development

Includes processes related to the performance of all fracture

related research and development activities. Includes "pure" research in

fracture mechanics, plus R&D directed toward fracture control, related

instrumentation, non-destructive testing, etc.

Related SIC's: part of 739

20B05 All other Research and Development

Includes all research and development activities except those noted

above. This is a special subdivision of new sector covering all R&D. The

two will be combined for future activities involving Input/Output analysis.

Important to note :

20A05 would go to zero in World II and would remain unchanged

between World III and World I.

By definition, 20B05 is unchanged in Worlds II and III from

World I.

Total R&D generally includes in-house as well as purchased

R&D and is generally assigned to the funding or the

benefitting column ( not to the performing column).

Where the R&D benefits a particular industry -- regardless of

how funded -- it may be ascribed to that column. E.g., agriculture is benefitted by the bulk of the USDA Extension Service

R&D and therefore (if possible) should be shown on the R&D row

of the several agricultural columns.

"Pure" research and social science research which cannot be

ascribed to any particular buyer, will generally be shown in

the institutional column related most closely to it:

21.07, Medical

21.08, Colleges and Universities

Federal Government Expense (FD)

lo

2.

3.

4 0

5.

Related SIC's: part of 739
C-26

20C05 Environmental Cleanup

Includes processes related to environmental cleanup associated with

all catastrophic natural or accidental events, excluding consideration of

improper dumping or improper disposition of hazardous materials, etc. This

is a special sector added for the fractures study.

Important to note :

1. This sector has nothing to do with cleaning up of old pollution, i.e., accumulated industrial pollution and/or waste

dumps, etc.

2. The only cleanups involved are those associated with transportation accidents and/or rupture of storage vessels (such as gasoline storage tanks).

Related SIC's: parts of many

20D05 All Other Business and Professional Services

Includes provision of all other business services not included

above, including data processing, personnel supply, management and con- sulting, equipment rental and leasing, commercial testing, legal, engineering, architectural, accounting, and selected commercial scientific and

research activities.

Related SIC's: part of 73, 7694, 7699, 81, part of 89

20.06 Business Travel, Entertainment, and Gifts

A "dummy" sector which distributes goods and services associated

with business travel, business entertainment and meals, and gifts to business

associates.

Related SIC's: parts of many

21.01 Printing and Publishing

Includes all processes associated with the printing and publishing

of newspapers, books, magazines, periodicals.

Related SIC's: 27
C-27

21.02 Radio and T.V. Broadcasting

Includes processes related to the dissemination of radio and T.V.

programs, excluding the provision of program material and related services.

Related SIC's: 483

21.03 Hotels and Lodging Places

Includes the provision of commercial and institutional lodging

services, including hotels, motels, tourist homes, boarding houses, trailer

and sporting camps, campsites, and organizational lodging on a membership

basi s

.

Related SIC's: 70

21A04 Personal Services

Includes provision of laundry, dry cleaning, photographic,

barber and beauty, and funeral services.

Related SIC's: 72, excluding part of 725

21B04 Repair Services Except Auto

Includes shoe and watch repair, appliance and furniture repair,

and all other personal repair services.

Related SIC's: part of 76, part of 725

21.05 Automobile Repair and Services

Includes provision of automotive repair, rental, leasing, painting,

washing, towing and parking services to the general public. Also includes

tire rebuilding and retreading.

Related SIC's: 75

21.06 Amusements

Includes provision of amusement, entertainment, and recreation

services, including motion pictures, TV and radio program materials (sold to

advertising, Sector 20XB2), theatrical productions, commercial sports, horse

racing, public golf courses, museums, coin operated amusement devices, and

other participatory or spectator events.
C-28

21.07 Medical and Health Services

Includes provision of medical, surgical, dental, psychiatric and

other health services to persons, including nursing care facilities.

Related SIC's: 80

21.08 Educational Services and Nonprofit Organizations

Includes provision of all formal, academic, or technical education,

including correspondence, commercial and trade schools, and libraries; also

includes museums and art galleries and all membership organizations, including business, professional, and fraternal associations, labor unions, political organizations and noncommercial research institutes (e.g., The Brookings

Institution)

Related SIC's: 82, 84, 86, 892

22.01 Post Offices

Includes provision of all postal and mail services.

Related SIC's: none
D-1

APPENDIX D. THE ROW RULES

The philosophy which led to the development of the so-called "Row Rules"

is set forth in Chapter 4. This Appendix contains the details of all the

rules in the way that they have been applied. These rules are arranged

generally in terms of the matrices to which they apply and the matrix

indication appears parenthetically with each rule's title. Note that the

Scrappage Rule applies to both the A and B matrices and (even though

procedurally it is the first rule applied to the A matrix) it appears in

this Appendix as the last in the A matrix group.

The general order of arrangement is: A Matrix, B Matrix, R Matrix, and Final

Demand.

Materials Rules

(A Matrix)

For each of the materials producing sectors discussed below, sets of row rules

for Worlds II and III weight reductions have been formulated. Generally,

these rules reflect the ability to design uniformly perfect materials at a safety factor of unity in World II and macroeconomic best practice, which

employs all presently known skills and practices and which minimizes total

cost to society, in World III (see Chapter V of the Phase I report for a more detailed discussion of the derivation of these rules). For many of the rules

presented below, exceptions to each will be noted (i.e., weight reduction is

not possible because e.g., a material thickness is dictated by wear, corrosion,

aesthetics, etc.). For others, exceptions are accounted for as column

specific changes, the explanations for which will appear on the column

data sheets.

Development of the Materials

Rule Concept

The development of the materials rules stems from the most fundamental

definitions of Worlds II and III, and ties directly to the physical meaning

of these hypothetical descriptions of the economy. In general, the material

characteristics in either World II or World III are defined such that the

useful yield strength will be increased over that of World I, and the

quantities of material required would be decreased. The ratio of yield

strength in either World to that of World I is conveniently expressed as

K

i = v- cV

(1) m n- B(T

where the index (i) denotes the appropriate World, and fx and ct are the mean and standard deviations, respectively, of yield strength for a class

of materials.
D-2

In addition, design considerations require that a safety factor be

applied as a correction to strength. Thus, the strength of a material

in World (i) becomes K °"j , where tfj is the strength in World I.

A straightforward argument permits a translation from this general expression for World (i) strengths into World (i) weights of materials, the latter

being the appropriate basis for the development and use of row rules. Intuitively, it is expected that strength increases by a factor of K^kJ would

result in weight decreases by a factor ( KmK<j)~ n

> wh ere n -1-

To evaluate n, we need to consider load distribution and component geometry.

For example, in a tension member of length L and supporting a load P, we have

where A T is the cross section in World I and A

1 is the cross section in

World (i). The weight of the tension member is given as

Wj = p LA j ; W

1 = pLA 1 (3)

where p is the density. Combining Equations (2) and (3), the proportionate

weights are wVWj = (K^Kjr 1 (4)

or n = 1 . If a solid cylindrical bar is loaded in bending, a similar

calculation gives n = 2/3. For a flat disc supported along its rim to

represent a platform and point-loaded, n = 1/2. Consideration of several

other geometries suggests that l>n>l/2 in all cases. In the absense of

detailed data regarding all possible load-bearing geometries, we have

arbitrarily chosen an "average" value of n = 3/4.

The specific choices of C

1 (and, hence, kL) and kJ can now be made to result

in initial values of the weight reduction that is applied in the row rules.

As was noted in Chapter II, the no-fracture World cannot be based on the

assumption that fracture and massive deformation do not occur in an absolute sense. Such an assumption would lead to values of the total cost of

fracture which are totally unrealistic.

In order to define a more tenable base from which to measure fracture costs,

several conditions have been imposed on the materials and design which

characterize World II. In regard to material usage, existing standards

dictate that most steels (which we use as a reference) are selected to have

minimum yield strengths at that value which is 3.7 standard deviations below

the mean.* The definition of World II permits usage at 4.0 standard

deviations above the mean.

*Metals Handbook, Ninth Edition , Volume 1, ASM (1978)
D-3

In addition, the definition and specification of World II includes perfect

knowledge of material characteristics and their response to imposed stresses;

hence, a safety factor of unity can be applied to all structures. It follows

from these "textbook" definitions that for most applications in World II,

the dimensions of steel members could be reduced substantially -- to 51 percent

of the dimensions presently employed in World I. This material reduction

can be achieved in all cases except where the application carries with it

constraints imposed by stiffness or other characteristics of the material

(such as electrical conductivity).

Similarly, in World III, it is assumed that the use of best fracture control

practices would lead to the use of steels having properties 2.0 standard

deviations below the mean. A representative safety factor of 1.5 has been

assumed for various metals in World I*, and a range of safety factors of

1.15-1.5 (average 1.3) has been identified as appropriate for the ultimate

stress in commercial aircraft. Inasmuch as this sector is believed to

exhibit general application of best practices, a value of

kJ

11

= 1.5/1.3 = 1.15

has been adopted. Coupled with the choice of kJ~ , it has been calculated

that material reductions to 81 percent of present specifications could be

real ized.

It is recognized that these reductions by 49 and 19 percent (the so-called

49/19 rules) tend to understate the extent to which material adjustments

should be made, as they take into account only the lower limits of safety

factors that are commonly employed. Present designs for a number of different

structures use large safety factors, and their reduction to unity would be

reflected in an even larger reduction in materials. However, in keeping with

the overall thrust of this program, conservative estimates of reductions (and,

hence, conservative estimates of the cost of fracture) have been made.

Application of the

Metals Rules

All producing sectors which buy primary metals (7A,B,C,01, 7.03, 7 x 04) will buy 49 percent less in World II and 19 percent less in World III.

Note that the material weight savings accrue to the fabricating sector.

For example, lighter weight I-beams put in place by one of the construction sectors do not represent a material savings to that construction

sector. The construction sector buys I-beams from sector 8.A05, and

8.A05 appreciates the savings in metal due to weight reduction. The

construction sector thus purchases the same number of I-beams as it did

*H. D. Gerlach, International Journal of Pressure Vessels and

Volume 8, pp 283-302 (1980).
D-4

before at the same price as before. The only exceptions would result

from design changes which would e.g., permit wider beam spacing and

therefore require fewer beams.

Exceptions to the -.49/. 19 rule include the following columns:

Sector Title World II World III Notes

8.03

8.04

8B05

8.07

0.01

10.02

10.03

10.06

Metal sanitary ware

and plumbing fittings —

Nonelectric Heating -.29

Equipment

Boiler Shop Products -.25

Other fabricated -.05

metal products

Engines 8 Turbines -.25

Construction machinery -.37

Mining machinery -.37

Industrial trucks

and tractors

-.37

10.07 Metal working machinery -.25

10.08 Special industry -.37

machinery

11.01 Motor vehicles and -.49

parts

11.02 Aircraft and parts - -.25

11.03 Ship and boat building -.49

12.03 Industrial controls,

transformers —

14A01 Fracture Control -.49

Instruments

16.01 Ordnance and -.25

accessories

16A02 Sporting goods -.25

and toys

-.05

-.10

-.10

14

14

14

10

14

14

14

10

10

WI materials are already

as thin as can be fabricated;

also corrosion related

Limitations due to

stiffness requirements

Corrosion allowance

Stiffness requirements

Limitations due to stiffness/

temperature and heat flow

requirements

Balance/ballast requirements

Partially stiffness and wear

requirements; partially

ballast

Balance/ballast requirements

Partially stiffness limited

(e.g., rolling mill frame

thickness); partially wear

limited (e.g., cutting and

forming tools)

Stiffness and corrosion

requirements

Movement toward best

practice by 1978

W II stiffness requirements;

already at W III best

practice

W III stiffness requirements

Electrical rather than

structural limitations

(e.g., can't change amount

of steel in transformer core)

At W III best practice

Stiffness/mass constrained;

some W III best practice

already exists

Stiffness/mass constrained

(e.g., tennis racquets,

golf clubs)
D-5

The above exceptions to the -.49/. 19 rule apply to all metals used as inputs to

each of the column sectors. Additional exceptions for specific metal inputs

incl ude:

• No material savings of 7X04 into all sector 12'

s

, 1 3' s , and

15'

s

. The 7X04 inputs into these sectors are primarily for

wiring. Because of conductivity constraints, no material

savings can be realized.

• No material savings of 7X04 and 7C01 into 16B02 (Miscellaneous

Products). These primarily represent precious metal inputs

into jewelry and silverware, and stainless steel into tableware. Weight savings would not occur because of personal

taste considerations.

• Other exceptions such as -.25/. 10 of 7A01 into 19A03 (Railroad

Construction) because of rail stiffness limitations are ac- counted for as column specific changes.

Special Treatment of Ceramic

and Related Materials

Unlike metals, there are no sectors that produce unformed ceramic materials

and sell them to fabricating sectors. Instead, most of these sectors (disaggregations of 6.01 and 6.03) both refine and form the material. Therefore,

reductions which take the forms of "row rules" in metals (7.01, 7X04, 7.03)

inputs into fabrication sectors (8's, 9's, etc.) must be treated in a different

manner.

Glass . Glass equivalents of row rules involve reductions in inputs

of glass making materials (from 2.06, 2.07 and 5.03) and energy (from 5.01,

18.02 and 18.03) into 6A01 , 6B01 and 6D01 . This allows reduction of World II glass content of formed items, which then go unchanged into other processes.

There are no changes in World III.

No equivalent change is made in 6C01 , which buys flat glass (already subject

to reduction) from 6A01

.

World II material characteristics allow 30 percent reductions in 6A01 and

6B01 , many uses of which are stiffness limited. Even more of outputs of

6D01 are limited by stiffness, insulation, thickness, or aesthetic aspects,

leading to a 7.5 percent reduction.

Ceramics . With the exception of readymix concrete (part of 6B03),

the ceramic sectors (6A03, structural concrete products in 6B03, 6C03, and

6D03) should be treated in a manner similar to the glass sectors (disaggregated 6.01 ).
D-6

Readymix Concrete . Across the row 6B03, reduction^ in inputs of

readymix should be made in World II only:

Since readymix is approximately 60 percent of 6B03 total output and World II material characteristics are thought to permit a 4 percent reduction in

inputs over World I, all row entries should be reduced by .024 (multiplied by

.9760). The only exception is the 6B03 diagonal.

Plastics Rule - Row P. 07

The material rule for plastics is split into four ranges of possible

materials savings:

W II = -.30/W III = -.125

W II = -.20/W III = -.08

W II = -.10/W III = -.04

w 11 = -.00/W III = =.0

As all of the plastics fabricating sectors buy their materials from

Sector P. 07, any fracture relevant material savings are treated

reductions across the P. 07 row. Also noted is the fact that

plasticizers and chemical additives which affect the strength of

plastics are also produced in P. 07.

Given the wide range of plastics produced as well as their different

characteristics, it is difficult to generalize a single rule as it

applies to each sector. However, by emphasizing the degree to which

each sector's plastics applications are strength relevant (as opposed

to e.g. waterproofing, sealing, filling a space, providing a decorative

service, insulating, etc.), it is possible to categorize potential material

savings for the average of each sector's major uses. Below are the

expected P. 07 savings by column sector.

.30/. 125: PA15

.20/. 08 : 5AO 6 PB15 6B01

.10/. 04 2X02 4.02 4.08

3A01 4.03 5.12

3B01 4XA5 P. 13

3X05 4XB5 PA1

3B07 4.07 PB14

6C01 8 .06 16A02 16B02

PCI 5 10 .08 12B07 14.04

6001 11 .01 13.01 15.01

6A04 11 .02 13 02 15.02

8.02 11 .03 13.03

8.07 11 .05 14.02
D-7

3.02 P. 07 7.03 8C05 all 12's 16. 01 20A05

3X03 6B04 7X04 9.01 except 12B07 17. 06 20B05

5.03 7A01 8.03 9.03 14A01 17. 07 20D05

5B06 7B01 8AO 5 10.04 14B01 19. 02 21 .01

5X10 7C01 8B05 10.07 14.03 20. 01 21.06

Wood Rule - Row 4.01

It was decided by Battelle experts that materials characteristics allow

general reductions in the following amounts of lumber (furnished by

Sector 4.01):

W II - 15% or X 0.85

U III - 7.5% or X 0.925

This applies to all sectors using inputs from Sector 4.01 except:

4.03 ^ stiffness limited

4XA5 asthetics/spacej
D-8

Transportation Rules for Reduction in

Material Weights

(A Matrix)

Given the potential weight savings in the material rules described

above, costs of transportation associated with the delivery of

inputs to each sector's plant gate will be reduced. Inputs include

the primary materials themselves (except in those cases where a sector's

products were either not affected by a given material rule or which did

not receive the full rule application, e.g., Sector 8.03), machinery

and equipment and replacement parts for maintenance and repair of each

producing sector's capital (a similar rule will apply toward transport

costs associated with delivery of capital goods in the B matrix), and

all forms of component parts that each sector assembles to complete its own product (as with the primary material inputs, account is taken

of those components which are unaffected by or only partially affected

by the materials rules). Where possible, sectors with similar input

weight reductions have been grouped together for application of the

transport savings rule.

Example: For all Sector I's, about two percent of all input

requirements are weight sensitive. Divide the weight sensitive

proportion by two, subtract the difference from 1.0 and apply

the result to each sector's coefficients for Sectors 17.01,

17.03, and 17.04 to arrive at W II transport savings; similarly

apply .25 of the W II savings to arrive at Will transport savings

Thus, for all Sector I's:

.02 2 = .01

1.0 .01 = .99 for W II

.01 X .25 = .0025

1.0 .0025 = .9975 for W III

W II Multiplier

W III

Sectors Mul ti pi ier

I's

2's

3A01, 3B01

3AO 7 3.02, 3X03, 3X05, 3B07, 3X08

4.01, 4.02, 4.03, 4.07, 4.08

4.04

4XA5, 4XB5

5.01, 5.02, 5.03, 5X04, 5A06, 5B06, 5.09

5X10, 5.12

all P's except P. 13

P. 13

.99

.90

.90

.65

.99

.99

.95

.80

.98

.97

.99

.94

.9975

.9750

.9750

.9125

.9975

.9975

.9875

.9500

.9950

.9925

.9975

.9850
D-9

W II W III

Spc tor*? Mul ti d! i er Mul ti d1 if

all 6

1 . exceot 6 03's .99 .9975

6A03 6B03. 6C03. 6D03 .96 .9900

all 7's .99 .9975

8 01 8 02 .75 .9375

8.03 .98 .9950

8 04, 8A05 .80 .9500

3B05 .35 .9625

8C05, 8.06 .75 .9375

8.07 .98 .9950

9.01 .90 .9750

9 02. 9 03 .80 .9500

all 10's .80 .9500

1 1 .01 .88 .9700

11 .02 .98 .9950

11 03 88 .9700

1 1 .04 80 .9500

11 .05 .90 .9750

121 (p t v011 95 .9875

12A02 12B02 85 .9625

12 03 99 9975

12 04 97 9925

121 L> t V05V 70 9250

12 06 12A07 12B07 95 .9875

13 01 . 1 3 02 .88 .9700

13.03 .95 .9825

14A01 14B01 14 02 .90 .9750

14.03 .97 .9925

14 04 14 05 .98 • 9950 -mf -J tj \J 151 W 1 01V 1 .95 .9875

15 02 .88 .9700

all 16'

s

.90 .9750

all 1 7'

s

.99 .9975

all U 1 1 18's 1 u o 99 .9975

19.01, 19.02 .88 !9700

19A03, 19C03 .80 .9500

19B03 .60 .9000

19A04, 19B04 .88 .9700

19C04, 19D04 .90 .9750

all 20's .99 .9975

all 2Ts .99 .9975
D-10

Maintenance and Repair Rules

(A Matrix)

The following rules will apply as row modifications for capital-generating

sectors in the A matrix, to selected column sectors, but in no instance

will the modification apply to the diagonal (row and column cell of the same sector).

Rule #1. • For all construction sectors in the A matrix

(which are automatically M/R), multiply selected row entries by .995 in W II; note that only

rows 19.02 and 19A04 should perform M&R for any

other 19 sector.

• W III is anticipatory, i.e., anything done would

be done to e.g. increase life, etc. Therefore,

multiply all 19's by 1.0025.

Applicable sectors: 19.01, 19.02, 19A03, 19B03,

19C03, 19A04, 19B04, 19C04, 19D04.

Rule #2. 0 For 21B04 (Repair Services), multiply all entries

by .9000 across the row for W II; i.e., about 10%

of this repair and maintenance service is fracture

related.

I For W III, multiply all 21B04 entries by .9500 across the row because, e.g., a) a typewriter is

made better, b) a typist uses it better, and

c) typewriter M/R makes better repairs.

Applicable Sectors: 21B04

Rule #3. • For selected sectors, multiply row entries by .9900

for W II; this represents fracture relevant M/R

parts, supplies, and labor.

• For W III, multiply by .9950 across row because

"Best Practice" affects original manufacture, use,

and M/R services.

Applicable Sectors: 9.01, 9.02, 9.03, 10.03, 10.07,

12.01, 12B02, 12.03, 12.05, 12A07, 12B07, 13.01,

13.03, 14A01, 14B01, 14.02, 14.03, 14.04, 14.05

Rule #4. • For selected row sectors (those which are less

component/supplies oriented than in #3 above),

multiply by .9000 across row for W II; in-service

use of equipment/machinery in these sectors generates

significant parts replacement that are fracture

relevant.

• For W III, multiply by .9500 because "Better Practice"

affects original manufacture, use, and M/R services.
D-11

Applicable Sectors: 10.01, 10.02, 10.04, 10.05,

10.06, 10.08, 11.01, 11.02, 11.03, 11.04, 11.05,

12A02, 15.01, 15.02.

Rule #5. I For 21.05 (Automotive Repair), fracture relevant

M/R is estimated to be M of total M/R, which

represents 60% of the sector's output (excludes

parking, painting, washing, towing, leasing, etc.),

for W II, multiply row entries by .9940.

• For W III, multiply 21.05 row entries by .9970.

NOTE: Sector 12.04 (light bulbs) is excluded from the

above rules because of its "consumable characteristic;

Sector 13.02 (household appliances) is excluded

because most of its M/R is performed in 21B04; and

sectors 16.01 (ordnance) and 16A02 (sporting goods

& toys) are excluded because their outputs are non M/R related.

The above M/R rules as they apply to specific row Sectors are summarized below.

Multipliers for M & R Rules

Sector Rule # Title W II W III

9.01 3 Engines & Turbines .9900 .9950

9.02 3 Gen Indus Mach & Equip .9900 .9950

9.03 3 Machine Shop Prod .9900 .9950

10.01 4 Farm Machinery .9000 .9500

10.02 4 Construction Machinery .9000 .9500

10.03 3 Mining Machinery .9900 .9950

10.04 4 Oil Field Machinery .9000 .9500

10.05 4 Material -Handl ing Mach .9000 .9500

Except Truck

10.06 4 Indust Trucks & Tractors .9000 .9500

10.07 3 Metal Working Machinery .9900 .9950

10.08 4 Spec! Industry Machinery .9000 .9500

11.01 4 Motor Vehicles & Parts .9000 .9500

11.02 4 Aircraft & Parts .9000 .9500

11.03 4 Ship & Boat Bldg & Repairs .9000 .9500

11.04 4 Locoms & Rail & Rpd Trnst .9000 .9500

11.05 4 Cycles, Trailers, Etc. .9000 .9500

12.01 3 Elec Measuring Instruments .9900 .9950

12A02 4 Elec Motors & Generators .9000 .9500
D-12

Row

Sector Rule # Title W II W III

12B02 3 Other Elect Motrs & Genrtrs .9900 .9950

12.03 3 Indus Controls, Transformers .9900 .9950

12.05 3 Light Fixt & Wiring Devices .9900 .9950

12A07 3 X-Ray Equipment .9900 .9950

12B07 3 Other Misc Electric Mach .9900 .9950

13.01 3 Service Industry Machinery .9900 .9950

13.03 3 Radio, TV & Commun Equip .9900 .9950

14A01 3 Fracture Control Instrum .9900 .9950

14B01 3 Other Scientific Instrum .9900 .9950

14.02 3 Med, Surgcl , Dental Instrum .9900 .9950

14.03 3 Watches, Clocks & Parts .9900 .9950

14.04 3 ODtical & ODhthalmic Goods .9900 .9950

14.05 3 Photo Equip & Supplies .9900 .9950

15.01 4 Computing & Related Machines .9900 .9950

15.02 4 Other Office & Busin Machines .9000 .9500

19.01 1 New Construction, Nonfarm .9950 1 .0025

Res i dences

19.02 1 New Construction, Nonresid- .9950 1 .0025

dential Buildings

19AO 3 1 New Construction, Railroads .9950 1 .0025

19B03 1 New Construction, Pipelines .9950 1 .0025

19C03 1 Other Public Utility Constr .9950 1 .0025

19A04 1 New Construction, Highways .9950 1 .0025

19B04 1 New Construction, Bridges .9950 1 .0025

19C04 1 New Construction, Dams .9950 1 .0025

19D04 1 New Construction, All Other .9950 1 .0025

21B04 2 Repair Service, Except Auto .9000 .9500

21.05 5 Automobile Repair & Service .9940 .9970
D-13

20A05 Fracture R&D Row Rules

(A Matrix)

In World II, entries for row 20A05 go to zero . In World III, corresponding row entries remain unchanged.

There are no exceptions.
D-14

Environmental Cleanup Rule (Sector 20C05)

(A Matrix)

Entries across row 20C05 in the A matrix affect only 12 Sectors in

World I. These are sectors that are subject to accidents of transportation and/or storage necessitating emergency cleanup of spills

of hazardous materials. They do not involve improper disposal or other similar forms of pollution.

In Worlds II and III these sectors are still subject to emergencies

due to catastrophic natural events and events of human error, vandalism,

etc., that are outside our scope. Therefore, the reductions in inputs

of 20C05 (across the row) in World II are based on data collected for

the supplemental models. On the basis of fragementary information, we

have assumed that the reductions in World III are one-half those shown

for World II.

For column sectors 2A05, 2B05, 5.01, 5.03, 5X02, 17.06, and 18.03, row entries are reduced by 7.3% (i.e. multiplied by .927) in World II and

by 3.65% (multiplied by .9635) in World III.

For column sector 17.01, corresponding changes are -25.3% and -12.65%

(multiplied by .747 and .8735), respectively.

For column sectors 17.03 and 18.02, corresponding changes are -0.5% and

-0.25% (multiplied by .995 and .9975).

For column sector 17.04, changes are -0.7% and -0.35% (.993 and .9965).

For column sector 17.05, changes are -7.8% and -3.9% (.922 and .961).
D-15

Inspection Rule

(A Matrix)

Fracture relevant inspection of capital equipment, structures, inputs, work

in progress, or finished goods is also treated as a "row" rule. For both

Worlds II and III, estimates of labor savings/dissavings related to lower/higher

inspection requirements are applied to the labor component of each sector's

value added. In applying the row rule, only inspection performed by the

producing (column) sector's labor is considered. In cases where special

circumstances warrant, additional inspection adjustments are made in other

rows, e.g., ultrasonic inspection of petroleum refinery equipment, which is

treated as a Sector 5.01 purchase from Sector 20D05. Summarized below are

the sector specific inspection changes for Worlds II judgments concerning

best practice state of the art.

The first part of the rule details that follow consists of the proportion by

which the labor component of value added is reduced (-) or increased (+). The

second part consists of the proportion of value added that is labor costs.

Thus, in Sector 1.01 the World II adjustment is shown (in the first listing)

as -01; the labor component is shown (in the second listing) as .1322. The

final adjustment is made by multiplying the sector's value added coefficient

by 1-(.01 x .1322). This is (1-.0013) or .9987. For Sector 2A04 the World

III adjustment is shown (in the first listing) as +.07; the labor component

of value added is shown (in the second listing) as .5189. The final adjustment

is made by multiplying the sector's value added coefficient by l+(.07 x .5189)

this is (1 + .0363) or 1.0363.

Adjustment to Labor Component

of Value Added

Sector Title World

1.01 Livestock & live- -.01

stock products

1.02 Field & orchard -.01

crops

1A03 Forestry products -.005

1B03 Fishery Products -.03

1 .04 Services to agricul- -.01

ture, forestry & fishery

2.01 Iron & ferro alloys -.005

ores mining

2X02 Nonferrous ores -.005

mining

2A04 Underground coal -.05

mining

World III Notes

-.005 low, mainly for capital

equipment, W III lower

due to improvement in

capital equipment

-.005 low , similar to 1 .01

-.0025 very low , mostly for

equi pment

-.01 moderate, mostly capital

in fishing industry

-.005 low, mostly capital

equipment

-.0025 very low, mostly capital

equipment

-.0025 very low, similar to 2.01

+.07 moderately high, mostly for

prevention of roof falls,

balance for equipment;

best practice likely to

increase roof bolting
D-16

Sector Title

2B04 Strip coal mining

2C04 Other coal mining

2A05 Crude petroleum

2B05 Natural gas

2.06 Stone & clay

2.07 Chemical & fertilizer

minerals

3A01 Beverages

World II World III Notes

-.005

-.02

-.02

-.005

-.005

.03

-.0025

-.005

-.005

-.0025

-.0025 •

01

very low , mostly equipment

neql iqible, ignore

moderate, essentially all

capital; W III reduction

due to best practice improvement in equipment

moderate, similar to 2B05

very low , mostly capital

very low , same as above

moderate , mostly inputs /work

in progress (glass containers;

less in W III due to shifting

toward metal cans & plastics

3B01 All other food & kindred products

01

3.02 Tobacco manufactures -.01

3X03 Leather & Leather

Products

3X05

3AO 7

3B07

3X08

Fabrics, yarns,

threads & soft

floor coverings

Metal tire cord

-.01

10

-.03

Norimetal 1 ic tire cord -.03

& miscellaneous textile

goods

Apparel & other -.005

fabricated

products

4.01 Sawmills & planing -.01

mills

-.005 low, largely inputs /work in

progress (glass containers);

W III shift to metal/plastics

also

low, 50/50 split between work

in progress/capital; W III

inspection up for work in

progress & output offset by

decline in equipment inspection

+.0075 low , mostly work in progress & output, capital small; W III

inspection up for work in

progress and output, down for

capi tal

moderately high , mostly work

in progress, some capital;

no change in W III

+.005 moderate , mostly output, some capital; inspection labor up

in W III

+.005 moderate, similar to 3A07

very low , for both output & capital; W III increases

for output offset by

decrease for capital

+.005 low , mostly capital; increase

in inspection of inputs more

than offsets decrease for

better equipment
D-17

Sector Title World II World III Notes

4.02 Veneer & plywood -.005

4.03 All other lumber & -.005

wood products, except

containers

4.04 Wooden containers -.005

4XA5 Wooden furniture & -.01

fixtures

4XB5 Metal furniture & -.01

fixtures

4.07 Pulp, paper & paper -.01

products, except

containers

4.08 Paperboard containers -.02

& boxes

5.01 Petroleum refining -.03

& related products

5.02 Paving mixtures & -.03

asphalt products

5.03 Industrial inorganic -.02

& organic chemicals

5X04 Agricultural -.01

chemicals

5A06 Adhesives -.01

5B06 All other misc -.01

chemical products

5.09 Drugs -.02

5X10 Cleaning & toilet -.01

preparations

5.12 Paints & allied prod- -.01

ucts

P07 Plastic materials -.03

resins & synthetic

rubber

P08 Organic manmade -.03

fibers

-.001 very low , mostly capital, some

output; W III, capital down

output inspection up

-.0025 very low , mostly capital

,0025 very low , similar to 4.03

005 low, similar to 4.01

005 low, similar to 4XA5

005 low, similar to 4XB5

low, capital & output; W III

increase of output inspection

offsets less for inspection

of better capital

,01 moderate , all for capital

.01 moderate , similar to 5.01

,01 low, all for capital

low , part capital, part

packaged output; W III

increase for output offset

by decrease for better

equipment

low , similar to 5X04

low, similar to 5X04

,005 low , part packaged output,

part capital; W III increase

in output inspection partially

offset by decrease in equipment

inspection

low , similar to 5X04

.005 low , mostly capital

.01 moderate, all for capital

-.005 moderate , mostly capital but some for work in progress;

W III capital inspection

reduced but no change in

work in progress
D-18

Sector Title World II World III Notes

PI 3 Tires & inner tubes -.02

PA14 Industrial rubber -.03

belts

PB14 All other rubber -.01

products

PA15 Plastic pipe -.02

PB15 Plastic containers -.015

PCI 5 All other manufact- -.01

ured plastic products

6A01 Flat glass -.02

+ .01

6B01 Glass containers .03

+ .005

+ .01

+ .005

-.005

-.01

6C01 Automobile & truck -.01

windshields

6D01 All other glass prod- -.05

ucts

6.02 Hydraulic cement, -.01

lime, & gypsam

products

6A03 Structural clay prod- -.03

ucts , except clay

structures

6B03 Structural concrete -.01

products & ready

mixed concrete

-.02

-.01

+ .005

low, split between capital

& product (both work in

progress & output); W III

product inspection increase

offsets equipment decrease

moderate , 2/3 for product,

1/3 for capital ; W III

product inspections

increase, those for

capital decrease

low, similar to P13, but less

low , split between capital & output; W III output inspection

increases more than equipment

inspection decrease

low , 2/3 capital, 1/3 output;

W III output inspection

increases more than equipment inspection decrease

low, similar to PA15,

but less

low, mostly capital, some output; no change in W III

output inspection (already

at best practice) but modest

decline in capital inspection

moderate , split between output

& capital

low , split between output & capital; essentially no change in W III as capital

equipment is much less

complicated than in 6A01 or

6B01 and output inspection

still needed

moderate, 2/5 for capital,

3/5 for output; W III best

practice allows savings in

both

low , mostly capital; W III

equipment inspection

decrease offsets output

inspection increase

moderate , 2/3 output, 1/3 capital;

W III reductions for both

low , 1/4 capital, 3/4 output;

W III modest increase in output

inspection, equipment best

practice negligible
D-19

Sector Title World I World III

6C03 Pottery, whiteware & -.03

porcelain products

6D03 Clay & none! ay -.03 -.005

refractories

6A04 Abrasives, including -.01 +.005

grinding wheels

6B04 All other store & non--.01

metallic mineral

products

7A01 Carbon steel -.01 +.0025

7B01 Alloy steel -.01 +.0025

7C01 Stainless steel -.01

7.03 Aluminum -.03 +.01

7x04 All other nonferrours -.01

metal

s

8.01 Metal cans -.01 +.005

8.02 Metal barrels, drums -.01 +.005

& pails

Note

moderate, 1/3 capital 2/3

product (both work in progress

& output); W III equipment

inspection reduction offset

by small increase in product

inspection

moderate, 1/3 capital, 2/3

for product (both work in

progress & output); W III

has lower equipment inspection

but modest increase in

product inspection

low, 3/4 for product, 1/4 for

capital; no W III change in

equipment inspection but

product inspection increases

low, split between capital & output; W III product

inspection increase offsets

equipment decline

low, mostly capital; W III

has small increase in

equipment inspection

low, mostly for capital;

~Y III has small increase

in capital equipment

i nspection

low, primarily capital, some

for output; W III equipment

inspection decline offsets

output inspection increase

moderate , mostly output, some

'

for equipment; W III output

inspection increases

low , split between capital and

products (work in progress & output; W III reduction in

equipment inspection offsets

increase in output inspection

low, split between capital & product (inputs, work in

progress, and output); product

inspection increases more than

offset reduction of equipment

inspection in W III

low, mostly for product (inputs,

work in progress, output),

remainder for equipment; no

W III change for equipment,

but slight increase for product
D-20

Sector Title World I World III Notes

8.03 Metal sanitary ware & -.03

plumbing fittings

+ .005

3.04

8A05

8B05

8C05

8.06

8.07

9.01

9.02

9.03

Non electric heating -.01

equipment

Structural metal -.01

products

Boiler shop products -.01

& pressure vessels

All other fabricated -.005

structural products

Screw machine prod- -.005

ucts, stampings & forgi ngs

Other fabricated -.005

metal products

Engines & turbines -.01

General industrial -.005

machinery & equipment

Machine shop products -.005

10.01 Farm machinery -.01

10.02 Construction

machi nery

10.03 Mining machinery

10.04 Oil field machinery

10.05 Materials-handling

machinery, except

trucks

-.01

-.01

-.01

-.01

+ .005

+ .005

+ .005

+.0025

-.0025

-.0025

+.0025

+.0025

+.0025

+.0025

+.0025

+.0025

+.0025

+.0025

moderate, mostly for work in

progress & output; slight

W III reduction in capital

inspection, but more than

offset by increase in product

best practice (switch to castings from forgi ngs)

low, mostly for inputs, work

in progress, output; W III inspections increase

low, nearly all for inspection

of inputs, work in progress,

output; W III inspections

increase

low, similar to 8A05

essentially for

W III inspection up

very low,

output;

slightly

very low , mostly for

capital ; W III better

equipment requires

less inspection

very low , mostly capital,

similar to 8.06

low, split between capital

and product (work in progress

and output) ; W III shift

from forgi ngs to castings

increases inspection needs

very low , primarily output;

W III requires slightly

more output inspection

very low , split between

capital & products (work

in progress & output); W III

reflects increase in product

inspection

low , split between products (work

in progress & output) and

capital; W III decline in

capital inspection more than

offset by increased inspection

of products

low , similar to 10.01

low, similar to 10.01

low , similar to 10.01

low, similar to 10.01
D-21

Sector Title World II World III Notes

10.06 Industrial trucks & -.01

tractors

10.07 Metalworking -.01

machinery (including

cutting tools)

10.08 Special industry -.01

machi nery

11.01 Motor vehicles & -.03

parts

11 .02 Aircraft & parts

11.05

12.01

12A02

12B02

12.03

12.04

12.05

-.25

11.03 Ship & boat building repair

.03

11.04 Locomotives, rail -.01 cars & streetcars

Motorcycles, bicycles, -.01

trailer coaches,

etc.

Electrical measuring

instruments

Electric motors & -.01

generators for power

pi ants

All other electric -.01

motors & generators

Industrial controls, -.01

transformers, etc.

Electric lamps -.03

Lighting fixtures & wiring devices

-.005

+.0025

+.0025

+.0025

+.01

+ .01

+ .005

+ .005

+ .005

+ .005

+ .005

-.01

+.0025

low , similar to 10.01

low , similar to 10.01

low , similar to 10.01

moderate , 2/3 for products

(input, work in progress,

output), 1/3 for capital;

W III equipment best practice

reduces inspection, but

that for product increases

them substantial ly

high, primarily

(input, work

for product

in progress,

output); W III best practice

increases some inspections,

reduces others to yield net

inspection change of zero moderate, preponderantly work

in progress & output

W III best practice

results in increased

inspection, e.g., welding, leakage prevention

low, principally for work in

progress & output; W III

requires increased inspection

low , mostly

requi res ion

negl igible , no changes

warranted

low, primarily

W III needs

i nspection

low, similar to 12A02

for output; W III

increase inspectfor output;

i ncreased

low, similar to 12A02

moderate, mostly for inputs

work in progress, & output;

W III process best practice

reduces inspections

very low, mostly for output;

W III requires slight

increase in inspection
D-22

Sector Title World I World III Notes

12.06 Electronic components -.005

& accessories

12A07

12B07

13.01

13.02

13.03

14A01

14B01

14.02

14.03

14.04

14.05

15.01

15.02

16.01

X-ray equipment -.005

All other misc elec- -.01

trical machinery

Service industry -.01

machi nery

Household appliances -.01

-.01 Radio, T.V. , & communication

equipment

Fracture control

instruments

Al 1 other scientific

measures & controls

Medical , surgical & dental instruments

& suppl ies

Watches, clocks & parts

Optical & ophthalmic

goods

Photographic equipment & suppl ies

Computing & related

machines

Al 1 other office & business machines

Ordnance & accessories

16A02 Sporting goods & toys

-.01

-.01

-.01

-.01

-.02

-.01

-.01

-.01

.01

.005

-.0025

+.0025

+.0025

+ .005

+ .005

+ .005

+ .005

+ .005

+ .005

+ .005

-.01

+ .005

-.005

-.005

+ .005

very low, largely for capital

equipment, some for output

(circuit continuity); all

W III inspections reduced

by best practice use very low, mostly for work in

progress (x-ray tubes); W III

inspections up slightly

low, mostly for output, some for equipment; W III output

inspections increase

low, mostly output, some for

capital (enamelling ovens,

drying ovens); W III inspections increase

low, largely for work in

process & output; W III

inspections increase

low, predominantly for

output; W III inspections

increase

low, similar to 13.03

low, similar to 13.03

low, similar to 13.03

low, simi lar to 1 3.03

low, primarily for inputs,

work in process, and output; W III best practice

reduces inspection needs

low, for equipment and output;

W III output inspections up

low, split between work in

process & capital; W III

best practice reduces inspections of both

low, similar to 15.01

low, mostly work in process

(costings & forgings); W III inspections up because of more costings

very low, mostly for output;

W III no change
D-23

Sector Title World I World III Notes

16B02 All other misc prod- -.005

ucts

17.01 Railroads & related -.01

services

17.02

17.03

17.04

17.05

18.04

19.01

19.02

19A03

Local & intercity

highway passenger

transport

Motor freight & warehousing

Water transportation

Air transport

-.01

,01

17.06 Pipelines

.01

.03

-.05

17.07 Other transportation services

18.01 Telecommunication

18.02 Electric Power

18.03 Gas

Water, sanitary ser- vices, & steam

New construction,

nonfarm residences

-.015

-.005

-.02

-.01

-.01

-.01

New construction, -.03

nonresidential buildings

New construction, -.03

rai 1 road

+.0025

+ .005

-.005

-.005

-.005

-.01

-.02

-.0025

-.01

-.005

-.005

+ .005

+ .01

+ .01

very low, mostly for output;

W III inspections increase

si ightly

low, largely for capital;

W III best practice reduces

inspection needs of

but counterbalanced

inspection of right

low, similar to 17.01

inspection declines

low, similar to 17.02

equipment,

by more

of way

but W III

low, similar to 17.02

moderate, essentially all

for capital equipment;

W III equipment best practice

reduces inspection need

hiq_h, ign primarily pr for capital

(on- 1

i

ne compressors & pumping stations) ; W III

equipment best practice

reduces inspection needs

low, mostly capital, but some "output" ( inspection,

packing & crating services

are part of this sector);

very low , all for capital;

W III better equipment

reduces inspection needs

low

,

all for capital; W III

best practice reduces inspecti ons low, al 1 for capi tal ; W III

best practice reduces

inspection needs

low, similar to 18.03

low, essentially all for

products (input, work in

progress, output); in W III,

inspections increase all

around

moderate, mostly for work in

progress, some for inputs and

output; W III work in progress

and output inspections

increase

moderate, mostly on work in

progress; W III inspections

i ncrease
D-24

Sector

79803 New construction,

pipeline

pipeline

19C03 Other public utility

new construction

19A04 New construction,

highways

World I -.05

-.02

-.015

19B04 New construction,

bridges

19C04 New construction,

dams

19D04 All other new construction

20.01 Wholesale & retail

trade

20XA2 Insurance

20XB2 Finance, real estate

& advertising

20A05 Fracture-related

R&D

20B05 All other R&D

20C05 Environmental

cleanup

20D05 All other business

& professional

services

21.01 Printing & Publishing

21 .02 Radio & TV broadcasting

21.03 Hotels & lodging

places

21A04 Personal services

21B04 Repair services,

except auto

21.05 Automobile repair & services

-.01

-.005

.01

.005

005

WpM2ld_n_I

+ .01

+ .01

+ .005

Notes

hlsh., similar to 19A03, but more inspection required

mostly work in progresslow

m

? rA

W ^Pectlons

' IoWjl 2/3 work in progress i inputs, 1/3 capital; W III

decline in capital inspection offset by increases

in work in progress & input inspection

+ .005 1 ow , similar to 19A04

-.0025

,005

.0025

-.0025

veryjow, mostly for capital

equipment; W III best

practice equipment reduces

need for inspection

low, mostly capital, especially

drillings; W III better

equipment reduces inspection

needs

negl igible , ignore

negligible, ignore

negligible , ignore

negligible , ignore

negligible , ignore

negligible , ignore

negligible , ignore

very low , mostly capital;

better W III equipment

requires less inspection

very low, all for capital

better W III equipment

requires less inspection

negligible, ignore

negligible , ignore

negligible , ignore

negligible , ignore
D-25

Sector Title World I World III Notes

21.06 Amusements

21.07 Medical & health

servi ces 21.08 Educational services

& nonprofit organizations

22.01 Post Office

-.0025 -.0012 very low, mostly capital in

relevant activities in

this sector; W III better

equipment reduces inspection

needs

negl igible , ignore

negl igible , ignore

negligible, ignore
D-26

RATIO OF LABOR COST TO TOTAL VALUED ADDED

(A Matrix)

^\Pr t"n Y" Ratio 1 01 . 11 OlL 199 PA1 c; in 1 0 1 02 . 11 Oll 799 r D 1 0 1 AD? A RQl . 4oy i rL 1 0 1 R03 . 4 oy i OMU 1 1 04 . 4oy i ODU 1 ? 01 .DM/ £i l 7 OLU 1 lAUl £1 1 7 .011/ OUU 1 9A04 Ell RQ . o i oy a no O . Ul

9R04 . o

£1i RQoy OMU

J . o i RQoy OdUo

PAOS . 91^9 L 1 Ol Arno DLUO L DU%J . L91^9 1 DC. OUUO 9L . OP, uu . AAA7 444 / 0aaU4 9c . 07u / A A A 1 . 444 / ot>U4

?AD1 £1 Rfi . O 1 oO 7/MUAm1 ODU ?Rni1 t;i R£ 7om /dU 1 J. Ul 1 £Q0 . i oyo 7Pm /tu 1 JAUJ 7/] A 9 . / 44l 7 no / . Uo

JAUJ fil 2Q 7 vn/i / AU4

RA07 fil 9Q or . mU 

ODU / Al 9Q . D 1 d.y o no o. U£

OAUO 71 no . / 1 Uo o. Uo 44. niU 1 /I Q/l /I . 4y44 O (~\A o. U4 4 . 09Ul ii oAUo 4 rn ii odUo 4 . UH ii oLUo

4XAS H- AAA J . oyou o. Uo

HAD

J . oyou

q n7 o. U/ 4H • D7U / . oo i y y . u i A4 . ORuo £E1 Q . oo I y o no y . U£ D . U 1 07R1 n no y . Uo . Ul 07R1 . L 1 0 1 i1 n

U.

mU 1 5.03 .5003 10.02

5X04

M 10.03

5A06 ii 10.04

5B06 ii 10.05

5.09 10.06

5X10 10.07

5.12 ii 10.08

P. 07 ii 11.01

P. 08 11.02

P. 13 .6132 11.03

PAH ii 11.04

PB14 ii 11.05

Ratio Sector Ratio • U611 JL32 i9m 1 l . U 1 A90R

II 1 9A09 ii

II 1 9RH9 1 LDUl ii 5881 191 l . OOUO ii

II 191 l OA . U4 ii

II 19 OK 1 L . UO

n

II 1 9 nc 1 c. . UO

n

II 1 9 AH7

n

II 1 9RD7 ii

II l1 O

"5 . mU 1 cooc

II i o no 1 O . Ul\

a ono . oZUo

II i o no 1 o . Uo cono . oZUo

II l1 4AU a i\ m1 c nnc . byub

II i1 4dU /i d m1 n . OOO 1 i /i no 1 4. UZ

II l a no 1 4. Uo

n

II 14. 04

ii

II 1 a nc 1 4. Uo

ii

II i1 c0 . Um1 Al QA . o i y4 l c no 1 0. UZ coo c

ii ic no 1 o . Uo cooc . 0l£O n 1 0 . U 1 h r\ o n . /UoO 11 f>h09 DnUll c oo o . 00<iO

ii 11 AR09 OdUl . 6323 n 171 / . mU 1 .6735 1 7 no 1 / . Ul . 6096 n 1 7 no 1 / . Uo . 5943

ii I / . U4 . 6854

cooc . ucco 1 7 n^ 1 / . Uo P O "7 /" . 5276

II i 7 nc 1 / . Uo .2573

II i 7 n7 1 / . U/ .4810

II l1 o.o mU 1 .3742

Ii 18.02 .2476

II 18.03 .2476

II 18.04 .2476

II 19.01 .6264

II 19.02

II 19A03

II 19B03

.4986 19C03

.7030 19A04

ii 19B04

ii 19C04 n 19D04
D-27

RATIO OF LABOR COST TO TOTAL VALUED ADDED

(Continued)

Sector Ratio

20.01 .5266

20XA2 .5451

20XB2 .1421

20A05 .5606

20B05

20C05

20D05

20.06

21.01 .6166

21.02 .5125

21.03 .5227

21A04 .5088

21B04 .4960

21.05 .4271

21.06 .5352

21.07 .6647

21.08 .8759

22.01 .8584
D-28

Scrappage Rule

(A & B Matrices)

The scrappage row rules for World II and III account for fracture

related breakage (or the potential for breakage) of a column

sector's "product," including that sector's work in process,

or output. The rule, once applied, is intended to account for both

the absolute amount of "product" thrown away and an adjustment for

"product" that can be recycled. The column specific scrappage rates

were determined from three sources:

(1) The data sheets prepared as a result

of interviews with the column industries;

(2) Analogies suggested by the data sheets;

(3) Sector by sector review sessions with

BCL industry and materials experts

A column sector's scrappage rate, once determined, is averaged out over

all of the sector's input, value added, and capital. Computation of

the rate is as follows:

(1) S = a scrappage rate in decimal form

(i.e., 2% rate = 0.02)*

(2) In both A & B matrices, multiply every

coefficient (a or b) in the relevant

column by 1-S:

a' = a x (1.0 - S)

b' = b x (1.0 - S)

The sector specific scrappage multipliers for output and capital for

World II and III are summarized below:

WORLD II

.999: 5A06

.9975: 3AO 7 11.03

.995: 1.02 3X05 4.03 5.01 P. 13 8.07 12,.05

3.02 3X08 4XB5 5.09 8.01 12B02 13.,03

3X03 4.02 4.08 6C01 8.06 12.03 14.,03

* Note that "scrappage rate" relates to the change from W I to W's II and/or III. If the effective rate in W I is 2% of output,

W II - W I = -2% = S

W III - W I = -1% = s

in the above formula.
D-29

.995: 14.04 21.01

14.05

19.01

.99: 1 A 11 .01 A A "7 r AO r)D 1 A b.\Jl PBI4 A AO 9 . Uc T A AC 10.05 1 1 AC

O A A C 2AO 5 5.02 6A03 PA15 A AO 9.03 T A r\c 10.06 TO A A 12.04

on A c 2B05 CD A£ bBOb c A A A nn i c 6A04 PB15 T A AT 10.01 in r\-i 10.0/ TO A C

1 2.06

3B01 5X10 6B04 PCI 5 10.02 10.08 12B07

3B07 5.12 P. 08 8.02 10.03 11.01 16.01

4.U 1 c nA 1 bUU 1 D A 1 A O A o PAI4 8.03 1 A A A 10.04 11 A A1 1 . 04

a o r .985:

/|w AC

4X.A5

f~ AO 5.03

5X04

.98: 4.04

6B01

*7\/ A A 7X02

9.01

.97: 3A01

6B03

7A01

7B01

7C01

7.03

.94: 6D03

WORLD III none . .9995: 5A0b

. 99875

:

O A A "7 3AO 7 IT AO

1 1 .03

.9975: 1 .02 4.02 4.08 P. 13

A A ~7 8.07 TO a r 12.05 T A AC 14.05

3X03 4.03 5.01 8.01 12B02 13.03 19.01

3X05 4XB5 5.09 8.06 12.03 14.03 21 .01

3X08

.995: 1.01 4.07 5.12 6B04 8.03 10.04 11.04

2AO 5 5.02 6D01 PA14 9.02 10.05 11.05

2B05 5.03 6.02 PB14 9.03 10.06 12.04

3B01 5X04 6A03 PA1

5

10.01 10.07 12.06

3B07 5B06 6C03 PB15 10.02 10.08 12B07

4.01 5X10 6A04 PCI 5 10.03 11.01 16.01

4.04
,9925; 3A01

4XA5

99 6B01

7X04

985:

98:

9.01

6B03

7A01

7B01

7C01

7.03

95: 6D03
D-31

Downtime Rule

(B Matrix)

Downtime is significant in sectors which operate around the clock. In these

sectors, a built-in capital redundancy is necessary to provide for standby

capacity, allowing for regular maintenance and repair activity as well

any downtime associated with equipment failures. In our treatment of this

cost, however, allowance must be made for the fact that only a portion of

the total downtime is fracture-relevant.

In making an adjustment for downtime, a convenient and consistent approach

involves consideration of inspection activities requiring shutdown of

equipment. However, it is not necessary always to assume that this inspection

requires the complete shutdown of every 24-hour operation. We note, for

example, that in the transportation sectors, there are operational or scheduled downtimes which do not affect the overall delivery of service.

Hence, the time required for inspection or maintenance does not interfere

with operation and does not reflect a change in the Capital/Output ratio.

Where conditions seems to require full shutdown, we adjust the Capital/

Output ratio by the proportion applied to the Labor component of the Value

Added (VA) coefficient. Where inspection can be accomplished without

shutdown, the Capital/Output adjustment will be assumed as 25 percent of

the VA Labor change; for intermediate levels of shutdown, the adjustment

will be 50 percent of the VA Labor change. Just as in the case of scrappage,

this factor is. applied as a decrease in the Capital/Output ratios of World II.

Where increased inspection is suggested in World III, the same change

ratios will be used, but will be applied as increases in Capital/Output

ratios.
D-32

DOWNTIME ADJUSTMENTS TO CAPITAL/OUTPUT RATIO

SECTOR WORLD II WORLD III

2.01 0.9988 0.9994

2A04 0.9750 1 .0350

2B04 0.9988 0.9994

2C04 1 .0000 1 .0000

2A05 0.9950 0.9988

2B05 0.9950 0.9988

3A01 0.9925 0.9975

3B01 0.9975 0.9988

3.02 0.9975 1 .0000

3X05 0.9750 1 .0000

3A07 0.9925 1 .0013

3B07 0.9925 1 .0013

4.07 0.9975 0.9988

5.01 0.9925 0.9975

5.03 0.9925 0.9975

5X04 0.9985 1 .0000

P. 07 0.9925 0.9975

P. 08 0.9925 0.9988

PAT 5 0.9950 1 .0001

PB15 0.9963 1 .0000

6A01 0.9950 0.9988

6B01 0.9963 0.9988

6D01 0.9950 0.9980

7A01 019980 1 .0003

7B01 0.9980 1 .0003

7C01 0.9980 1 .0000

7X04 0.9988 1 .0000

7.03 0.9980 1 .0008

18.01 0.9990 0.9995

18.02 0.9980 0.9990

18.03 0.9990 0.9995

18.04 0.9990 0.9995

21 .02 0.9990 0.9995
0-33

Useful Lives/Replacement Matrices

(R Matrix)

There are no specific changes that should be made in the U-matrix in

qoing from World I to Worlds II and III. The fracture-relevant changes in

useful lives generally are taken care of by overdesign, maintenance and

repair, etc. To also adjust useful lives would significantly overstate

fracture costs.

This situation differs significantly from those involving corrosion

and wear. These two processes continuously, remove materials from capital

items that cannot be replaced easily by maintenance and repair or offset by

material redundancies. In the case of fracture processes, while the weakening

may be progressive, it is also localized and therefore an be discovered by

inspection and eliminated by parts-substitution in the M/R procedure.

There is, however, some minor shortening of useful life that must be

taken into account, even though it is too small to be handled by whole-year

changes in the lower limit of the useful life range. We propose that this be

accomplished by changes in the R-matrix.

The R-matrix is calculated cell-by-cell as a function of the U and G

matrices. It is suggested that these two matrices be kept unchanged between

World I and Worlds II and III. After the R-matrix for World I has been established, however, selected values can be adjusted to account for World II and

III conditions. Conceptually, the R values are continuous fractions and can therefore be adjusted by small increments.

We proposed that, for those row -sectors which have already been

established as generally fracture-relevant in use (i.e, show fracture-relevant

M/R adjust ements ) , very small changes be made to Worlds II and III. In going

to World II, replacement rates should be reduced by 0.1% (i.e., multiplied by

.9990); and in going to World III the reduction would be half as great (i.e.,

multiply by .9995).

All entries (in the R-matrix) on the following rows should be so adjusted:

9.01 Engines & turbines

9.02 General Industrial machinery & equipment

10.01 Farm machinery

10.02 Construction machinery

10.03 Mining machinery

10.04 Oil field machinery
D-34

10.05 Material handling machinery, except trucks

10.06 Industrial trucks & tractors

10.07 Metalworking machinery

10.08 Special industry machinery

11.01 Motor vehicles & parts

11.02 Aircraft & parts

11.03 Ship & boat building and repair

11.04 Locomotives, rail cars & rapid transit cars

11.05 Cycles, trailer coaches, etc.

12.01 Electrical measuring instruments

12A02 Electrical generators for powerplants

12B02 All other electric motors & generators

12.03 Industrial controls, transformers, etc.

12.05 Lighting fixtures & wiring devices

12A07 X-ray equipment

12B07 All other mi seel laneous electrical machinery

13.01 Service industry machinery

13.03 Radio, TV, and communication equipment

14A01 Fracture control instruments

14B01 All other scientific instruments

14.02 Medical , surgical and dental instruments

14.03 Watches, clocks & parts

14.04 Optical & ophthalmic goods

14.05 Photographic equipment & supplies

15.01 Computing and related machines

15.02 All other office & business machines
D-35

1ddU<i All other miscellaneous products

19. 01 Residential construction

19. 02 Construction

,

nonresidential buildings

19AUo Construction rail road

i no n o 19d0o tons true i i on

,

p i pe i i ne

19C0 3 Construction

,

other public utility

19A04 Construction

,

highways

19B04 Construction bridges

19C04 Construction dams

19D04 Construction

,

all other

Final Demand Changes

With the exception of the capital formation final demand column,

which is treated separately, other fracture relevant final demand changes

summarized below include:

• fewer non-capital purchases/replacements associated with less

within scope fracture.

• maintenance/repair activities associated with consumer and social

capital

.

• replacement rate changes associated with consumer and social

capital

.

• trade and transport margins associated with (1-3) above.

• federal, state, and local payroll implications of fracture

relevant inspection

• capital redundancy issues

Fewer Non-Capital Purchases

Accounted for here are those items of which less would be purchased

as replacements due to less fracture within scope. Examples include container

breakage and loss of contents due to e.g., bags breaking, thermal shock breakage of china/crystal in dishwashers, and use of adhesives for do-it-yourself
D-36

repair of a variety of broken objects or their application as preventive

measures. Tne rules for each of the above are applied to PCE and the three

government final demand columns.

The sectors affected by fracture within scope are listed below along

with their respective reductions and the rationale for each.

Sector W II W III Notes

3A01 -.001 .0005 accounts for container breakage within scope plus loss of

contents

3B01 -.0005 -.00025 similar to 3A01, but lower due to

smaller share of breakable

contai ners

5A06 -.15 -.075

5.09, 5X10

and 6B01

5.12

-.001

-.02

-.0005

.01

accounts for do-it-yourself home

repair of a variety of broken

objects, plus their application as preventive measures

accounts for container breakage

within scope and loss of contents

includes do-it-yourself repainting

associated with peeling/cracking

of either the exterior or interior

finish

6A01

PB14

PC15

.20

-.005

-.01

-.10

-.0025

-.005

includes do-it-yourself replacement of windows, shelves, table

tops, etc.

includes replacement of broken

tiles, hoses, etc.

includes replacement of kitchenware/tableware, do-it-yourself

replacement of siding and gutters,

and a variety of plumbing applications, e.g., fittings, tubing,

hardware

6D01 -.02 -.01 accounts for replacement of cookware, mirrors, crystal, and a variety of other finished glass

products
D-37

6C03 -.02 -.01 similar to 6D01, but for china and

whiteware

8.07 -.002 -.001 accounts for replacement of hand

tools and a variety of household

utensi 1 s.

Maintenance/Repair Activities

Considerations taken account of here include application of the five

maintenance/repair rules derived for A-matrix changes to the non-capital

shares of the final demands for all consumer and social capital producing

sectors. For example, PCE final demand for Sector 9.01, Engines and Turbines

(almost all of which consists of outboard motors in PCE), is $288 million. Of

this amount, 7.4 percent ($21 million) consists of parts and factory authorized repairs (including labor). Of the $21 million, Rule #3 is applied, i.e., one percent of the $21 million is considered the fracture relevant portion.

Thus, World II purchases of parts and repair services from Sector 9.01, by

PCE, are reduced by $210,000.

Adjustments similar to the above are applied to the non-capital

shares of final demand for all of the other social and consumer capital

producing sectors. For noncapital producing sectors, rules #1, #2, and #5 are applied to each of the final demands where, for example, fracture relevant

maintenance and repair services are provided by Sector 19.01 (home construction), Sector 21B04 (repair services, as for appliances), and Sector 21.05

(automobile repair).

The non-capital shares of capital producing sectors to which the

maintenance/repair rules are applied are listed below:

Sector Noncapital share (percent)

9.01 7.4

9.02 13.4

10.01 1.1

10.02 6.4

10.03 8.2

10.04 4.6

10.05 7.3

.10.06 1.8

10.07 12.5

10.08 2.3

11.01 23.4*

11.02 40.1

11.03 20.0

11.04 2.4

*The noncapital share in PCE is 5 percent, as most automotive repair/

maintenance is performed in Sector 21.05.
D-38

Sector Noncapital share

11. Ub in n 10.

12.01 1.5

1 OA AO 12A02 2.6 on r\ 28. 9

12.03 1 ^ 1 16.

12.05 o o n 83.

12A07 26. 5 12B07 42.

13.01 11.0

13.03 6.5

14A01 Of") o 38.8

14B01 11 o 11.2

14. 02 1 c o 15.

14.03 inn n 100.0

14. 04 A C 4.6

1 a nc 1 4. Ub oU. y 15.01 5. 5

i c no A A 4.4

16B02 28.

19.01 20.0**

19.02 20.0

19A03 50.0

19B03 15.0

19C03 20.0

19A04 20.0

19B04 75.0

19C04 10.0

19D04 20.0

(percent)

Capital Replacement

The above section described the application of the various

maintenance/repair rules to the noncapital goods shares (e.g., factory

authorized repair, replacement parts, etc.) of final sales by sectors producing consumer and social capital. Here, account is taken of adjustments in the

replacement of the consumer and social capital stocks by the four noninvestor

final demands.

The replacement adjustments are .999 for WII and .9995 for Will times

the calculated stocks of social capital on each of the following rows:

By definition, all 19.01 activities are 100 percent maintenance/repair in

PCE.
D-39

q n i y . ui ii n i 1 9flfl7 1 CtWJ /i10.^ mUl

0 09 y. uc 1 1 09 1 9Bf>7 1 CDU /1 f\ D9 1 D. Uc

10.01 11.03 13.01 16B02

10.02 11.04 13.03 19.01

10.03 11.05 14A01 19.02

10.04 12.01 14B01 19C03

10.05 12A02 14.02 19A04

10.06 12B02 14.03 19B04

10.07 12.03 14.04 19C04

10.08 12.05 14.05 19D04

Capital stocks are calculated as follows. The purchase from a social

capital producing sector (the annual purchase is the value falling in the

appropriate cell in FD) in year t is equivalent to purchases for replacement

plus purchases for the growth occurring between year t-1 and t.

Annual Purchase of _ Replacement Purchases^ + (1)

Social Capital^ ~ Growth Purchasest-i t

The purchases for growth are equal to the stock of capital in year

t-1, SKt_i s multiplied by the rate of growth, g, from t-1 to t.

Growth Purchases^

t

= g (SK

t _ 1

) (2)

As we are interested in the present stock of social capital, SKt , (2) may be transformed by using the following equivalent for the variable

SKt-i:

SK = (1 + g) SK^ (3)

and

SK

t-l

= SK

t /(1 + 9)

Equation (2) may then be rewritten as

Growth Purchases =

9 SK

t

t_i,t

1 + g
D-40

The annual replacement rate of a durable good, the production of

which has been growing at its long term rate of g per year and which has a replacement life of u years, may be represented as:

r

= 2 (1 + g)

u

- 1

The annual replacement of social capital in year t is then equal to

the stock of capital in year t multiplied by the replacement rate, r

Replacement Purchases^ = SK. S = ($« )( r ) 1

(1 + g)

u

- 1 t

Substituting equations (5) and (7) into (1) we then get

(g)(SKt ) Annual Purchase of Social Capital =

(i + g) + (SKt ) (r)

As we are interested in the value of capital stock in year t, SKt , and since the annual purchase of said capital is known (the values are those

occurring in the appropriate final demand cells), we may solve for SKt

c „ Annual Purchase of Social Capital (1 + g) SKt r(l + 9) + 9

V S ^

The use of (9) allows us to estimate the stocks of social capital

held by individuals, Federal government, and state/local governments.

Trade and Transport Margins

Account is taken here of trade and transport margins associated with

the above adjustments and, most important, for overall transport savings due

to lighter weight materials being delivered to final demand. First, trade and

transport margins associated with fewer purchases of noncapital items were calculated. Similarly, margin adjustments which account for fewer replacements were calculated.

For transport savings which result from delivery of lighter weight

materials to final demand, a set of rules similar to those for the A-matrix
D-41

transport changes were formulated. Generally, these rules accounted for

lighter weight "hardware" going into the production of consumer and social

capital for all capital producing sectors (8.01 through 16B02).

After consideration of all of the above, margin adjustments were

appl i ed as fol 1 ows

:

trade margins : multiply 20.01 entries in each final demand column by

.997 in WII, by .9985 in Will.

transport margins : multiply 17.01 and 17.03 entries by:

WII Will

PCE .9274 .9817

FG (defense) .9423 .9849

FG (nondefense) .9274 .9814

S&LG .9258 .9814

Government Payrolls Associated With Inspection

Here, estimates of inspection activities undertaken by Federal , state, and local governments for fracture within scope were calculated and

applied as payroll savings in each of the government final demands. Total

savings for World II were estimated as $175 million (Federal nondefense = $115M; Federal defense = $20M; State and local government = $40M); total

additional costs in World III were estimated as $175.9 million (Federal

nondefense = +$115. 6M; Federal defense = +$20. 1M; State and local government = +$40. 2M). These figures reflect payrolls associated with full time job

equivalents but do not include, for example, armed forces personnel who, for

example, inspect aircraft for fracture. For the above type, such personnel

would be assigned other duties.

Capital Redundancy

The only capital redundancy identified in final demand was for Sector

11.02, Aircraft and Parts, in the Federal Government (Defense) column. Major

causes of redundancy due to fracture include re-winging and turbine blade

replacement. With respect to the former, it should be noted that the

re-winging of the A-6 and C-5 fleets takes place every 15 years. Similarly,

turbine blades, landing gears, helicopter rotors, etc., while examples of

"life-limited" parts whose replacements create redundancies, when averaged

over their respective designed lives do not result in redundancies as high as was the case for corrosion. Generally, causes of fracture-related redundancy

are most sporadic and less continuous than for corrosion.

After allowances for corrosion, wear, fracture outside the scope of

this project, it was estimated that three percent of the total defense aircraft fleet is inoperative as a result of fracture within scope.
D-42

INFORMATION SOURCES

The implementation of the Battelle ex ante approach requires that

data be collected which relates to the technology of production of the goods

and services of all sectors of the economy. Whether one is establishing the

baseline data describing the industrial interactions (World I, in the context

of this project), or is adjusting baseline coefficients which describe

possible or hypothetical constructs (as in World II and World III), it is

important that the data reflect the levels of or changes in activities,

operations, or purchases that characterize the different technological states

of the economy. Because of the special nature of the present project, and the

intellectual processes required to conceive of and relate to the concepts of

Worlds II and III, the data collection procedure required a mix of three types

of information:

(1) that which would be obtained directly from industrial sources,

including design or operating engineers, researchers and research

management in industry, or technical staff of representative or trade associations;

{?.) that from practicing researchers representing many different

Battelle research sections and whose specific expertise is, or

has been, applied to programs related to a number of similar

industries or industrial procesess; and

(3) that from additional Battelle researchers whose broad knowledge

of industries and industrial practice provided a perspective that

can be generally applied across a number of sectors, and whose

familiarity with, and sensitivity to, the Input/Output approach

permitted estimates of coefficient changes which represented

consistent and reasonable practical judgment.

As noted in the text (Chapter IV), the data collection process

employed all three generic sources. Furthermore, each of these sources contributed to both row and column adjustments, i.e., representing a sector as

a supplier to, or a buyer from, all other sectors. As a result of the

interwoven relations among sectors, it is important to note that not all of

the information pertaining to, say, Sector 7A01 (Iron and Carbon Steel), was
D-43

provided by experts in the iron and steel industry. Some coefficient changes

affecting Sector 7A01 resulted from discussions with experts from the gas

distribution industry, from Battel le researchers with expertise in materials

development and design, and from others familiar with uses of specialty

steel s. The data collection procedure, as outlined in greater detail in

Chapter IV, also utilized a detailed evaluation process involving a large

number of researchers and other staff from the Battelle Columbus Division

(BCD) research sections. These staff members, while specifically assigned to

selected technical or administrative units, have both technical backgrounds

and work experiences which belie the formal name of that unit. They brought

to this program a wealth of experience based upon their formal backgrounds,

their project work at Battelle, their outside contacts, and their research

activities in other organizations.

In addition to the sources noted below, much information was obtained

from members of the Advisory Board. These inputs and insights related not

only to the specific organizations with which the members are, or have been,

associated, but also to a broad range of activities and interests.

Principal Sources

Sources

BCD Technical Economics Section

BCD Technical Economics Section

SPE*; BCD Technical Economics Section

BCD Technical Economics Section

Continental Moss Gordon, Prattsville, AL; Planters, Suffolk, VA; Del

Monte, San Francisco; Kingman Fish Co., Vermillion, OH; Stokely-Van

Camp, Indianapolis, IN

BCD Equipment Development Section

BCD Equipment Development Section

Section

1.01

1.02

1A03

1B03

1.04

2.01

2X02

* SPE = Battelle Staff Project Experience
D-44

2A04 BCD Equipment Development Section

2B04 BCD Equipment Development Section

2C04 BCD Equipment Development Section

2A05 SPE; Shell Oil Company/Bel 1 ai r Research Center; BCD Gas Industries

Program Office; Newton Upper Falls, MA

2B05 BCD Gas Industries Program Office

2.06 Limestone plant supervisor; S I E* ; BCD Glass, Coatings and Concrete

Research Section

2.07 BCD Technical Economics Section

3A01 BCD Technical Economics Section; BCD Biological Sciences Department

3B01 BCD Biological Sciences Department; BCD Technical Economics Section

3.02 BCD Technical Economics Section

3X03 BCD Chemistry Department

3X05 BCD Polymer Science and Technology Research Section; BCD Technical

Economics Section

3A07 BCD Physical Metallurgy and Process Metallurgy Sections; Goodyear

Tire and Rubber Company; B.F. Goodrich Co.

3B07 BCD Polymer Science and Technology Research Section

3X08 BCD Polymer Science and Technology Research Section

4.01 Weyerhauser Sawmills, Seattle, WA; Syracuse University

4.02 Sword Veneer, Rock Island, IL; Stoneman Co., Oak Park, IL; American

Plywood Association

4.03 Champion International Corporation, Brewster, NY; American Plywood

Association, Tacoma, WA; U.S. Forest Service, Forest Products

Laboratory, Madison, WI

4.04 General Box Co., Toledo, OH; Paragon Industries, Lawrence, MA

4XA5 BCD Technical Economics Section

4XB5 BCD Technical Economics Section; BCD Structural Materials and

Tribology Section

* SIE = Battelle Staff Industrial Experience
D-45

4.07 Syracuse University; Empire State Paper Research Institute

4.08 International Paper Company; St. Regis Paper Co.; International

Paper Company, NY, NY; Quality Packaging Materials, Inc., Clinton,

NJ; International Paper Box Machine Co., Nashua, NH.

5.01 BCD Gas Industries Program Office; BCD Energy and Chemical Processes

Department

5.02 Sherex-Chemical Co., Dublin, OH; Asphalt Institute, Worthington, OH

5.03 BCD Chemistry Department

5X04 BCD Chemistry Department and Technical Economics Section

5A06 3M Company, St. Paul, MN; SPE; BCD Polymer Science and Technology

Section

5B06 BCD Polymer Science and Technology Section

5.09 BCD Biological Sciences Department

5X10 BCD Chemistry and Biological Sciences Departments

5.12 SPE; Hanna Chemical Coatings Corp., Columbus, OH

P. 07 BCD Polymer Science & Technology Research Section

P. 08 BCD Polymer Science and Technology Section

P. 13 SPE; Goodyear Tire & Rubber; Pittsburgh Plate Glass; BCD Polymer

Science and Technology Section

PA14 Gates Rubber Company, Denver; B.F. Goodrich Co., Akron; BCD Polymer

Science and Technology Research Section

PB14 Gates Rubber Company, Denver; B.F. Goodrich Co., Akron; BCD Polymer

Science and Technology Research Section

PA15 Minnesota Gas; Plexco, Franklin Park, IL; National Transportation

Safety Board, Washington; SPE, Phillips Plastics Corp., Phillips,

WI; Plastic Pipe Institute, NY; DuPont; BCD Polymer Science and

Technology Research Section

PB15 SPE; Nalge Co. (Div. Sybron Corp), Rochester, NY; Liqui-Box,

Worthington, OH; Ethyl Corporation, Richmond, VA; BCD Polymer

Science and Technology Research Section

PC15 Alma Plastics, Alma, MI; Thermowood, Dale, IN; Rotuba Plastics,

Linden, NJ ; Tupperware, Orlando, FL

6A01 R&D mgr (large plate glass plant); BCD industrial experience
D-46

6B01 SIE/SPE; Lancaster Glass; BCD Glass, Coatings and Concrete Research

Section

6C01 Ford Motor Company; Pittsburgh Plate Glass; BCD Glass, Coatings, and

Concrete Research

6D01 Lancaster Glass; SIE; BCD Glass, Coatings and Concrete Research

Section

6.02 BCD Glass, Coatings and Concrete Research Section

6A03 SIE/SPE; BCD Glass, Coatings and Concrete Research Section

6B03 BCD Glass, Coatings and Concrete Research Section

6C03 SIE/SPE; BCD Glass, Coatings and Concrete Research Section

6D03 SIE; BCD Glass, Coatings and Concrete Research Section

6A04 BCD Glass, Coatings and Concrete Research Section

6B04 BCD Glass, Coatings and Concrete Research Section

7A01 ASM Metals Handbook; Forging Industry Association; Armco, Inc.;

Bethelem Steel Corp.; Charles River Associates; SPE/SIE; BCD Process

Metallurgy Section; BCD Iron & Steel Technology Section

7B01 ASM Metals Handbook; Forging Industry Association, Armco, Inc.;

Bethelem Steel Corp.; American Iron & Steel Institute (AISI);

Charles River Associates; SPE/SIE; BCD Process Metallurgy Section;

BCD Iron & Steel Technology Section

7C01 ASM Metals Handbook; Forging Industry Association; Climax Moybdenum

Company; Armco, Inc.; AISI; BCD Iron & Steel Technology Section

7.03 ASM Metals Handbook; Forging Industry Association; Aluminum

Association, Inc.; Reynolds Metals Co.; Kaiser Aluminum; Anaconda

Aluminum Co.; Private Consultant (Die Casting)

7X04 ASM Metals Handbook; Forging Industry Association; Private

Consultant (Die Casting)

8.01 ASM

8.02 ASM

8.03 ASM

8.04 BCD Engineering and Manufacturing Technology Department
D-47

8A05 Armco, Inc.; Kansas University; American Association of State Highway and Transportation Officials; Lehigh University; American Board

of Shipbuilders; National Association of Manufacturers; SPE/SIE

8B05 American Boiler Manufacturers' Association

8C05 SPE/SIE; BCD Engineering and Manufacturing Technology Department

8.06 Private Consultant (Die Casting)

8.07 Armco, Inc.; Private Consultant (Die Casting)

9.01 General Electric Co.; Trans World Airlines; Forging Industry

Association; Private Consultant (Die Casting)

9.02 Forging Industry Association

9.03 BCD Engineering and Manufacturing Technology Department; BCD Stress

Analysis and Fracture Research Section

10.01 International Harvester Company; J. I. Case Company; Forging

Industry Association

10.02 Forging Industry Association

10.03 Forging Industry Association

10.04 Forging Industry Association

10.05 Forginq Industry Association,

10.06 Forging Industry Association

10.07 Forging Industry Association

10.08 BCD Engineering and Manufacturing Technology Department

11.01 General Motors; Society of Automotive Engineers; Society of American

Body Engineers; International Harvester; J. I. Case Co.; Ford Motor

Company; Structural Dynamics Research Corp.; U.S. Department of

Transportation; Forging Industry Association

11.02 Boeing Aerospace; U.S. Department of Defense; The Ohio State

University; Port Columbus International Airport (General Maintenance

Facility); Trans World Airlines; Lockheed; Institute for Defense

Analysis; Naval Air Development Center; Wright-Patterson Air Force

Base (Air Force Materials Laboratory); Forging Industry Association

11.03 National Association of Manufacturers; American Boiler Manufacturers

Association; American Bureau of Shipping; Society of Naval Architects and Marine Engineers; U.S. Department of Transportation;

Institute for Defense Analysis
D-48

11.04 Association of American Railroads; General Electric Co.; General

Motors Corp.; U.S. Department of Transportation; Forging Industry

Association; Transportation Research Institute/Carnegie-Mell on University

11.05 RCD Transportation and Structures Department; BCD Manufacturing

Engineering, Components and Safety Research Station

12.01 BCD Instrumentation Laboratory

12A02 Columbus & Southern Ohio Electric Company; SPE/SIE

12B02 SPE/SIE

12.03 BCD Instrumentation Laboratory; Columbus & Southern Ohio Electric

Company

12.04 BCD Electronic Materials and Devices Group

12.05 BCD Electronic Materials and nevices Group

12.06 BCD Electronic Materials and Devices Group

12A07 RCD Nondestructive Evaluation and Instrumentation Group; Trans World

Ai rl ines

12R07 BCD Electronic Materials and Devices Group

13.01 BCD Instrumentation Laboratory

13.02 BCD Engineering and Manufacturing Technology Department

13.03 BCD Instrumentation Laboratory and Electronic Materials and Devices

Group

14A01 BCD Physical Metallurgy and Stress Analysis and Fracture Research

Sections

14B01 BCD Instrumentation Laboratory and Stress Analysis and Fracture

Research Section

14.02 BCD Instrumentation Laboratory and Electronic Materials and Devices

Group; BCD Nondestructive Evaluation Group

14.03 BCD Engineering and Manufacturing Technology Department

14.04 Bausch & Lomb; White-Haines; Optical Manufacturer's Association

14.05 Bausch 8 Lomb Inc.; BCD Chemistry Department

15.01 BCD Technical Economics Section; BCD Computer, Information Systems

and Education Department
D-49

15.02 BCD Computer, Information Systems and Education Department; BCD

Instrumentation Laboratory

15.03 BCD Technical Economics Section and Purchasing Department

16.01 Army Metals and Materials Research Center/Watertown Arsenal

16A02 BCD Technical Economics Section; BCD Equipment Development Section

16B02 BCD Equipment Development Section

17.01 Association of American Railroads; Automation Industries/Sperry Rail

Division; U.S. Department of Transportation; Transportation Research

Institute/Carnegie-Mel Ion University

17.02 BCD Transportation and Structures Department; National Safety

Council; U.S. Department of Transportation

17.03 BCD Transportation and Structures Department

17.04 Ship Structures Commi ttee/U. S. Coast Guard

17.05 TWA; American Airlines; Delta Airlines

17.06 SPE; BCD Gas Industries Program Office

17.07 BCD Technical Economics Section

18.01 BCD Technical Economics Section

18.02 Columbus & Southern Ohio Electric Company; former EPRI and TVA

employee; SPE

18.03 BCD Gas Industries Program Office

18.04 BCD Economics Department

19.01 City of Columbus (Ohio)/Code Enforcement Division; BCD Construction

Research Group

19.02 U.S. Army Construction Engineering Research Laboratory; Battel le

Facilities Management Office; City of Columbus (Ohio)/Code

Enforcement Division

19A03 BCD Construction Research Group

19B03 BCD Construction Research Group

19C03 BCD Construction Research Group; Columbus & Southern Ohio Electric

Company

19A04 Federal Highway Administration Research Laboratories; Asphalt

Institute
D-50

19B04 Franklin County (Ohio) /Engineer' s Office; National Association of

Counties; BCD Structural Materials and Tribology Section

19C04 BCD Construction Research Group; BCD Glass; Coatings and Concrete

Section

19D04 BCD Construction Research Group

20.01 BCD Economics Department

20XA2 BCD Economics Department

20XB2 BCD Economics Department

20A05 BCD Research Management and Purchasing Departments

20B05 BCD Research Management and Purchasing Departments

20C05 BCD Environmental Program Office; BCD Energy and Chemical Processes

Department

20D05 Derived as residual

20.06 BCD Economics Department

21.01 BCD Economics Department

21.02 BCD Economics Department

21.03 BCD Economics Department

21A04 BCD Economics Department

21B04 BCD Economics Department

21.05 BCD Engineering and Manufacturing Technology Department

21.06 BCD Engineering and Manufacturing Technology Department

21.07 BCD Health Care Systems Program Office and Economics Department

21.08 BCD Economics Department

22.01 BCD Economics Department
E-1

APPENDIX E. DETAILS OF THE SUPPLEMENTAL MODELS

Overview of the Methodology

Four supplemental models were used in this study: the Events

Character Model (ECM), Injury Cost Model (ICM), Property Cost Model (PCM), and

Environmental Degradation Model (EDM). This appendix discusses each of these

models in detail, including explanations of the inputs, methodology employed,

and the outputs of each model. The original proposed model structures and

methodologies are presented first, followed by details of the results in a later section.

Development and implementation of the supplemental models accomplished

two goals:

t An estimate of certain imputed costs associated with fracture, such

as environmental degradation, pain and suffering of injury victims,

nonmedical disability costs of injury, death, and cargo and other

property 1 osses.

• An estimate of "resource" costs associated with fracture, including

environmental clean up costs, medical costs, health insurance

administration costs, and property damage costs. These latter

costs were then interfaced with the Input/Output (I/O) model

results.

The overall flows among the models which achieved these goals is presented in Figure E-1. The Events Character Model determined the number of

fracture related events, the average consequences of each occurrence, and the

severity of their consequences. Output from this model was the number, type,

and severity of fracture related human injury, death, property loss, and

environmental damage consequences of events in the national economy. The

Injury Cost Model estimated the dollar costs of all injury consequences.

Resource costs, such as hospital and drug costs, were determined separately

from imputed costs (such as death and pain and suffering costs.) Similar cost

estimating procedures were employed in the Property Cost and Environmental Cost

Models. Relevant cost estimates generated were then checked against I/O model

results to yield the unduplicated total costs of fracture.

Conceptually, the total cost of fracture related events were measured

within the following framework,

C = Cr + c

n

= I Ni I [(Cu X Iij) +

i j

(C 2j X Iij) + (Di X C 31 ) + (C 4j X P id ) + (C 5i + C

6i )]
LE 2: CO 0 < zc »—

LU CD 1—

CD zd 0

<C o ZD

_i Q£O

Q_ 3:

O LU }— en CH a.

CdI—

CQ zc 0

FA CD 1—

ZD h- O C_> 1ALM

C£L ZD

ZC CD

tr 1—

Oq:

or

-4

4-

d; 1— 1 ZD OO LU "D O CD ^ CD O 0

_J<1— —I LU

>- 21 LU ZC

1— LU CD tQ£ I— _l s: 0 LU 00 LU z 2: u_

QO CD 0 0 OOO Q£ h- q: SI t—1 00

Q_ > 0 0 ^ _l A

LU Ll_

00

LU

CD<CD

>-—

q:ljz

co <c <_> o

IH <=C I— I— I CC < < ZD I— ZD CD

LU -"D —I <S) 1—

Z < Z I

1—1 LU 1—1 1—

LU

O

O 1—

o 2: 1— C5<< ct: cc: cd <D« CD CO I

_J< 01—

EN AT

SI CL, < ZD 0 1 q; CD 1—

LU <C > Q LU EN CL

LU

CD

OO LU I— I—

—

Si CD LU lil< Q > C£ O LU ell S ZC0
E-3

where C

iC lj

c 5i c

6i

total cost of fracture related events resource costs

imputed costs

individual event categories

the average injury costs that are resource replaceable for

injury type j

the average injury costs that are imputed for injury type j

the cost of a death for each event i the average dollar value of property of type j damaged or lost

the cost of environmental degradation for event i the cost of environmental clean-up for event i the average number of human injuries of type j that result

from a fracture caused accident in event i the average number of deaths that result from a fracture

caused accident in event category i the average number of property items j destroyed during a fracture-caused accident in event category i the total number of fracture caused accidents in event

category i.

Each of the symbols is further explained in the following discussion. For ease

of understanding, the components of the overall structure are presented in

further detail below.

Events Character Model

Purpose . The Events Character Model (ECM) was designed to produce an exhaustive, nondupl icating list of nonroutine failure events that occur throughout the economy, and then determine the nature and severity of

consequences of thos-e events. The outputs of the ECM model provided the inputs

for the remaining three supplemental models.

Inputs . Inputs to the ECM were fracture relevant events as drawn from

Table E-l. These events may be classified into five basic types of accidents:

transportation-related, work-related, home-related, public-related, and other

fracture events. This list was derived in consultation with project staff from

the National Bureau of Standards and other Federal government agencies.

In transportation, individual modes of transport were checked for

frquency of fracture related failures. Transportation vehicles and systems

resulted in a large number of accidents, many of which are due to material

fracture (e.g., through fatigue associated with repetitive forces).

Investigation proceeded on a modal basis as better data were available in this

format.

Work related events were analyzed on an industry by industry basis,

where possible. Data on the number of injuries and deaths, as well as associated property damage, were available in aggregate form for all accidents
E-4

TABLE E-l. LIST OF EVENTS

Accident Type

Transportation-Related

Work-Related

Home-Related

Publi c-Related

Other

Events

Rail road

Pi pelines

Auto

Other motor vehicle

Ai r Transport

Mari ne

Construction

Agriculture

Mi ni ng

Manufacturing

Home Product Failure

Houses

Uti lities

Public Structures

Mi 1 itary

Communications-related

Medical -related

Storage-related

Recreation-rel a ted
E-5

that occur in the workplace. Table E-l lists examples of the fracture specific

items that were investigated within each industry. Data were available for

some, but not all, of these items.

Home related accident data were available for injuries that result

from a large number of products used in the home. However, the number of such

accidents which result primarily from fracture was not known. Thus, for this

category, emphasis was placed on estimating the percentage of the accidents

that result from fracture-prone products.

Public-related fractures were treated in the same way because of data

1 imitations

.

All other events were investigated in varying levels of detail. For

example, military events data were available in sufficient detail to permit

their use in extrapolation to related nonmilitary events. Additional information concerning the nature of all assumptions made because of data constraints

is presented later in this appendix.

Methodology . ECM took the above list of events and estimated the

following annual averages over a recent 3 to 5 year time period:

f-j - the frequency of accidents in the particular event category

i

F-j - the fraction of fj that is due to fracture

Dj - the average number of deaths that result from a fracture

caused accident in event category i

Ijj - the average vector and number of human injuries of type j that

result from a fracture caused accident in event category i,

(e.g., within event i there may be an average of 6 broken legs,

4 concussions, and 7 severe bruises)

P-jj - the average number of property items j destroyed during a fracture-caused accident in event category i (e.g., within

event i there may be an average of one bridge damaged and 16

automobiles lost)

E-jj - the average severity of environmental degradation and

clean-up items j that result from a fracture-caused accident in

event category i

From the list of items determined above, it can be noted that ECM is

basically a tabulation model. The product of and F^ yields Ni--the

total number of fracture-caused accidents in each event category i. Where

possible, data were obtained that estimated the severity and extent of the

consequences of the average accident in Nj for each event i. Consequences

that received special emphasis were the number of deaths, the type and number

of human injuries, the type and extent of property damage, and any environmental degradation or clean-up costs.
E-6

Of the above, the most readily available data were the total frequency

of accidents f -j , and for these accidents, information on I-jj (injuries) and

D-j (deaths). These data were gathered from various government and private

agency reports (a complete listing of references appears at the end of this

Appendix). For some events, the data for element j in I^j were far more

detailed than for others. Generally, data in greater detail were available for

the more regulated industries (railroads) than for nonregulated industries.

After reviewing all available published literature, additional events data and

detail were sought by contacting trade organizations, industry representatives,

insurance institutes, health care facilities, and other experts.

The values of Fj , the fraction of total accidents due to fracture

causes, was much more difficult to determine as there was much less information

available on causes of accidents. Thus, in large part, informed judgments

based on information from other events were used to determine F-j . For

example, accidents or events which resulted from excessive loads (whether

man-made or a natural disaster) or from human design error were eliminated as fracture relevant. Similarly, accidents caused by operator error were removed

from consideration. Generally, in designing the list of events to be

considered, only those accidents with some reasonable probability of having

been caused by a fracture failure were included.

The data collection for Pjj came from reported information where

available. Where no solid reported data were available, informed judgments,

similar to those described above, were made for the extent of property damage

for an event N-j

As originally conceived, the final ECM data requirement was for E-jj,

the number, types, and severity of environmental consequences of an event N-j.

As very little information was obtained in this area, the EDM model was not

fully developed (refer to a later section of this Appendix for details).

All the data collected was for the "average" year 1978. That is, in cases where the frequency of occurrence was low, data were collected for

several recent years and averaged. All cost estimates made in these models are

in 1978 dollars so as to provide compatibility with the I/O model results.

The availability of data, as noted above, varied considerably by both

type of event and level of detail in the consequences which result from that

event. Where detailed data were available, they were incorporated in the ECM.

Where it was difficult and costly to obtain detailed estimates, more aggregate

numbers were employed. In data-poor situations, maximum/minimum approaches

were applied or information was transferred between events, as was the case,

for example, in estimating the cost of environmental degradation.

Particular emphasis was placed on transportation events for three

reasons. First, better and more detailed data were available for these

sectors. Second, transport events cover a large share of the total accident

costs to society. According to data from the National Safety Council (Table

E-2) motor vehicle accidents alone account for much of both the total cost to
E-7

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E-8

society and the cost of premature deaths among all accidents. Also, considering that transport devices are often subject to repetitious stresses and are therefore more prone to material fracture than, say, home appliances,

transportation events may be quite fracture-relevant. Third, the severity of an accident in a transport industry is often greater than in many non-transport

industries. Large numbers of people are affected by airline accidents, large

amounts of property are put in jeopardy when trains derail, etc. Since both

the frequency of an accidents caused by fracture can be higher, and their

consequences generally more severe, these events received proportionately more attention than other categories.

Injury Cost Model

Purpose . The Injury Cost Model (ICM) employed herein draws primarily

upon a model developed by Battelle's subcontractor Technology + Economics, Inc.

(T+E), of Cambridge, Massachusetts. This model provided social cost estimates

for human injuries and deaths that result from fracture relevant events.

Estimates were made in 1978 dollars for both resource and imputed costs.

Input . The inputs to the ICM were the vector of deaths D-j and the

matrix of human injuries I-m developed by the ECM.

Methodology . The Injury Cost Model, originally developed for the

Consumer Product Safety Commission, provides cost estimates associated with

accidents and failures involving consumer products. The proper scope of injury

cost is defined as all costs borne by society as a result of the injury,

encompassing those costs incurred by the injured party, his family, his

employer, and the community in which he resides, whether they be out-of-pocket

expenditures or opportunity costs.

By structuring the model in terms of a mutually exclusive and exhaustive set of injury-related societal costs, T+E can ignore the whole question of

who bears the cost burden and how it is distributed, whether it be the

individual victim or a third party (insurance).

Total injury costs were partitioned into a set of eleven cost

components, each of which was estimated separately, utilizing the best possible

procedure given available data and applicable functional relationships.

Estimation techniques included regression analysis (pain and suffering costs),

utilization of sample means from the disaggregation of the large data bases

(hospital costs and foregone earnings), and direct analytic solution (e.g.,

health insurance costs). In most instances, several techniques were employed.

Details are provided in Appendix F.

There are three broad types of injury costs in the ICM that estimate

the human injury cost of failures: those costs representing direct expendi - tures associated with injuries, e.g., litigation costs, visitor and victim

transportation costs; foregone earningse.g. , the opportunity cost associated
E-9

with visitor and victim time spent away from normal activities because of the

injury; and those nonreimbursable costs imputable only in terms of subjective

social valuations of reductions in the risk of injury occurrence. Pain and

suffering costs, disability costs, and valuations of loss of life comprise this

third type of injury cost.

The first and second categories of costs are the resource costs also

estimated by the I/O model. The third type of injury costs are imputed costs

which were subsequently added to the total I/O costs.

The ICM provided dollar amounts for the following costs:

C

i j - the average injury costs (in terms of resources) for injury

type j

C 2j - the average injury costs that are imputed for injury type j

C 3-j - the cost of a death for each event i.

The value of C 3-j could vary by event only if different average ages of death

were available by event. Since this was often not the case, a constant value

of C 3-} was employed for all events. In computing Cjj and C2 j» the level

of detail of Ijj was considered. When it was only known that an average

injury occurred, the cost estimates were for the average injury only. When more detail was available, the injury cost was computed for that specific type

of injury.

The total fracture relevant costs of human injury and deaths

associated with an event were calculated from the following:

TICii = I (Cij X Iij) X Ni

j

TIC 2i = [I(C 2jX Iij) + (Di X C 3i )] X Ni

j

where T IC 1 n

- is the total injury cost of replaceable resources for event i

T IC 2i is the total imputed injury cost for event i.

The total injury and death cost of all fractures was then computed as:

TIC = I (TlCji + TIC 2 i )•

i
E-10

Property Cost Model

Purpose . Conceptually, the Property Cost Model (PCM) provided cost

estimates (in 1978 dollars) for all the property identified as damaged in ECM.

The replacement costs of houses, buildings and industrial plants (or parts of

these units) represents one aspect of property damage. Another is the costs

involved in replacing the contents of housing, commercial, industrial and

transportation units (e.g., large cargo losses due to water damage, furniture and contents losses due to foundation failure in domestic housing units,

cargo losses due to spillage from trains, trucks and marine transportation

units, etc.). Also included in property damage are losses associated with the

replacement of a destroyed transportation unit (barge, truck, automobile,

rail car, etc.).

Input . The input given to PCM was the matrix P-jj of the average

number and type of property damage per accident by event l and the vector N-j of the number of occurrences of the accident due to fracture. These data were

often not detailed or complete, forcing estimates to be made.

Methodol ogy . The method that was attempted to evaluate property

damage costs was a simple listing of each item of property damaged j. Where

severity of the damage was known, it was included in the costing of the damage.

The average dollar value of each piece of property damaged or lost is

represented by C 4j, which indicates that the cost of each separate item

needed to be obtained. For example, a totally destroyed house should have a different cost estimate than a partially destroyed house; i.e., each is

represented by a different j in the P-jj estimate of ECM and each had a separate C4J cost associated with it in this model.

The cost of property damaged by event may be calculated as

TPCi =L (C 4j X Pi j

) X Ni

j

where TPC-j is the total property cost loss associated with event i.

The total cost of all property damage was then computed as

TPC = £ TPC-j

i

Because of data scarcity, the ability to produce detailed costs was considerably hampered. Even insurance institutes, for example, did not have

cost data for specific items of property that were necessary. Where

information was available, it is reported in the property damage section. Cargo

losses were treated separately in that they were estimated on a sector by

sector basis and treated as a Final Demand column in the I/O model.
E-n

Environmental Degradation Model

The Environmental Degradation Model (EDM) was designed to estimate:

• Environmental clean-up costs

• Direct loss environmental damages or the welfare damages of

environmental degradation.

Environmental clean-up costs included the labor, material, and capital

costs required to clean up environmental damages associated with failurerelated incidents. Such clean-up costs included attempts to mitigate damages

in air, land, and water media, and account for cross-media linkages in clean-up

efforts. Also, these costs are associated with expenditures for clean-up in

both the public and private sectors. To the extent possible, both private and

public expenditures were accounted for in EDM. Clean-up costs were also

treated as a separate row sector in the I/O analysis.

Direct loss environmental damage, or the welfare damages of environmental degradation, are more or less commensurate in dollar terms. In the

abstract, welfare damages of environmental degradation are imposed directly on individuals in the form of foregone benefits without the intervening mechanism

of explicit money outlays.

Purpose . EDM attempted to measure in dollar terms the environmental

costs identified in the E-h matrix of the ECM.

Input . The inputs to EDM were the matrix E-jj of the j types and

severities of environmental consequences associated with fracture accidents and

the vector N-j of the number of such fracture accidents by event i.

Methodology . As originally conceived, the EDM would provide cost

estimates for the consequences in E-jj by completing the following five steps.

First, the consequences of an event i were to be listed in the

corresponding vector j of the E-j j matrix. These would then be separated into

environmental degradation consequences E-j^ and environmental clean-up

consequences Ej c.

Second, cost weights corresponding to a consequence were to be

assigned to each severity of the consequence as given in E^ and E^.

Implicitly, this step would involve the assignment of relative costs to

different severities and different consequences.

Third, all the weights assigned to the consequences of a particular

event were to be added together, producing a single number for each event.

This would then result in an index for each E-j^ vector and each E-j C vector,

which would have a larger value if the environmental consequences of the event were greater.
E-12

Fourth, data concerning the environmental costs of known specific

events were to be collected. A minimal amount of actual case data would then

be related to the index developed in step 3, using appropriate statistics.

This step would have then resulted in a functional relationship between dollar

cost and each value of the index.

Finally, the above function would be used to assign a cost to each

event i. Thus, by developing a severity index of the consequences of an event,

a minimal amount of actual data would be necessary to calibrate EDM.

Mathematically, the above would result in the assignment of varying

weights and Wc to each consequence and their summation to total indices:

s id = 2 ( wd

x E id)

d

Sic = 2(WC

X E ic ) c

These indices would then be related to specific environmental cost data as

fol lows

c 5i

= f d( s id)

c 6i

= Ms ic)

where C5-,- is the cost of environmental degradation for event i Cg-j is the cost of environmental clean-up for event i.

The functions f<j and f c would be obtained through regression analysis on known values of C5 -j and 0,5-,-, which were related to their corresponding

index values S 1(j and S-j c. Once obtained, these functions would be used to

assign a cost value to every event with an index value.

To calculate the actual cost of an event, the number of occurrences of

the environmental event would be multiplied by the costs.

TECi = (C51 + C 6i ) X Nt

where TEC-j is the total environmental cost associated with event i.

The total cost of all environmental damage would then be
E-13

TEC = STEC-j

i

The above discussion was provided to indicate how we hoped the model

would be developed. As it turned out, it was not reasonable to do this for one

simple reason, lack of data. Among events in ECM, very little information was available on what the environmental consequences of an event caused by fracture

might be. Many assumptions about most likely environmental consequences would

have had to be made for each event. Once this was done, the above models could

be developed which would roughly ascribe costs to these consequences. However,

it was not deemed appropriate to do this series of assumptions/estimations.

Instead, those known environmental consequences are discussed in more qualitative terms. A later section of this appendix provides further detail on how

this was done.

Summary

The total costs from all the supplemental models was then obtained by

summing

C = C

r + C

n = TIC + TPC + TEC

since each estimate is non-duplicating and in 1978 dollars. This was done

separately for resource costs and imputed costs. The following section

presents model results.
E-14

Results

Events Character Model

The ECM results are presented below on an event-by-event basis. In most cases, a table of information summarizing data and assumptions is

provided for each event. In addition, each table includes a short discussion

of how the numbers were obtained, the results of the minimum/maximum approach,

and indications of where information was transferred between events.

Rail Transportation . The railroad industry is regulated to a higher

degree than many industries. As a result, more accurate statistics are available on railroad accidents, their causes, and their consequences. The ECM

results for the railroad industry are presented in Table E-3. In reviewing

these data, it is observed that a high percentage of the accidents are attributed to fracture events. There are three major reasons for this. First,

railroads are subject to regular inspection, safety checks, and--when needed--

formalized accident investigations*. Second, operators are well trained and

less susceptible to human errors, thus, those accidents that do occur are more

likely to be a result of material failure. Third, since both the vehicle and

the way (rails) are counted as accident causes, there is a possible doubling

of the percent of accidents due to fracture.

It is also worth noting that even in an industry which collects

detailed statistics on accidents, there was little information available on environmental degradation. As will be seen throughout this Appendix, there is

a general paucity of reliable data relative to environmental degradation and

its relation to fracture events.

Pipeline Transport . Information pertaining to pipeline accidents

came predominately from data gathered by DOT's Office of Pipeline Safety

Regulations (OPSR) and compiled by Battel le in two reports for the American

Gas Association. This was supplemented by OPSR data published by DOT's

Material Transportation Board in its 1979 Annual Report on Pipeline Safety,

and its 1978-79 Summary Report on Liquid Pipeline Accidents.

Natural Gas Distribution Systems. With respect to accidents

occurring in gas distribution lines, relevant data included the number of

leaks repaired each year, their causes, and the number of fatalities, injuries

and property damage resulting from the leaks. Data collected covered a period

of 9 years (1970 through 1978). Yearly averages were calculated for the total

number of incidents, the total number of fatalities and injuries, and the

* A review of 147 publications (from the Railroad Accidents Reports series),

analyzing the more important accidents in 1976 and 1977, indicated that

16--or almost 11 percent—were due directly to material failure.
E-15

TABLE E-3. RAILROAD TRANSPORT

Acci dents 10,362

Fra ct ure* 15.1 - 36.3

ent Due to Fracture 1564 - 2192

Fra rt urp** 70 - 90

AmDutate » \i up U L U Arm n 1 111 0.2 - 0.2

AmDutatp Lpo 0.2 - 0.2

Amnutatp Othpr 0.2 - • 0.2

Fra i I u t>\/ ct ure ui t An irmin 0.4 - 0.5

Fracture Finaer 0.4 - 0.5

Fra 1 1 U vctv Ulurpt 1L, pat ^-J 0.8 - 1.0

F met urp Top 0.4 - 0.5

Fracture Head 0.4 - 0.5

Fracture Torso 1.8 - 2.3

Bruise 28.1 - 36.2

Sprain/Strain 27.9 - 35.9

Laceration 7.4 - 9.6

Burn 1.0 - 1.3

Di slocation 0.5 - 0.8

Number of Deaths Due to Fracture

Property Damage

Environmental Damage

1$48.3 - 59.2 million

26 - 63 cars damaged,

releasing hazardous material , resulting in 2130 - 5120 people evacuated.

Source: Accident/Incident Bulletin No. 146, Federal Railroad Administration,

Railroad Accident Reports, Various Tables.

* The lower bound includes accidents resulting from the failure by breaking

of key vehicle or rail parts, plus some fraction (one-fourth or one-half)

of accidents caused by events that might have been fracture, e.g., "Switch

point worn or broken". The upper bound includes all such events as being

fracture caused. Actual counts of the number of accidents were made.

** The total injuries due to fracture were determined by a percentage of the

total railroad injuries (15.1 to 36.3 percent). The details provided are a normalization of injuries that occurred to this total of 70 - 90 injuries.

This does not imply that a fractional number of injuries occurred in a given year, but rather, that on average these are the injuries that occur.
E-16

TABLE E-4. PIPELINE TRANSPORT

Transmission and

Distribution Gathering Liquid

Total Number of Accidents 1,096 448 262

Percent Caused by Fracture 3.1-7.8 4.3-10.8 3.8-30.3

Number Caused by Fracture 34-86 19-48 10-79

Fatalities due to Fracture 1-2 0-0.4 0-1.5

Injuries due to Fracture 10-24 1-2 0-3

Total Property Loss

due to Fracture* 2.1-5.3 5.7-6.0 0.1-1.1

Environmental Degradation

due to Fracture 12,000 to

97,000 barrels

of Commodity

1 ost.

Source: See text.

* Property damage estimates, in million of 1978 dollars, include damage to

both pipeline and nonpipeline property; these estimates were based on court

settlements awarded during an average year between 1970 and 1978.
E-17

amount of property damage. The percentage range of incidents due to fracture

was calculated on the basis of general information on cause provided by the

Gas Distribution companies, and the more detailed causal breakdown provided by

Transmission and Gathering Companies. The resulting percentage range due to

fracture (3.1 to 7.8 percent) was then applied to the total yearly averages to

obtain the estimated numbers due to fracture (see Table E-4).

Natural Gas Transmission and Gathering Systems. Data collected on Natural Gas Transmission and Gathering Systems was extremely detailed. These

data provide both a breakdown of accidents by cause, and a further breakdown

of those accidents caused by material failure (15.8 percent) in terms of the

origin of failure. This latter information was used to determine the upper

and lower bound percentages of accidents due to fracture. A breakdown of

material failure incidents with respect to their origin is provided in Table

E-5.

TABLE E-5. COMPONENTS INVOLVED IN NATURAL GAS PIPELINE MATERIAL FAILURES

Percentage of Material

Origin Failure Incidents

27.2**

8.6*

22.1*

1.1*

1.6*

4.9*

0.2

3.2*

17.4

0.2

13.2

* Assumed to be fracture-related upper bound, (i.e., total of 68.7 percent),

such that 10.8 percent (68.7 of 15.8 percent) of all accidents could be

fracture-rel ated.

** Assumed to be fracture-related lower bound, such that 4.3 percent (27.2 of

15.8 percent) could be fracture related.

Data on fatalities, injuries, and property damage were also broken

down in terms of the origin of material failure incidents. Those occurring in

the appropriate upper and lower bound categories were tabulated directly and

averaged over the 9 year period to provide the total number of incidents,

fatalities and injuries, and the amounts of property damage due to fracture

(see Table E-4). The small percentage range (4.3 to 10.8 percent) and small

Body of Pipe

Gi rthweld

Longitudinal weld

Other field weld

Compressor

Valve

Scraper trap

Trap connection

Fitti ng

Gas Cooler

Other
E-18

number of deaths and injuries due to fracture in this particular sector are noteworthy. It should also be noted that there was some discrepancy in the

Transmission and Gathering Systems data provided to Battel le by OPSR (in the

form of computer tapes) and that published in the 1979 Material Transportation

Board's (MTB) Annual Report. Since the discrepancy has not yet been resolved

with DOT, the numbers published by MTB, which on the average tended to be

higher, were utilized.

Liquid Pipelines. As seen in Table E-4, the number of liquid

pipeline accidents attributable to fracture and the resulting fatalities,

injuries, and property damage are very small, despite an upper bound (30.3

percent) that is much higher than that for natural gas distribution and for

transmission and gathering systems. Information on liquid pipeline accidents

came primarily from MTB's 1979 Annual Report; information as to cause was supplied by MTB's Liquid Pipeline Accident Report Summary for 1978 and 1979.

This latter report distributes the incidents occurring in 1978-1979 by cause,

where the following cause categories were assumed to be fracture related:

defective pipe, girth weld, repair weld, or fabrication weld; rupture or leaking seal and pump packing failure; rupture of leaking gasket; stripped or broken threads; and pipe coupling failure. The lower bound estimate of 3.8

percent was established assuming that only those incidents caused by a defective pipe were fracture-related; the upper bound estimate of 30.3 percent

was established with the assumption that all the above causes, including

defective pipe, could be fracture-related.

Once established, the percentage range of accidents due to fracture

was applied to the nine-year average totals obtained from MTB's 1979 Annual

Report in order to determine the total number of accidents, fatalities,

injuries and propert* damage due to fracture.

Auto Transport 'on. The data available on accidents in the auto

transport sector come prt minantly from the National Safety Council ( Accident

Facts ) and the National Hi ^ay Traffic Safety Administration ( Fatal Accident

Reporting System and National Accident Sampling System ). Both are somewhat

general in that they do not provide statistics with breakdown by cause (see

Table E-6). The percentage of automobile accidents due to fracture (0.4

percent to 0.8 percent) was derived from results obtained in an Indiana

University study which analyzed the causes of traffic accidents. These data were collected at three levels of detail: examination of 13,500 police

reports, 2,258 field-survey investigations, and 420 in-depth investigations.

Results revealed the following percentage distribution of probable causes:

Human only 57 percent

Human and environmental 26 percent

Human and vehicular 6 percent

Human, vehicular and environmental 3 percent

Environmental only 3 percent

Vehicular only 2 percent

Vehicular and environmental 1 percent
E-19

TABLE E-6. AUTO TRANSPORT

Total Number of Accidents 18,300,000

Percent Caused by Fracture 0.4 - 0.8 (5-10 percent of 8

percent vehicular defects)

Number Caused by Fracture 70,400 - 140,800

Fatalities Due to Fracture 206 - 412

Injuries Due to Fracture 19,700 - 39,400

Total Property Loss Due to Fracture $46.4 - 92.8 million

Total Environmental Degradation

Due to Fracture

Information Not Available

Sources: National Safety Council; National Highway Traffic Safety

Administration; Institute for Research on Public Safety, Indiana

University (Study Conducted for U.S. Department of Transportation).

* Assumed 8 percent of all auto accidents were caused by vehicular factors,

based upon results of a survey conducted by Indiana University's Institute

for Research on Public Safety, and that 5-10 percent of this 8 percent were

actually fracture related. This latter assumption was based on the results

obtained in the pipeline accident analysis. Pipelines and autos were assumed to be similar in that both require metal manufacturing, design, and

processing, and the results of failure are approximately equally visible to

the public.
E-20

Human and environmental factors, a significant 86 percent, were immediately discarded as having no fracture relevance. The vehicular factors,

which included predominantly brake and tire/wheel failures, were assumed to

have some fracture relevance. Based upon the results above (i.e., 2 percent

of accidents caused solely by vehicular factors and 12 percent caused by

vehicular and at least one other factor), and discussions with industry

experts, a weighted average of 8 percent was used as the percentage of highway

motor vehicle accidents caused by vehicular factors. Of these 8 percent, 5 percent to 10 percent were assumed to be actually caused by fracture, resulting in a very small percentage (0.4 percent to 0.8 percent) of total highway

motor vehicle accidents being attributable to fracture. This percentage range

was then applied to NSC's estimates of the total number of highway accidents

(18,300,000), fatalities (51,500), injuries (4,928,000)* and property damage

($34.3 billion) occurring in 1978 to determine the respective amounts due to

fracture.

Highway accident statistics compiled for 1978 by NSC and NHTSA

compared favorably in terms of the estimated number of fatalities and

injuries. NSC's estimate on the total number of accidents, however, was more

than double that of NHTSA, attributable to the fact that NHTSA' s statistical

sample was taken from police files and did not account for those accidents

which went unreported. Estimates of property damage for motor vehicles

accidents were available only from NSC. For reasons of consistency, NSC

estimates were used in calculating the total number of motor vehicle

accidents, fatalities and injuries, and the property damage due to fracture.

Other Motor Vehicle Transportation . Accidents involving motor

carriers were analyzed separately from motor vehicle accidents as separate,

more detailed data sources were available. Data used were averaged over a two-year period (1978-1979). Approximately 5.0 percent of all accidents

(1,740) were found to be caused by mechanical defects, (indicating some fracture-relevance), which resulted in an average of 100 deaths, 1,360

injuries, and $21 million worth of property damage over the two-year period.

Assuming, as in the case of motor vehicles, that 5 to 10 percent of the

accidents caused by mechanical defects were due to fracture, this percentage

range was applied to the numbers generated above in order to obtain the upper

and lower bound estimates of the number of accidents, number of fatalities and

injuries, and property damage due to fracture (see Table E-7).

Limited data were also provided on the number of accidents involving

hazardous materials, which could contribute to environmental degradation.

Applying the same percentage range (5 to 10 percent of 5.05 percent) to the

total number of accidents involving hazardous materials indicated that an

* Because NSC's 1978 estimate of total injuries included only disabling

injuries, their annual average estimate for 1975-1977, which included

disabling and nondisabling injuries, was used. This is larger than the

number cited in Table E-2.
E-21

TABLE E-7. OTHER MOTOR VEHICLE TRANSPORT

Total Number of Accidents

Percentage due to Fracture*

Number Due to Fracture*

Number of Fatalities Due to Fracture

Nmber of Injuries Due to Fracture

Property Damage Due to Fracture

Environmental Degradation

34,770

.25 to .51 (5-10 percent of

5.05 percent mechanical

defects)

88 - 176

5-10

68 - 136

$1.0 - 2.1 million

1-2 incidents involving

leakage of hazardous

material

Source: Federal Highway Administration.

Assumption: 5-10 percent of accidents caused by mechanical defects were

fracture related. Percentage due to mechanical defects (5.05

percent) was provided by FHA; of this the percentage range (5-10

percent) assumed to be caused by fracture was based on results

obtained in the pipeline accident analysis.
E-22

average of 1 to 2 incidents per year would be due to fracture. Data pertaining to the quantity or type of material involved and the affected resources were not available.

Aviation Transportation . Detailed information on aviation accidents

was obtained from the National Transportation Safety Board's (NTSB) Aviation

Accident tapes which are compiled annually and computer stored. Relevant

information included the type of aircraft, the degree of damage to the

ai rcraft--both qualitative (minor, substantial and destroyed) and quantitative

(full damage loss), number of fatalities, injuries, and a detailed breakdown

on causes This information was compiled on an accident-by-accident basis.

Accidents caused by fracture were then tabulated so as to estimate the

resulting number of fatalities and injuries, as shown in Table E-8. (The

establishment of upper and lower bounds was not necessary in this particular

case.) With regard to the property damage estimate, two caveats should be

noted: (1) the estimate includes damage to aircraft only (information on cargo losses was not available); and (2) the estimate was based upon the

qualitative information provided in the tapes (quantitative information on

full loss damage was incomplete). The methodology used to estimate property

damage involved a breakdown of those accidents caused by fracture into three

categories: those in which the aircraft was destroyed, those in which the

aircraft received substantial damage, and those in which the aircraft received

minor damage. Each category was then tabulated separately and multiplied by

the appropriate "average cost" per aircraft. The three subtotals were then

combined to give the total property damage estimate.

Marine Transportation . As seen in Table E-9, the percentage of

marine accidents due to fracture is low, a not-surprising result as vessel

weight is not a critical factor in design and vessels are constructed to be

structurally solid. The percent due to fracture is a single value and not a range as the level of detail (with respect to cause) found in the Coast Guard

data was sufficient to allow simple tabulations of the number due to fracture.

The U.S. Coast Guard, through the Pollution Incident Reporting System (PIRS),

compiles on a year]y basis the following types of information on marine

accidents: location of accident, type of vessel involved, cause, materials

involved and quantity spilled, affected resources, and cost of clean-up. Data

for 1978 were analyzed and results were tabulated to determine the total

number of accidents due to fracture.

Fatalities and injuries resulting from marine accidents were estimated from data in another Coast Guard Publication (Polluting Incidents in

and around U.S. Waters). Data were averaged over the 9-year 1970-78 period to

yield an annual average estimate of fatalities (542) and injuries (1,495)

occurring during this time period. The percentage due to fracture (0.7

percent) was then applied to each of these figures to obtain estimates on the

number of fatalities and injuries due to fracture.

As PIRS contained only quantity of material lost data, two other data sources were used to obtain upper and lower bound estimates on property

damage. The upper bound was calculated by multiplying the total number of
E-23

TABLE E-8. AVIATION TRANSPORT

Total Number of Accidents

Percent Due to Fracture

Number Caused by Fracture*

Total Fatalities Due to Fracture

Total Injuries Due to Fracture

Total Property Loss

Total Environmental Degradation

4,518 (4,494 general

aviation; 24 air carrier)

7.8(a)

354( a )

66(a)

393(a)

$18.3-71.9 million

No Information Available

Source: National Transportation Safety Board (NTSB) Aviation Accident Tapes

(1978)

* Accidents caused by Material Failure and/or Fracture Fatigue were included

in this count.

(a)In contrast with the data on other kinds of events (see, for example,

Tables E-3, E-4, and E-7), the figures presented here represent exact

counts for 1978, rather than derived estimates and averages over a threeto five-year time span. The actual airline figures for 1977 were comparable with those for 1978 (4286 accidents; 303, or 7.1 percent, due to fracture; 53 fatalities). Similarly, aside from the 273 fatalities resulting

from the DC-10 crash in Chicago, the numbers of fracture-related incidents

and fatalities in 1979 (270 and 73, respectively) were also comparable with

those of 1978. Hence, the figures presented in the table above are reason- able estimates for non-catastrophic events.
E-24

TABLE E-9. MARINE TRANSPORT

Total Number of Accidents

Percent Due to Fracture*

Number of Accidents Due to Fracture

Number of Fatalities Due to Fracture

Number of Injuries Due to Fracture

Total Property Damage Due to Fracture

Total Environmental Degradation

Due to Fracture

4,417 (vessels)

0.7

31

4

10

$58,000 $53,800,000

4500 gallons of oil

products spilled

Sources: U.S. Coast Guard; Pollution Incident Report System; NTSB Marine

Accident Reports; U.S. Department of Transportation, 1978.

* Accidents caused either by a structural failure or loss (e.g., hull rupture

or leak; tank rupture or leak) in which material fault was the contributing

factor, or by an equipment failure (pipe rupture or leak; hose rupture or

leak; manifold rupture or leak; loading arm fracture, rupture or leak;

value, pump, flange, gasket or other equipment failure) in which material

fault was a contributing factor were assumed to be fracture-related.
E-25

accidents due to fracture (31) by the average property damage cost remltlng

from a major marine accident ($1.7 million).* The lower bound estimate was calculated in a similar fashion; however in this case, the number of accidents

due to fracture (31) was multiplied by the average property damage cost of a recreational boating accident ($1,870). This information was provided in a DOT publication, Transportation Safety Information Report , October-December

1978 and Annual Summary .

While PIRS data did include information on the quantity and type of

material involved in marine accident spills, as well as clean-up costs, they

were not sufficiently complete to use in estimating the cost of environmental

degradation. The types of material spilled in accidents due to fracture were predominantly oil products; the quantity spilled in accidents caused by

fracture totaled 9,500 gallons.

Work-Related Events . Only minimal data were available on fracture

accidents in the workplace. This required a slightly different estimating

procedure, which is described below.

Table E-2 indicates that the average annual number of accidents in

the workplace is 10.2 million. Of this total, the portion that might have

been caused by fracture had to be determined. The first approximation

considered was use of Bureau of Labor Statistics data to establish an absolute

upper bound on the fracture relative percentage. By judging what types of

accidents seldom result from fracture (e.g., overexertion in the workplace)

and what injury sources seldom result from fracture (e.g., steam) and then

calculating the remainder, it was found that as much as 22.5 percent of all

workplace accidents could possibly be caused by fracture, a figure that

appears far too high when related for example, to transportation events.

Generally events that are more people-oriented, such as driving, are much more likely to result in accidents caused by some form of human error. As

accidents in the home, at work, or in public places are similarly peopleoriented, one might expect a fracture relevant accident frequency more like

that found in autos or other motor vehicles (0.4-0.8 percent and 0.25-0.51

percent, respectively).

As a second estimate, the very detailed military data on accidents

(documented in a later section) were examined. The U.S. Navy data base on accidents indicated that 1.2 percent of all accidents may have been related to

fracture or material failure, a figure derived from a very large sample of

specific case studies. This sample includes both on-base and off-base

accidents which approximately match a general work environment. Similarly,

U.S. Air Force data indicated that 1.1 percent of all accidents occurring on

* This value was obtained by averaging the property damage costs of 52 major

marine accidents occurring in 1978 as reported in individual marine accident

reports published by NTSB. It should be noted that the individual accident

reports are available only for those accidents considered to be major, i.e.,

accidents involving loss of life, substantial loss of cargo, or property

damage in excess of $200,000.
E-26

base may have been due to fracture. After examination of all of the above,

1.2 percent was selected as the highest reasonable upper bound. A lower bound

of 0.25 percent was chosen, as this is the lowest frequency in other motor

vehicles. Application of this range results in a total of between 25,000 and

122,000 accidents in the workplace resulting from fracture in an average year.

Using these same percentages and the data in Table E-2, we obtain the

results on injury, death, and property damage as given in Table E-10. Note

that the property damage estimate includes medical costs and foregone earnings

estimates as well, not just property damage.

Construction. Within work-related accidents, some detailed information is available for particular sectors, which can be used as benchmarks.

One such subgroup includes construction equipment (e.g., scaffolds, ladders,

ropes, cables, and manufacturing machinery), where case history data from the

Occupational Health and Safety Administration on fatal accidents were

examined. Review of this data determined that, at the very most, 6-13 percent

of such case histories might have been related to fracture. While many of the

histories did not determine an exact accident cause, this information at least

indicates that the numbers selected earlier are probably of the correct order

of magnitude.

Agriculture. The National Safety Council estimates that 1,900

fatalities and 190,000 disabling injuries occur in the agriculture industry

each year. Because of lack of data on the causes of these accidents, the

overall work-related fracture frequencies were applied to this event (0.25-1.2

percent). This would indicate that there were 5-23 fatalities and 500-5,300

disabling injuries caused by fracture. These are probably overestimates to

the extent that many farm accidents are provoked by human error, rather than

material failure. These are already included as part of Table E-10, but are mentioned here to give a general idea of the size of the accident problem in

agriculture.

Mining. The best source of data for the mining sector comes from the

Mine Safety and Health Administration. Their investigation of accidents

attempts to determine the number of injuries, deaths, and lost work time from

accidents according to 21 different causes. Significantly, none of these

causes is fracture, indicating it is a smaller problem than other areas which cause mine accidents (e.g., explosion or collapse of an improperly supported

roof). In fact, only 1.0 percent of all injuries were assigned to "other

injuries", which presumably includes fracture. Again, this agrees with the

earlier work-related range of accident frequency due to fracture. Without

further specific information, this event has been included in the compilation

of overall work-related consequences (see Table E-10).

Manufacturing. The only specific information obtained in the

manufacturing sector was a series of case histories involving manufacturing
E-27

TABLE E-10. WORK-RELATED ACCIDENTS

Total Number of Accidents

Percent due to Fracture*

Disabling Injuries due to Fracture

Deaths due to Fracture

Property Damage**

Environmental Degradation

10,200,000

0.25-1.2

5,000-26,400

32-156

$57-276 million

No information available

Source: Accident Facts , National Safety Council; Military data

*See text for explanation

**includes medical costs, foregone earning.
E-28

machinery. After reviewing 58 such accidents that resulted in fatalities,

none were reported as being caused by fracture. Thus, while certain cutting

tools, grinding wheels, or other machinery components do fracture, the extents

of injuries, damage, etc., are not known.

Home-Related Accidents . The National Safety Council estimates that

27.1 million accidents occur annually in the home. However, most of these

accidents are due to either human mistakes or neglect. Actual property which

fractures is a rare event. To obtain an order of magnitude estimate, the

detailed military data will again be referenced. For Air Force data, it was possible to determine that of 4,939 accidents which occurred off-base (similar

to home and recreational environment), only 13 were due to material failure

which may have been fracture. All 13 cases involved breaking glass, so even this is an upper bound. Utilizing the data in Table E-2 and the 0.26 percent

frequency due to fracture derived above provides the estimates in Table E-ll.

An arbitrary lower bound of 0.01 percent was used since some fracture events

do occur in the home.

No additional data on houses were available. While it is conceivable

that an electrical appliance may fracture, resulting in short-circuiting and

possible serious fires, no estimate is made here of the prevalence of such

events. Rather, it is presumed that the all-inclusive category of home

accidents includes them.

Pub 11 ic-Related . Two types of events are included in public-related

events: public uti lities and public structures. Each will be discussed in

turn.

Public Utilities. Investigations in this area were directed toward

obtaining and analyzing electric utility failures caused by such factors as turbine fracturing, where the major consequence would be a power failure and

its associated social loss. As such failures seldom result in direct injury

or death, it was assumed that a plausible range of 0 to 5 deaths and 0 to 10

injuries per year would result from electric utility fracture events. Data on property damage, as a result of such events, was similarly unavailable, but a gross assumption of $1 to $10 million was included as an order of magnitude

estimate. The costs associated with this area are relatively small compared

to other events.*

* Discussions with operating companies further indicated that fracture was not

a significant factor in any aspect of electric power generation and distribution. An indicator of service disruptions is the amount of power that

must be purchased from the integrated power grids. Major purchases, or

service disruptions and their consequences, derive far more from peak

demands and storm-affected transmission losses than from factors related to

fracture within scope.
E-29

TABLE E-ll. HOME-RELATED ACCIDENTS

Total Number of Accidents

Percent due to Fracture*

Disabling Injuries due to Fracture

Deaths due to Fracture

Property Damage**

Environmental Degradation

27,100,000

0.01-0.26

350-9,100

2-60

$0.7-18.5 mil lion

No information available

Source: Accident Facts , National Safety Council; Military data

*See text for explanation.

**Includes medical costs, foregone earnings.
E-30

Public Structures. This large category was originally conceived to

include diverse incidents in the public sector, such as buildings fracturing,

dams failing, and bridges collapsing, among others. It does not include

accidents while at work in a public place, related motor vehicle accidents, or any other transportation event.

Only very incomplete data were available to estimate the consequences

of such events. As a starting point, the National Safety Council estimates in

Table E-2, were used. Assuming that the frequency of fracture in the home

(0.01 - 0.26 percent) is relevant for public places, and structures, total

estimate for deaths, injuries and property damage were obtained. We then

subtracted out other transportation, recreation, storage, medical, and

communication accidents, leaving net figures of 0 to 2700 injuries, no deaths,

and no additional property damage unaccounted for. Overall, this residual

category did not encompass any substantial costs that were not already

included in the range for other events. While we recognize that these costs are not zero, they should not be recounted after already being included in

previous events. The additional injuries were costed into the total to insure

complete coverage.

Other Events . Several other events deserve mention to complete the

universe of accidents. Military data, which have already been referred to in

determining the frequency of fracture in other events, are discussed below,

followed by discussions of events related to communications equipment, medical

instruments , storage devices, and recreational activities. While no detailed

data were available to estimate the consequences of events, they have been

included for the sake of completeness.

Military. The Defense Department maintains detailed files on accidents occurring in the Army, Navy, and Air Force. Each sector searched

their respective files and provided the following types of information.

The Naval Safety Center maintains files of Naval accidental property

damage exceeding $300 and injuries to Navy civilian and military personnel

resulting in lost time away from work. These files were searched to retrieve

records of accidents caused by material failures other than those arising from

either personnel error or stress beyond normal limits. Data were provided in

three separate files, the Personnel Injury/Death Master Prints, the Material

(Property) Damage Reports, 5102.2, and the Material Failure Reports. The first

two files proved useful in that they provided a total count of accidents

caused by material failure (i.e., fracture) which resulted in either personnel

injury (99) or material damage (199).* Since some accidents are included in

both these totals, the 199 figure is assumed to be a more meaningful estimate

of the number of accidents caused by fracture.

The Department of the Army queried their Army Safety Management

Information System to identify those accidents where material failures per se,

in the form of fractures or ruptures under normal operating conditions were

* Totals were for 1979.
E-31

the initial cause factor. However, as Army accident reporting for general

safety data does not provide a unique means for selecting only specified

material factors, additional analyses were undertaken to exclude those

incidents not having any fracture-relevance. The criteria for exclusion were based on "cause" information provided in the narrative descriptions of each

accident. The total number of accidents originally reported as being

potentially fracture-caused was 1,800.* However, additional analysis revealed

that at least 50 percent of these were not fracture-related. Where questionable, an accident was assumed to be fracture caused. Thus, the number of

accidents in the Army sector which were assumed to be caused by fracture is

estimated at a maximum of 900.

U.S. Air Force failure data were provided from their Headquarters Air

Force Inspection and Safety Center. As with the Army and Navy data, the Air

Force data provided information on the numbers of injuries and fatalities, and

the amounts of property damage, as well as a narrative and description of

findings. These data were also analyzed in greater depth since not all accidents included under the material failure heading were fracture related. Of

the original 139** accidents categorized as related to material failure, 30

percent were excluded as having no fracture relevance. The upper bound

estimate of fracture-caused accidents occurring in the Air Force sector in

1979 was thus estimated at 97.

A significant benefit derived from the military data was the ability

to use the detailed results (i.e., percentages due to fracture) as a supplement to that obtained in the civilian sector, which contained only limited

data on the cause of accidents occurring in the home or at work. Percentages

of accidents due to fracture in the various military services were derived

from the Department of Defense Consolidated Report (1979). Accident totals

for all three services were broken down into two major categories: on-duty

and off-duty. The off-duty totals were further subdivided between motor

vehicles (private), other (including sports and recreational) and contractor;

the totals are shown in Table E-12.

TABLE E-12. TOTAL REPORTED OPERATIONAL MISHAPS IN THE MILITARY

Tot a 1 Pr i vat e Accidents On-Duty Of f-Duty Motor Vehicle Other Contracto r

Army 20,561 16,040 4,521 1,959 2,374 188

Navy 16,048 12,892 3,156 1 ,800 1,333 23

Air Force 15,015 7,999 7,016 1,936 4,939 141

* Totals were for 1979.

** 1979 data.
E-32

Using the above figures and the total number of accidents caused by

fracture determined previously, the percentage of military accidents due to

fracture could be calculated. Results are given in Table E-13.

TABLE E-13. MAXIMUM PERCENT OF MILITARY ACCIDENTS DUE TO FRACTURE

Total Number

of Accidents

Number

Due to Fracture

Percent

Due to Fracture

Army

Navy

Air Force

20,561

16,048

15,015

900

199

97

4.4

1.2

0.7

Application of these percentages to the civilian home and work sectors

required a further breakdown of the total number of accidents caused by fracture into the number of accidents caused by fracture which occurred while

on-duty (work-related), and off-duty ( home- rel ated } , specifically the

off-duty/other category. Inspection of the Air Force data revealed that 13

out of the 97 fracture caused accidents occurred at home, or 0.26 percent due

to fracture (13/4939, where 4,939 is the total number of accidents occurring

in the off-duty/other category). The remaining accidents were assumed to be

on-duty, or work-related, or 1.1 percent due to fracture.

Analysis of the Army data revealed that about 100 of the 900

accidents appeared to be "home"-rel ated and caused by fracture; this implies

that 4.2 percent was due to fracture (100/2374); the remaining accidents were assumed to be on-duty (work-related) and consequently indicated that 5.0

percent were due to fracture (800/16,040). It should be noted that at least

60 percent of the Army accidents were attributable to motor vehicle accidents.

It was impossible to determine, however, which of those accidents were on-duty

and which were off-duty. This, when combined with the extreme upper bound

analysis performed on the Army data, results in higher percentages for this

branch of the military. It was determined that the Navy and Air Force numbers were more plausible; thus they were used as described earlier.

Communications-Related. This category of events attempted to

estimate societal costs of failure in communications equipment due to fracture, including such events as the failure of an entire radio tower or a part

in a transmitter. Communications-related events cause only minimal injury,

death, and property damage. Of more importance is the loss to society of the

communications link.
E-33

No data on the frequency of such events were obtained, nor was the

likelihood of failure by fracture determined. However, it was judged that the

importance of operational integrity in communications equipment leads to very

careful design, manufacture, installation, and inspection. Thus, the magnitude

of the fracture problem in this sector would not appear to be large. In the

few observed instances where tower failures have occurred, the causes (e.g.,

high wind loads, or improper construction) do not involve fracture within

scope. Overall, the occurrence of failures due to fracture is probably very

small, especially since few moving parts are involved. Furthermore, the

resultant costs are even smaller (few deaths or injuries and little environmental degradation), no costs have been allocated to this event category.

Medical-related. Medi cal -rel ated fracture events include failures in

medical devices used with human bodies (e.g., pacemakers, implanted

prostheses, or artificial organs). Failure of hospital equipment has already

been included in work-related events.

As it is presumed that all medical devices are state-of-the-art and

at best practice, fracture caused failures should be minimal. Pacemaker parts

do fail occasionally, and the consequences are severe. When an artificial

limb or organ fails, serious and costly injury may result. For the sake of

completeness, 25 fatalities plus 25 injuries were assumed as the upper bound

of costs for medical -related events. There was no evidence that any fracture

failures do occur, thus the lower bound was set to zero. Associated property

damage in such cases is relatively minor (compared to injury costs) and are assumed to be less than $100,000 annually.

Storage-Related. Storage-related events result from failure in

storage tanks or vessels. Potential consequences are spilled oil and chemicals resulting in property loss, environmental degradation, and potential

health hazards. The Environmental Protection Agency (EPA) monitors hazardous

material spills; these account for the majority of costs in this category of

events.

The EPA data were widely variable in detail by reporting region.

Individual descriptions were provided for the causes and consequences of each

accident that resulted in spillage of hazardous materials. A review of the

data suggested that, while 93 incidents may have been fracture caused in 1978,

only 19 were related to storage devices. The others involved pipelines,

trucks, rail cars, etc. The exact materials spilled were determined and

costed as property loss in the Property Cost Model. Few injuries and deaths

were associated with these accidents. For lack of exact data, an upper bound

of 19 injuries and 10 deaths were costed. Again, the lower bound for injuries

was set at zero. Since environmental consequences may be large, the type and

amount of materials spilled were passed to the EDM.
E-34

Recreational -Related. Some recreational items can fracture, such as skis and baseball bats. The general nature of recreational equipment and its use by individuals is reasonably comparable to events in the home and use of

home appliances, commodities, etc. Because of the lack of specific detailed

data, the same assumption was used as in home-related events, namely, that

0.01 percent to 0.26 percent of all accidents occur due to fracture. The

total number of recreational accidents was obtained without including injuries

where fracture could not be a cause (swimming, for example, was not included).

Results are presented in Table E-14. Property damage and environmental

degradation were assumed to be zero for this category of events.

Injury Cost Model

Given the details of injuries and deaths by event, this section now costs their consequences in 1978 dollar terms based on the T+E Injury Cost

Model. First, a discussion is presented of the methodological considerations

relative to model adaptation for this project. This is followed by: a discussion of the supplemental data sources used to augment the model; a description of the estimating approach including the event-specific estimates

of average injury costs; and a discussion of how estimates of the value of

loss of life were calculated for a number of different valuation procedures.

Methodological Considerations . The estimates of societal costs of

injuries which result from material fracture-related accidents are based on the T+E Injury Cost Model. This model was originally developed for the

Consumer Product Safety Commission for the purpose of estimating the costs of

consumer product-related injuries. Details of this model are contained in

Appendix F.

The Injury Cost Model was developed from a number of different data sources to provide estimates, on a modular basis, for eleven different cost

components for any specific injury. The cost components included in the model

a re the fol 1 owi ng:

• Medical Costs

• Retreatment Costs

• Foregone Earnings

§ Health Insurance Costs

o Product Liability Costs

• Litigation Costs

t Transportation Costs

• Visitor Foregone Earnings

• Visitor Transportation Costs

t Pain and Suffering Costs

• Di sabi 1 i ty Costs.

The model also provides estimates of the value of loss of life for a number of

different valuation methodologies.
E-35

TABLE E-14. RECREATION RELATED ACCIDENTS

Total Number of Recreational Injuries 1,400,000

Total Number of Recreational Deaths 1,570

Percent due to Fracture* 0.01 - 0.26

Injuries due to Fracture 140 - 3600

Deaths due to Fracture 0-4

Sources: Accident Facts , National Safety Council; Military data.

* Assumed same as home-related accidents
E-36

The model generates estimates on a disaggregated basis for each of

the injury cost components listed above on the basis of type of injury, body

part injured, and age and sex of the victim. Furthermore, with the exception

of the product liability insurance and litigation cost components,* the costs are estimated in a manner which is independent of the cause of the injury. It should be noted, however, that the structure of the model, in terms of classification of injuries and disaggregation among demographic characteristics of

the victims, is designed to interface directly with the NEISS injury data base

maintained by the Consumer Product Safety Commission. Estimates of total

injury costs are obtained by applying injury frequency data to the model and,

in effect, adding up the costs of specific injuries on the basis of these

frequencies

Before proceeding, two additional points regarding the nature of the

injury cost estimates obtained from the model are relevant. First, the model

provides cost estimates for acute injuries only. That is, injuries which are

not severe enough to require medical care are not considered in the model.

Second, for any specific type of injury, the model provides separate cost

estimates depending on whether the victim is treated and released or, alternatively, hospitalized. Thus, another dimension along which the model is

disaggregated involves the type of medical care received by the victim.

We turn now to the problem of adapting the Injury Cost Model for use

in providing estimates of injury costs which result from accidents involving

material fracture. The number of different events or types of activities in

which such accidents can occur has already been provided by ECM. The problem,

therefore, involves developing estimates of the average cost of an injury for

any given event. These average cost measures may then be multiplied by the

overall frequencies to obtain total injury costs.

The construction of average cost estimates for the set of injuries

which occur in each event category requires a weighting procedure by which the

disaggregated injury cost estimates produced by the model are combined to

produce the average. To obtain the true average, the weights must correspond

to the relative frequencies of the injuries broken down by the dimensions of

the model, i.e., type of injury, body part injured, age and sex of victim, and

the disposition of the case. Use of the model requires the input of injury

data which specify frequencies disaggregated along the same dimensions as the

model. If such data are not available, then costs along the various dimensions of the model must, by necessity, be aggregated on the basis of a priori

assumptions regarding the relative frequencies.

* The product liability insurance and litigation cost components of the model

specifically concern injury-related costs resulting from accidents involving

consumer products. While such cost concepts are relevant to material

fracture-related accidents, major data limitations and the general inability

to identify the share of relevant costs attributable to personal injury, as opposed to physical damage, made developing event-specific cost algorithms

for these components infeasible.
E-37

During the course of this project, an extensive search of potential

data sources that would be suitable for deriving relative injury frequencies

for weighting purposes was conducted. This search, however, failed to reveal

any data sets that provided such frequencies for injuries specifically resulting from material fracture. As an alternative, injury frequency data specific

to a number of event categories were examined. These related to the frequency

of different injuries stemming from a number of different causes, rather than

resulting exclusively from fracture-related accidents. As no other relevant

and sufficiently comprehensive data exist, these data were used under the

assumption that the observed frequencies were a reasonable approximation of

the frequencies of different injuries which result from fracture-related

injuries. In those cases where no injury frequency data for a specific event

existed, estimates were based on either an unweighted average of NEISS injury

costs, or an average of the estimates obtained in event categories for which

specific data existed. A discussion of these supplementary data sources

follows.

Supplementary Data Sources . The search of data sources revealed

several data sets which contained sufficiently comprehensive injury frequency

information to be useful in deriving average injury cost estimates for the

different events. These include injury data regarding motor vehicle accidents

collected by the National Highway Traffic Safety Administration (NHTSA), data

concerning railroad accidents collected by the Federal Railroad Administration

(FRA), work-related injury data from state workman's compensation programs

compiled by the Bureau of Labor Statistics (BLS) as part of its Supplemental

Data System (SDS), and data regarding frequencies of consumer product related

injuries contained in CPSC's NEISS data base.

These data sources permitted event-specific estimates to be derived

for 10 out of the 14 event categories. The event categories and the corre- sponding data sources are presented in Table E-15. Additional detail was calculated for specific work-related events such as construction, mining, and

manufacturing. Events for which specific data were not obtainable had few

fracture-caused injuries. An average cost was used for these injuries that

did occur.

Data regarding injuries resulting from motor vehicle accidents were obtained from NHTSA's National Accident Sampling System (NASS). These data

(for the year 1979) permit estimates of relative injury frequencies according

to type of injury for automobile accidents as well as those involving other

motor vehicles.* Table E-16 contains a listing of the NASS injury classification and the relative frequencies of each type of injury.

Another source of event-specific injury frequency data concerns information regarding railroad accidents collected by the Federal Railroad

Administration, Office of Safety. These data, which are derived from

accident/incident reports filed by all railroads, provide tabulations of the

* See Report on Traffic Accidents and Injuries for 1979 , prepared by NHTSA for

documentation regarding this data base.
E-38

TABLE E-15. EVENT CATEGORIES AND SUPPLEMENTAL DATA SOURCES

Accident Type/Event Supplemental Data Source

Automobile

Other Motor Vehicles

Rail roads

Aviation

Marine

Pi pelines

Construction

Mi ni ng

Manufacturing

Home-related products

Military

Work -related: Agriculture, forestry,

and fishing

Public Utilities

Home-related failures: houses

Public-related failures: public

buildings, sewer systems and

highway surfaces

Storage-related: landfill and tanks

Recreation-related

Medical -related

Communications-related

NHTSA

NHTSA

FRA

SDS

SDS

SDS

SDS

SDS

SDS

NEISS

None

SDS

SDS

None

None

None

None

None

SDS
E-39

TABLE E-16. RELATIVE INJURIES FREQUENCIES: MOTOR VEHICLES

Relative Injury Frequencies

Other Motor Corresponding NEISS

NHTSA Injury Categories Automobi 1 es veni c 1 es In j uri es

Lacerat ions . 165 . 175 Lacerations, puncture

uontusion ana urusmng "i AO 071 u rusn i ng

Abras ions n n i .2 28 Abras ions

Fra ct ures • 05 J n o o

. 08^ Fra ct ure

Daraini n 9n i 19 9 • ICC (Nerve uamage

Con cuss io n .047 .039 Concussion

nemor rn age nn /i . UU4 Hemorrhage, Hematoma

Avulsion .00 .5 .003 Avulsion

Rupture .002 .001 Organ Damage

Sprai ns .012 .018 Sprai ns

Di si ocations .004 .005 Di slocation

Amputation 0 0 Amputation

Burns .003 .003 All Burns

Asphyxi a 0 0 Drown i ng

Other .064 .027 Dental Injuries

N = 6581 2693

Source: NHTSA, National Accident Sampling System.
E-40

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E-41

TABLE E-18. NEISS INJURY CATEGORIES - NEISS INJURY DIAGNOSIS CODES

Diagnosis Code

Abrasions

Use: Contusions, abrasions 53

Allergic reaction from contact with substance

Use: Dermatitis, conjunctivitis 74

* Allergic reaction from ingested or inhaled substance

Use: Poisoning 68

Amputation 50

* Anoxia 65

t Aspirated foreign object 42

Avulsion 72

Bruises (unless diagnosed as hematoma)

Use: Contusions, abrasions 53

Burns, chemical (including caustic burns) 49

Burns, electrical 46

Burns, radiation (including all cell damage by

ultra riolet rays. X-rays, microwaves, laser beams,

radioactive materials, etc.) 73

Burns, scald (from hot liquid or steam) 48

Burns, thermal (from flames or hot surface) 51

Burns, not specified 47

* Carbon monoxide "poisoning"

Use: Anoxia 65

Concussion 52

Conjunctivitis Use: Dermatitis, conjunctivitis 74

Contact allergy Use: Dermatitis, conjunctivitis 74

Contusions, abrasions 53

Crushing 54

Dental injury 60

Dermatitis, conjunctivitis 74

Dislocation 55

* Drowning

Use: Submersion 69

* Electric shock 67

t Foreign object Choose among:

Aspirated foreign object 42

Ingested foreign object 41

Diagnosis Code

Foreign substance (solid or liquid) 56

Fracture 57

* Gas, fume, or vapor inhalation (excluding carbon monoxide)

Use: Poisoning 68

Hematoma 58

Hemorrage 66

t Ingested foreign object 41

Internal organ injury 62

Laceration 59

Muscle spasm

Use: Strain or sprain 64

Nerve damage 61

* Poisoning 68

Pulled ligament muscle, or tendon

Use: Strain or sprain 64

Puncture 63

* Shock, electric Use: Electric shock ....67

* Smoke inhalation Use: Anoxia 65

Soft tissue injuries Use: Contusions, abrasions 53

Sprain

Use: Strain or sprain 64

Steam burns

Use: Burns, scald 48

Strain or sprain 64

* Submetsiondncluding drowning) 69

Tooth loss or chipping (unless diagnosed as fracture) Use: Dental injury 60

Other injury diagnosis (Comment required) 7

1

Injury diagnosis not stated 70
E-42

TABLE E-18. NEISS INJURY CATEGORIES

Part of Body Code

Abdomen

Use: Lower trunk 79

Ankle 37

Arm

Choose among:

Upper arm 80 Lower arm 33 Elbow 32

Wrist 34

Back

Choose among: Upper trunk 31 Lower trunk 79

Shoulder 30

Bladder

Use: Lower trunk 79

Brain

Use: Head 75

Buttocks

Use: Lower trunk 79

Calf

Use: Lower leg 36

Cheek

Use: Face 76

Chest

Use: Upper trunk 3

Chin

Use: Face 76

Collarbone

Use: Upper trunk 31

Colon

Use: Lower trunk 79

Diaphragm

Use: Upper trunk 31

NEISS BODY PART CODES (Continued)

Part of Body Code

Ear 94

Elbow 32

Esophagus

Use: Upper trunk 31

Eyeball 77

Eyebrow

Use: Face 76

Eyelid

Use: Face 76

Face 76

Finger 92

Foot 83

Forearm

Use: Lower arm 33

Forehead

Use: Face 76

Genitals

Use: Pubic region 38

Groin

Use: Lower trunk 79

Hand 82

Head 75

Heart

Use: Upper trunk 31

Hip

Use: Lower trunk 79
E-43

TABLE E-19. INCLUDED NEISS INJURIES CATEGORIES

u mi n putation

u Mvu i b i o

n

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1

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u \j U 1 1 LU bb lull AW Contu^i ons ft Abrasions

t C rushi ng

0 Dental injury

t Di si ocation

• Drowning

• Fract ure

0 Hematoma

• Hemorrhage

• Internal organ injury

t Laceration

• Nerve damage

• Pun ct ure

• Sprai n
E-44

number of injuries to employees by type of injury.* The relative frequencies

(for 1980) and injury classifications for this data base are presented in the

first column of Table E-17. Since the reporting threshold for determining

whether an accident report was required was $2,900 in physical damage costs,

the data appear to be biased toward more severe injuries.

The third source of data regarding event-specific data involves

workman's compensation data which are collected by states and compiled by the

Bureau of Labor Statistics.** Depending on the level of detail present in the

state data, the SDS data contain information regarding the incidence of

different types of injuries which occur in work-related accidents according to

SIC industry classification. Because of the lack of compatibility in the

detail of data collected and the differences in the level of reporting coverage among different states, SDS data from the two largest states, California

and New York, were combined. This provided a data base of approximately

460,000 injuries. Relative injury frequencies were then tabulated for

industries relevant to specific event categories. These figures for 1978 are also presented in Tables E-17. Since both states include only those cases

that exceed a minimum number of lost workdays, again, the data is biased

toward more severe types of injuries.

The final data base regarding event-specific injuries concerns the

NEISS data which contain information regarding injuries resulting from con- sumer product-related accidents and are obtained from a sampling of hospital

emergency room cases. Relative injury frequencies for the relevant NEISS

injuries (see Table E-17) were tabulated from the 1979 tape and used as weights in estimating average injury costs for the home-related product event.

Injury Cost Estimates . Given the above description of the

supplemental data sources, we now turn to discussion of the procedure used to

derive injury cost estimates for the event categories for which such data

exists. The first step involved a review of the NEISS injury categories and

deletion of those injury types which, in our view, were unlikely to result

from fracture-related accidents. Table E-18 presents a complete listing of

the NEISS injuries, while those retained for estimating purposes are shown in

Table E-19.

Second, since the supplemental data provided injury frequency

estimates only by injury type, simple averages (i.e., unweighted) were

* See the Federal Railroad Administration, Accident/Incident Bulletin, No.

149, June 1981, for a description of these data.

* See Bureau of Labor Statistics, Detailed Data Available on Occupational

Injuries and Illnesses , Announcement 81-1, October 1981, for documentation

of the data available for the Supplemental Data System.
E-45

TABLE E-20. INJURY COSTS BY NEISS INJURY CATEGORY

NEISS INJURY COST COMPONENTS

CATEGORY MEDIC FERNS TRANS VFERN VTRAN LBLTY HELTH LEGAL DSBLT RETRT PASUF TOTAL

Burns 1356.44 343. 18 41.38 98.26 19.75 64.58 64.80 58.69 5599. 19 116.98 9759.04 17522. 18

Scalds 1356.44 343. 18 41.38 98.26 19.75 64.58 64.80 58.69 5599.19 116.98 9759.04 17522. 18

Chemical 1356.44 343.18 41.38 98.26 19.75 64.58 64.80 58.69 5599. 19 116.98 9759.04 17522. 18 Burns

Amputation

Hot Burns

Concussion

Contusions

Crushing

Di si ocation

Fracture

Hematoma

Laceration

Dental Injury

Nerve Damage

Organ Injury

Puncture

Strain

Hemorrhage

Submersion

Avulsion

Average Burns

Overall Average

1525.67

1356.44

537.46

478.12

419.68

929.00

968.53

416.09

691.47

405.67

773.06

1669.62

710.98

477.21

1872.38

862.34

791.39

1356.44

875.59

433.03

343.18

992.12

551.30

553.34

956.51

1302.65

553.62

397.42

428.96

1163.42

1195.79

397.42

514.55

911.65

577.75

397.42

343.18

686.48

53.79

41.38

43.81

19.44

50.45

26.58

30.75

32.42

28.53

13.41

40.01

33.68

28.08

16.52

34.75

59.17

28.71

41.38

34.21

105.41

98.26

292.10

121.57

121.99

213.35

352.56

121.99

95.17

104.14

304.99

296.92

95.17

109.77

222.94

160.39

95.17

98.26

171.29

21.42

19.75

64.98

25.19

25.29

46.61

79.09

25.29

19.03

21.12

67.99

66.10

19.03

22.44

48. 84

34.25

19.03

19.75

36.79

201.53

64.58

46.64

19.76

68.13

27.13

32.09

29.49

31.34

15.34

50.04

41.06

34.39

16.87

39.01

84.76

33.63

64.58

49.16

65.32

64.80

62.26

62.07

61.89

63.47

63.59

61.88

62.74

61.85

62.99

65.77

62.80

62.07

66.40

63.27

63.05

64.80

63.31

204.47

58.69

39.59

10.98

62.47

18.82

24.10

21.34

23.31

6.27

43.21

33.65

26.55

7.90

31.47

80.17

25.74

58.69

42.28

1864.81

37.34

583.78 19549.34 62457.73

116.98 9759.04 17522.18 — 9736.73 11815.69

1591.29 2879.72

17221.61 18584.74

127.30 3106.41 5515.19

302.58 3913.49 7470.97

4777.52 6039.60

108.68 2995.09 6716.42

366.38 1423.14

39.81 8565.33 12975.60

212.57 6613.27 10228.44

102.58 3451.30 7701.08

84.01 662.40 2011.08

122.10 6032.04 9381.57

22107.23 24029.30

125.05 3054.86 7474.80

116.98 9759.04 17522.18

113.26 7264.90 12601.59

Legend:

MEDIC = Medical Costs

FERNS = Foregone Earnings

TRANS = Transportation Costs

VFERN = Visitors' Foregone Earnings

VTRAN = Visitors' Transportation Costs

LBLTY = Product Liability Costs

HELTH = Health Insurance Costs

LEGAL = Litigation Costs

DSBLT = Disability Costs

RETRT * Retreatment Costs

PASUF = Pain and Suffering Costs
E-46

TABLE E-21. AVERAGE INJURY COST BY EVENT CATEGORY

EVENT CATEGORY MEDIC FERNS TRANS VFERN

COS

VTRAN

T C 0

LBLTY

M P 0 N E

HELTH

NTS

LEGAL DSBLT RETRT PASUF TOTAL

Agriculture 644.96 586. 19 24.23 137.44 28.89 27.62 62.53 19.35 858.01 91.75 3066.30 5547.27

Aviation 627.95 621.05 23.69 145.08 30.67 26.65 62.54 18.32 373.93 87.54 3217.45 5234.86

Communication 646.20 643.51 24.01 150.91 32.03 26.75 62.60 18.42 359.11 92.63 3223.69 5279.88

Construction 668.92 608.22 24.74 143.54 30.33 28.06 62.38 19.86 765.58 93.95 3266.92 5 712.49

Electric 620.33 559.06 22.53 128.50 26.81 25.35 62.46 16.94 723.81 92.02 2522.64 4800.45

Service

Manufacturing 636.98 582.39 23.84 137.65 29.10 27.68 59.54 19.91 781.33 87.76 3357.12 5743.29

Marine 710.22 677.36 26.67 162.96 34.84 30.56 62.85 22.46 648.45 96.51 4056.57 6529.45

Mi ning 698.22 650.68 26.09 156.06 32.24 30.30 62.70 22.21 738.76 95.81 3931.62 6445.69

Pi pel i nes 793.16 598.67 29.24 147.07 31.12 36.97 63.41 29.23 1333.54 89.46 5413.36 8565.24

NTSHA: Autos 586.42 704.23 37.43 173.93 37.41 46.56 62.43 39.50 799.08 44.79 9156.50 11688.29

NTSHA: Other 582.16 674.52 34.34 164.53 35.22 41.68 62.19 34.35 691.09 52.06 7743.10 10115.24

Rail roads 630.60 605.11 22.73 142.46 30.06 25.10 62.55 16.66 709.32 86.79 2393.75 4725.12

Household 661.95 574.66 25.40 138.39 29.11 28.28 62.65 20.05 1269.93 98.50 2856.52 5765.45

Average 654.4 7 621.97 26.53 148.35 31.45 30.89 62.37 22.87 773.23 85.35 4169.65 6627.13

Legend:

MEDIC FERNS TRANS

VFERN

VTRAN

Medical Costs Foregone Earnings

Transportation Costs

Visitors' Foregone Earnings

Visitors' Transportation Costs

LBLTY = Product Liability Costs

HELTH = Health Insurance Costs

LEGAL = Litigation Costs

DSBLT = Disability Costs

RETRT = Retreatment Costs

PASUF = Pain and Suffering Costs
E-47

constructed for each NEISS injury class.* This involves averaging over the

body part injured, the age and sex of the victim, and the disposition of the

case. Since each injury is costed separately for treated and released, as

well as hospitalized, victims, the simple averages reflect an implicit

assumption that approximately one-half of the cases are hospitalized. These

averages were produced for three age groups (0 to 20, 20 to 64, and 65 and

over) as well as for all ages. These estimates are presented in Table E-20

with the averages for all included injury classes.

The final step involved utilizing the relative injury frequencies

derived from the supplementary data to produce weighted averages for the NEISS

injury cost estimates for each event for which specific injury frequency data

existed. In the cases where a one-to-one correspondence did not exist between

the injury categories in the supplemental data and the NEISS injury classes,

it was assumed that the relevant weight was divided equally among the

associated NEISS Injuries (see Table E-16 and E-17). The estimates of

event-specific weighted average costs appear in Table E-21.

Valuation of Loss of Life . In addition to the estimates of the social

costs of non-fatal injuries, the model also provides for the valuation of loss

of life in the case of fatal injuries. Estimates of the value of loss of life

under six different methodological approaches are included, broken down by age

and sex of the victim. These procedures are based on the human capital

approach, quality-adjusted life-years, and the "willingness to pay" approach,

and include adjustments to reflect the societal value of loss of life.

A complete discussion and documentation of the loss of life estimates

are presented in Appendix G. After review, a range of costs across all ages

and both sexes was established at $200,000 to $600,000 per premature accidental death. A single range was chosen because the age distribution of individuals involved in fracture accidents was not known.

Summary . The information contained in Table E-21 was used to cost

out the injuries identified by the ECM. Average costs were used for events

where more specific detail was not available. Separate cost multiplications

were performed for both resource and imputed costs in the final results. Each

death was costed at $200,000 to $600,000.

Resource costs were between $44.7 and $132.8 million, while imputed

costs ranged between $223.2 and $570.6 million (plus $63.4 - $454.3 million

for the cost of fatalities). Note that most of these costs result from auto,

work, and home-related events because of the large number of accidents that occur here.

* For example, as all the included types of burns have the same costs, they

are treated as one injury class for averaging purposes.
E-48

TABLE E-22. PROPERTY DAMAGE BY EVENT FROM ECM

Rail $48.3 - 59.2

Pi pel i ne $8.0 - 12.5

Auto $46.4 - 92.8

Other Motor Vehicle $1.0 - 2.1

Avi at ion $18.3 - 71.9

Marine $0.1 - 53.8

Work-Related* $57.0 - 276.0

Home- Related* $0.7 - 18.5

Public Utilities $1.0 - 10.0

Public Structures** $0.0

Communications- Related $0.0

Medical -Related $0.0 - 0.1

Storage-Related $3.0

Recreational -Related $0.0 - 0.1

Total $183.8 - 600.0

Source: Synopsis of ECM Section Tables.

* Included medical costs and foregone earnings of industries, thus

overestimating property damage substantially.

** While it is recognized that this residual category cost is a positive

number, the other events have already incorporated all recognizable costs

which might have been attributable to public structures.
E-49

Property Cost Model

As mentioned in the methodological introduction to this appendix,

much of the envisaged property cost model could not be developed in detail

because of insufficient detail available in the ECM concerning specific items

of property destroyed or damaged in a fracture-caused event. Again, two types

of property costs were examined: resource and imputed costs.

An overview of the data provided by ECM is shown in Table E-22. As

explained earlier, total property loss estimates were often made in aggregate

form without specific items of property being listed. Rather than attempt to

cost out a vector of assumed property damages, some generalizations, aggregations, and assumptions were made. Again, it is important to point out that

the method used to estimate the home and work categories included medical

costs and foregone earnings in the property damage estimates. Thus, these

ranges tend to overstate property damage.

The total property damage range as indicated in Table E-22 is $183.8

to $600.0 million. This range allows for only rough comparison with the other

cost components. As resource costs are already included in the I/O model,

they are not added to the I/O results.

Imputed costs, especially the portion for cargo losses, are examined more closely. Most transportation events have some cargo loss. Thus, a sector-by-sector estimating procedure was employed, where data permitted. For

pipelines, separate estimates of the size and number of spills for crude oil,

gasoline, LPG, and chemicals were made from EPA data and costed using 1978

product values. EPA data also indicated that, because of fracture events, an additional $3 million of hazardous materials were lost each year from storage

tanks, rail cars, trucks, etc.* For the rail sector, it was assumed that

about one- fourth of total property damage observed was cargo loss, the rest

being damage to the rolling stock, as rail cars often break due to fracture

(hitch, flange, etc.), but no cargo is lost.

To obtain an upper bound estimate for aircraft, it was assumed that

the average incident resulted in $5,000 in cargo loss (because most air

accidents involved small private craft where cargo losses are minimal).

This figure was multiplied by the number of air accidents due to fracture.

For automobiles, which carry little cargo relative to the worth of

the vehicle, only one percent of auto property damage is assumed to be cargo

loss. For trucks, one percent was also used because much truck cargo is either

partially damaged or totally reusable, even when the truck itself may sustain

extensive damage.

Marine data indicated that 9,500 gallons of oil were lost per

fracture-caused event. Additionally, it was assumed that two percent of

* This estimate was made assuming that the frequency of fracture occurrence

among all accidents and the percentage of total spills caused by fracture

were the same in each relevant event.
E-50

property damage to ships is lost property because many boats are damaged but

do not sink (thus no property loss) when an accident occurs. All other events were assumed to not have significant associated cargo losses.

The above assumptions were used, together with the data in Table

E-22, to obtain a total cargo loss range of $22.2 to $28.2 million. Where

the nature of the cargo loss was known, such as oil, it was directly assigned

to the appropriate I/O sector. Where it was not known, the remaining losses were apportioned according to the share of total output in the economy of all

sectors that produce transportable commodities. The resulting final demand

column may be reviewed in Appendix H.

Total property damage is approximately $183 to $600 million, of which

$22.2 - $28.2 million is cargo losses. While the concept and approach in this

supplemental model is straightforward, the general lack of detailed information prevented much of the desired cross-checking between the I/O model

changes and the output of the PCM.

Environmental Degradation Model

As previously noted, the originally conceived five-step approach for

developing the environmental degradation model was determined to be too

detailed for the level of data produced by the ECM. Information that was obtained is reviewed in Table E-23.

Environmental clean-up from accidents is treated as a separate sector

of the I/O table. The column coefficients which quantify average clean-up

production processes from all types of spills and accidents, were obtained by an iterative ex ante process. The row coefficients were determined by

reviewing the information in Table E-23 and augmenting it with inputs from

other expert judgments. The values selected appear in the I/O tables.

(Appendix H). Thus environmental clean-up is viewed as part of the production

process of several industries, notably the oil, chemical, and transportation

sectors.

Environmental degradation costs pose a different problem as they

represent imputed costs to society which must be added to the I/O results.

In reviewing the information in Table E-23, it is observed that the

major environmental hazard for which data are available is the leakage or spillage of hazardous and other materials. To the extent that the clean-up

costs remove this pollution, the environmental degradation is mitigated.

Collection of this data by different groups indicates that it is among the

most costly of the potential degradation events caused by fracture.

Other known degrading events are solid waste refuse generated by

wreckage of rail cars, autos, airplanes, barges, etc. Such wreckage is almost

always removed thereby not resulting in a long range pollution problem.

Concerning the potential for nuclear waste releases from any source, no qualifying events occurred for "average" 1978. For all other home, work, and

recreation events, the types of incidents that result from fracture do not

have large environmentally degrading consequences.
E-51

TABLE E-23. ENVIRONMENTAL CONSEQUENCES BY EVENT

Rail

Pi peline

Other Motor Vehicle

26-63 cars damaged that released hazardous

material, resulting in 2100 - 5100 people

being evacuated.

12,000 - 97,000 barrels of crude oil,

gasoline, LPG, chemicals spilled

1-2 incidents involving hazardous materials

leakage

Marine 9500 gallons of oil spilled

Storage-Related 56,000 gallons of oil, chemicals, hazardous

materials leakage
E-52

There is no universally accepted procedure for estimation of

degradation costs and none that can include all factors (e.g., costs of

inconvenience, foregone earnings, and other imputed costs). The only solid

information available is on spills (from different sources); thus, it was determined that a full scale environmental model which addresses indirect

issues would not be cost effective. Instead, it was judgmental ly determined

that between 1 and 6 million gallons of liquids were released into the environment from fracture events (see Table E-23). Further assuming a degradation

cost associated with spillage of a gallon of chemicals, oil, or other material

between ten cents and five dollars, a total cost range of $0.1 to $30.0

million for this factor results. If leaked gases plus solid wastes had an equal magnitude of degradation cost, the total range would be $0.2 to $60.0

million. Overall, it is concluded that fracture relevant degradation costs,

while important, do not result in massive dollar consequences.

Rel iabi 1 ity

As has been repeatedly mentioned, data limitations for the

Supplemental Models increased the necessity of making assumptions, thereby

reducing accuracy. Use of the minimum/maximum approach, which placed upper

and lower ranges on the data, most likely included all reasonable fracture

costs. As such, the resultant ranges are deemed to be reliable. The most

critical estimates were those associated with determining the fracture relevant proportions of events. It is conceivable that additional investigative

efforts by the cognigant Federal, state, or local government officials, or private sector industries and associations, could result in a more detailed

and reliable assignment of cause to a variety of events. This would, of

course, improve the utility of the approach developed here.

However, given the combined judgemental , quantitative, and semiquantitative inputs to the calculations, the results are most likely representative of the maximum costs that fall within the scope of the program.

Total Costs

All the information calculated above is now reduced into two tables.

World I

All costs mentioned so far are for World I, the real world. They are summarized in Table E-24.

World II

By definition, World II contains no fracture events which are within

the scope of this program. Thus all F-j , the proportion of events related to

fracture within scope, are zero and costs are zero in all categories. It
E-53

TABLE E-24. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS

WORLD II DIFFERENCES (Millions of 1978 Dollars)

Resource Costs Imputed Costs

Injuries $44.7 - 132.8 $223.2 - 570.6

Deaths 0 $63.4 - 454.3

Property $183.8 - 600.0 $22.2 - 28.2

Environmental * $0.2 - 60.0

Total $228.5 - 732.8 $309.0 - 1,113.1

Source: Derived from Text.

* See Environmental Clean-up Sector in I/O Model.
E-54

follows that the numbers in Table E-24 represent the difference between World

I and World II.

World III

World III is a World where best fracture-control practice is carried

out consistently. Calculation of the difference between Worlds I and III

required establishing best judgments as to the extent to which best fracture

control practices are already followed. Results are presented in Table E-25

for each event. Note that the airline industry has been defined as at best

practice, thus it has a value of 100 percent. The remaining events were determined to be between 70 and 100 percent of present best practice.

Considerations taken into account in establishing degree of current best

practice included:

• What is the potential for a product liability suit initiated by an injury, death or malfunction? Consideration of this question is an indication of the degree to which a product might be better

engineered and manufactured.

• How much inconvenience would a fracture event cause to the general

public? Public utilities, for example, may presently perform at more nearly best practice to avoid such inconveniences.

t To what degree is the event associated with a regulated industry?

Consideration of this question might indicate that a greater

degree of best practice is followed in World I, if for no other

reason that to reduce potential for fines and other legal actions.

Having identified these factors, values were assigned to each

category to produce the World I minus World III difference table (Table

E-26). The results indicate that most of the costs incurred in the real world

would also be incurred in the best practice world.
E-55

TABLE E-25. FRACTION OF BEST PRACTICE ALREADY BEING

PRACTICED IN WORLD I

Rail .80

Pi peline .90

Auto .90

Other Motor Vehicl e .95

Aviation 1.00

Mari ne .90

Work Related .90

H nmp Rp 1 at prl 70

Public Utilities .98

Public Structures .95

Communication-Related .99

Medical Related 1.00

Storage-Related .98

Recreational -Re la ted .80
E-56

TABLE E-26. SUPPLEMENTAL MODEL RESULTS FOR WORLD I MINUS

WORLD III DIFFERENCES (Millions of 1978 Dollars)

Resource Costs Imputed Costs

Injuries $4.5 - 17.0 $22.5 - 65.2

Deaths 0 $5.1 - 51.5

Property $21.2 - 61.3 $3.40 - 4.10

Environmental * $0.02 - 6.0

Total $25.7 - 78. 3 $31.0 - 126.8

Source: Derived from Text.

* See Environmental Clean-Up Sector in I/O Model.
E-57

References

Motor Vehicles

1975 Societal Costs of Motor Vehicle Accidents , U.S. DOT, NHTSA, Planning and

Evaluation, Dec. 1976, (Barbara Moyer Faigin). Costs are presented by

fatality, by injury (by 6 severity levels), and by property-damage-only

involvement (i.e., per vehicle). Costs included are medical, funeral, legal

and court, insurance administration, accident investigation, losses to other,

vehicle damage, and traffic delay. Data are for 1975 and presently no update

is planned.

Transportation Safety Information Report and Annual Summary , U.S. DOT, March

1979, (Transportation Information Division). Reports and compares figures for

transportation fatalities, accidents, and injuries for 1978 and 1977.

Tri-Level Study of the Causes of Traffic Accidents: Final Report, Vol. 1 , U.S. DOT, NHTSA, May 1979, (Institute for Research in Public Safety), Indi ana University. Presents data on traffic accident causes, i.e., vehicle defects,

maintenance and inspection, etc. for Monroe County, Indiana. Determined the

relative frequency of these factors and their causal contribution within a defined accident and driving population. Data collected for 1970-1974.

1978-79 Accidents of Motor Carriers of Property , U.S. DOT, FHA, Oct. 1978,

(Bureau of Motor Carrier Safety). Statistics for number of accidents,

fatalities, injuries, and of property damage by mechanical defects.

Report on Traffic Accidents and Injuries for 1979 , U.S. DOT, NHTSA, National

Center for Statistical Analysis. Presents data on motor vehicle accidents and

their cause; also contains detailed statistics on injuries. Data collected

through the National Accident Sampling System and limited to those accidents

recorded in police files.

Highway Accident Reports - Brief Format , NTSB (for accidents occurring in

1977, 1978, and 1979). Publications contain briefs of selected highway

accident investigations conducted during 1978; brief formats present basic

facts (deaths, injuries, property loss), conditions, circumstances and

probable cause(s) for each accident.

Rail roads

Accident/Incident Bulletin , No. 146, U.S. DOT, FHA, August, 1978 (Office of

Safety) . Data are available for number of train and rapid transit accidents

and damages by mechanical and electrical failures and track, roadbed and

structures (Table 140). Fatalities, nonfatal casualties by cause (Table 104).

Nature of injury (i.e., amputations - part of body; fractures - part of body;

other - 8 categories) by train accidents, incidents and nontrain incidents.

(Table 143).
E-58

Air Transport

Annual Review of Aircraft Accident Data, U.S. General Aviation , National

Transportation Safety Board, 1978, (Bureau of Technology). Data are presented

for number of accidents by aircraft type and by kind of flying, by injury

index and severity of damage (pp. 25, 26). Number of accidents by injury

index and severity of damage, by cause (pp. 26-29). Number of fatal, nonfatal

accidents by cause/factor - detailed (pp. 40-46).

Annual Review of Aircraft Accident Data, U.S. Air Carrier Operations , National

Transportation Safety Board, 1978, (Bureau of Technology). Data are presented

for number of accidents for all operations by injury index and severity of

damage (p. 3). Number of accidents by injury index and severity of damage by cause (pp. 52-55). Number of fatal , nonfatal accidents by cause

factor detailed (pp. 64-66).

Evaluation of Safety Programs with Respect to the Causes , U.S. DOT, Federal

Aviation Administration, February, 1979, (Battel le Columbus Division). Data

are presented for costs by cause/factor by year (1964-1976). Number of

accidents by injury index and by type of accident. These data are for air

carriers

Evaluation of Safety Programs with Respect to the Causes of General Aviation

Accidents , 2 volumes, U.S. DOT, Federal Aviation Administration, Nov. 1979,

(Battel le Columbus Division). Data are presented for 1971-1977 for total

accidents by cause factor and injury index. Costs can be broken out by year

by cause/factor.

Battel le Columbus Division 1978 NTSB computer tapes on aviation accidents.

Tapes contain detailed information on an accident-by-accident basis (general

aviation and air carrier operations). Information includes location, type of

aircraft(s) involved, extent of damage (qualitative and quantitative in terms

of hull damage loss), probable cause(s), probable factor(s), number of

injuries/fatalities, and flight purpose.

Personal Communication : David Kelley, Aviation Accident Division, National

Transportation Safety Board.

Marine

Proceeding of the Marine Safety Council , U.S. DOT, United States Coast Guard,

(Commandant, USCG). Monthly. Incl uded in this publication are statistical

summaries of casualties to commercial vessels and statistical summary of

deaths/injuries due to a vessel casualty for material failure.

Polluting Incidents In and Around U.S. Waters , 1978 and 1979, U.S. DOT, U.S.

Coast Guard. A statistical summary of information provided in the Coast

Guard's Pollution Incident Reporting System (PIRS).
E-59

Pollution Incident Reporting System, 1978 . A computerized data base designed

for the collection and maintenance of discharge data on all U.S. reported

spills (oil and other hazardous substances) for 1978. Data included the spill

size (gallons), type of material, source, cause, cost of clean-up, and

affected resources.

Marine Accident Reports - Summary Format , January-June 1978. Publication

contains a detailed narrative account of individual marine accidents,

including information pertaining to the nature of the accident, cause, extent

of property damage (qualitative and quantitative), and the number of

fatalities and injuries.

Pi pel ines

An Analysis of Reportable Incidents for Natural Gas Transmission and Gathering

Lines 1970-1978 , American Gas Association, Sept. 1980, (Battel le Columbus

Division). Number of fatalities and injuries by year. Costs by five cause categories

.

Analysis of the Office of Pipeline Safety Operations 1970-1978 Reportable

Incident Data for Natural Gas Distribution , American Gas Association, Oct.

1980, (Battelle Columbus Division). Data are presented for the number of

fatalities and injuries by year by type of material. In addition, the number

of fatalities and injuries caused by leaks and ruptures is also presented.

Estimates of cost of damages are included.

Annual Report Data for Natural Gas Distribution Companies 1970-1978 , American

Gas Association, Oct. 1980, (Battelle Columbus Division). Number of

fatalities and injuries and cost of damage resulting from leaks by year.

Liquid Pipeline Accident Report Summary , U.S. DOT, Transportation Safety

Center, (unpublished). Number of fatalities and injuries by cause. Also

property damage data for liquid pipelines.

Pipeline Accident Reports - Brief Format , NTSB, 1979. Contains briefs of

selected pipeline accidents occurring during 1976-79. Format presents basic

facts, conditions, probable cause(s), and losses for each accident in terms of

the number of deaths, injuries and property damage (to pipeline and non- pipeline property).

Natural Gas Pipeline Statistics - Annual Report for 1978 . Prepared for DOT,

Material Transportation Board by Research Special Programs Administration,

Transportation Information Center, Cambridge, MA, April 1980. Contains a wide

range of safety and operational data involving the transportation of natural

gas by pipeline; includes information such as the miles of pipeline installed,

retired, inspected and in service, the number of leaks repaired by cause, and

the number of personal injuries and the amount of property damage for the

years 1970-1978.
E-60

Work Related

Occupational Injuries and Illnesses in the United States by Industry , 1975 and

1978, U.S. Dept. of Labor, Bureau of Labor Statistics. Data are presented for

the private sector on number of fatalities and injuries by eight broad

industry categories. Number of injuries are also available by 2 digit SIC.

Occupational Fatalities Related (4 industries) as Found in Reports of OSHA

Fatal ity/Catastrophe Investigations , U.S. Dept. of Labor, OSHA, 1978 and 1979.

The industries covered are Fixed Machinery, Roofs, Ceilings and Floors,

Scaffolds, and Ladders. The data presented are number of fatalities by type

of incident and by cause.

Injury Experience in (5 mining industries), 1978 , U.S. Dept. of Labor, Mine

Safety and Health Administration, 197. The mining industries covered are

Coal, Sand and Gravel, Metallic Mineral Mining, Nonmetallic Mineral Mining

(Except Stone and Coal), and Stone Mining. Data presented are for number of

deaths and injuries by nature of injury (24), by disability of injury (3

classifications) and by cause.

Nuclear Power Plant Operating Experience - 1978 , Annual Report, U.S. Nuclear

Regulatory Commission, Dec. 1979, (Office of Management and Program Analysis).

Data are presented on details of plant outages, by power plant, by cause.

Personal Communication : Alan Hoskin, Statistics Dept., National Safety

Council ; Norman Root s Supplemental Data System, Bureau of Labor Statistics,

U.S. Department of Labor (also provided tables on causes of accidents at the

workplace based on workman's compensation data); Pat Coleman, Division of

Safety Research, National Institute of Occupational Safety and Health; Peter

Reise, Health Interview Statistics Division, National Center for Health

Statistics; Caryl Michelson, Office of the Analysis and Evaluation of

Operational Data, Nuclear Regulatory Commission; Electric Power Research

! ns c i i i

:: e ; C o 1 umbu s Sout hern Oh i o Electric Compa ny

Home Related

Advance Data , National Center for Health Statistics, Vital and Health

Statistics, March 7, 1978, (Peter W. Ries) pp. 12. Data presented are number

of episodes of persons injured by selected characteristics (p. 8) by product

type, (25 categories). Data are for 1975.

U.S. Consumer Product Safety Commission Annual Report Fiscal Year 1979 , Part

2, U.S. Consumer Product Safety Commission, 1979. Data presented are

(estimated number of injuries requiring emergency room treatment associated

fith consumes products by 177 product groups

Personal Communication : Joel Friedman, National Injury Information Clearinghouse, and Arthur MacDonald, Data Collection (NEISS) of the Consumer Product

Safety Commission.
E-61

Public Related

Dams and Public Safety , U.S. Department of the Interior, Water and Power

Resources Division (Old Bureau of Reclamation). Government Printing Office,

1980. Traces the history of dams and the kinds of problems associated with

them which may lead to their failure. Special emphasis is placed on structures and experiences of the Bureau of Reclamation; however, the material

presented is drawn from sources worldwide. The more significant accidents and

failures are discussed in greater detail and provide further information on causes and consequences.

Lessons From Dam Incidents, USA , American Society of Civil Engineers, 1975,

(Committee on Failures and Accidents to Large Dams of the U.S. Committee on Large Dams). Presents available data on dam incidents and analyzes the data

from questionnaires with respect to the type of incident (i.e., severity),

frequency and trend. The data collected (for the years 1966-1973) were combined with USA data collected for a previous report (Failures and Accidents

to Large Dams, International Committee on Large Dams, 1966) to further

reinforce any frequency or time trends. Writeups are also included for each

dam that had one or more reported significant incidents using data from the

questionnaire and from available references.

Personal Communication : Ted Glord, Army Corps of Engineers; Harry Hardin,

Water Resources Support Center; Bruce Tschantz, Dam Safety Division, Federal

Emergency Response Agency; American Society of Civil Engineers; American

Association of State Highway and Transportation Officials .

Mi 1 itary

Material Failure Reports - 1977-1980. Military files were searched by the

Army, Navy, and Air Force to retrieve records of accidents involving material

failure. Results include narratives of all accidents and provide detailed

information on number of deaths, injuries, property damage, and cause.

Storage-Related

Hazardous Material Incidents Reported to U.S. EPA Regional Offices from

1977-1979 , U.S. EPA, Oil and Special Materials Control Division, Spill

Prevention and Control. Report contains a synopsis of all incidents involving

hazardous or toxic chemical spills.

Personal Communication : Harold Snyder, Oil and Special Materials Control

Division, U.S. EPA; Kathy Gaul, Environmental Manager, Great Lakes Division,

Waste Management Inc„
E-62

Recreation -Related

Personal Communication : U.S. Coast Guard, Office of Boating Safety.

Miscel laneous

Statistical Bulletin , Metropolitan Life Insurance Company, (various reports).

Statistical Abstract of the United States, 1979 , U.S. Dept. of Commerce,

Bureau of the Census.

Accident Facts , National Safety Council, 1979 (publ i shed yearly) . Provides

detailed analysis of accidents occurring at work, in the home, school and

motor vehicles. Most of the data is on accidents in which deaths and injuries

occurred, thus information on the extent of property damage is excluded.

Aggregate cost estimates are provided, however, for property damage resulting

from motor vehicle accidents and fire loss.

Envi ronmental

Maler, Karl Goran and Ronald E. Wyzga, Economic Measurement of Environmental

Damage . Organization for Economic Cooperation and Development, 1976. RevTews

and suggests methods which can be used to estimate environmental damage

functions and provides guidelines to ensure the resulting estimates are in

accord with economic principles. An environmental damage function is an estimate of the relationship between given levels of environmental quality and

monetary estimates of the environmental damage associated with these quality

1 evel s.

Mark, Jonathan, H. , "A Preference Approach to Measuring the Impact of Environmental Externalities", Land Economics, Vol. 56, No. 1, February, 1980, (pp.

103-116). Outlines a theoretical model which suggests a relationship between

externalities and property values.

National Environmental Statistical Report , prepared for Council on Environmental Quality and Resource and Land Investigations Program, U.S. Dept. of the

Interior, October, 1975. MTR-6957, (Mitre Corporation). Report contains a variety of environmental and related data in approximately 200 statistical and

summary tables. The tables are arranged by data type, under 16 sections: air

quality, water quality, land use, solid waste, pesticides and toxic substances, agriculture and food supply, forests and wildlife, water resources,

recreation, minerals, energy, transportation, housing, population, economics

and environmental impact statements.

Sixth Annual Report of the Council on Environmental Quality , U.S. Government

Printing Office, Washington, D.C., 1975, (Council on Environmental Quality),

pp. 494-570.
E-63

Insurance Information - Property Damage

Insurance Fact , 1977, 1978, 1979 (published yearly). (Insurance Information

Institute, New York. Contains selected data of general interest relating to

property losses resulting from fire and boating accidents. Information also

available on countrywide average paid claim costs for property damage

resulting from auto accidents in private passenger cars. Other estimates

provided for economic losses do not separate costs of bodily injury and

property damage.

Product Liability Closed Claim Survey: A Technical Analysis of Survey

Results , (Insurance Services Office) NYC, 1977. Contains numerous compilations of survey data on product and liability claims. Compilation has

been produced from the closed claim data on 24,452 survey forms submitted by

23 participating companies. Data includes a breakdown of payment data by type

of damage alleged; distribution of property damage economic loss by payment

size and total economic loss; and cause of loss distribution of size of loss

on both a claim basis and an incident basis.

Automobile Insurance Losses-Collision Coverage. Variations by Make and Series

1977, 1978 and 1979 Models , Washington, D.C., Dec. 1979. HCDI R72-2, (Highway

Loss Data Institute). Describes variation in both frequencies and sizes of

collision coverage claims for damage to 1977, 1978 and 1979 model year

passenger cars.

F-1

APPENDIX F. INJURY COST MODEL SUMMARY*

The Injury Cost Model was originally developed by Technology + Economics, Inc. (T+E), for the Consumer Product Safety Commission. The

objective of the model was to provide policymakers the ability to measure, on

a monetary basis, the magnitude of the impact on society of a wide range of

injuries associated with consumer products. The original research was conducted by T+E in 1975 and 1976 with subsequent revisions and modifications

undertaken through the period to 1980.

The model is designed to interface directly with CPSC's National

Electronic Injury Surveillance System (NEISS). NEISS is a statistically valid

national sample of product-related injuries collected from 74 hospital emer- gency rooms throughout the country. NEISS permits estimation of injury frequencies on the basis of type of injury and body part injured, the age and sex of the victim, and the consumer product associated with the injury. The

underlying objective of the Injury Cost Model is the development of disaggregated estimates of injury costs which can then be integrated with the NEISS

data base to produce national estimates of injury costs according to the

various dimensions of the NEISS sample. However, the model can be applied to

any injury frequency data base whose dimensions are reasonably comparable with

the NEISS data.

Several methodological factors strongly influenced the development of

the Injury Cost Model. These included the importance of the concept of social

cost in deriving estimates of injury costs, the need for a disaggregated or modular approach to the estimation of the separate components of injury costs,

and, as noted above, the necessity of formulating the functional relationships

in terms of the NE ISS-contai ned variables.

The specification, estimation, and implementation of the model consisted of three discrete steps. First, at a conceptual level, the elements

comprising injury costs were identified and a methodology for estimating these

elements specified. Ultimately, twelve separate injury cost components were

identified, with their sum constituting total injury costs. The second step

involved the collection of the requisite data necessary to estimate each

component. The major data sources included a larqe sample of medical insurance claims obtained from the Department of Defense, Civilian Health and

Medical Program for the Uniformed Services (CHAMPUS), information regarding

injury-associated work loss and restricted activity days from the National

Health Interview Survey (NHIS), and a sample of court awards for pain and

suffering. Estimation techniques included regression analysis, direct analytic solutions, and utilization of sample means from the disaggregation of

large data bases. The final step in the model development involved the

embodiment of the resultant injury cost algorithms in a set of computer

programs compatible with the NEISS data. In addition, it was necessary to

* This Appendix was prepared by Technology + Economics, Inc., of Cambridge,

Massachusetts, under a subcontract from Battelle.
F-2

structure the programs so as to permit ready access to the model in a manner

suitable for CPSC applications.

Given this general introduction to the nature, structure, and chronology of the Injury Cost Model, we now turn to a discussion of the estimation

of the individual injury cost elements. As noted, the model is composed of

twelve separate cost components. These include:

• Hospital costs

t Retreatment costs

• Foregone earnings

• Health insurance costs

• Product liability insurance costs

• Litigation costs

• Transportation costs

t Visitor foregone earnings

• Visitor transportation costs

• Pain and suffering costs

t Di sabi 1 ity costs

• Valuation of loss of life.

Before proceeding, it should be noted that these cost categories

represent three broad types of injury costs. First are those costs which

represent direct expenditures associated with consumer product-related injuries. These reimbursable costs include hospital costs, insurance costs,

litigation costs, and transportation costs. Second, foregone earnings represent the opportunity costs of time spent away from normal activities as a result of the injury. Finally, there are non-reimbursable costs whose value

can be imputed only in terms of a marginal reduction in the risk of occurrence

of that type of injury cost. Pain and suffering costs, disability costs, and

valuation of loss of life comprise the third type of injury costs. We now

turn to a consideration of each of the injury cost components.

Hospital Costs (and Retreatment Costs)

Hospital costs involve all medical and hospital expenditures for

treatment of the victim of a consumer product-related accident. These expenditures include the costs of medical personnel, facilities, and other health

resources required to treat the victim during the basic recovery period.

Similar to hospital costs are retreatment expenditures associated with the

long-run medical care of the victim. These retreatment costs, incurred after

the basic recovery period, include expenditures for corrective surgery, treatment of chronic injuries, and so forth.

Estimates of medical costs on an injury-specific basis were derived

from claim records of the CHAMPUS health insurance program of the Department

of Defense. The CHAMPUS data contain information about the value of hospital

and professional services for inpatient and outpatient claims for calendar

years 1976, 1977, and 1978. The data set contains more than 600,000 claim

records coded by age and sex of the claimant and by International Classification of Disease, Amended (ICDA) injury classification. These data were
F-3

grouped into cells to obtain estimates of average medical costs for each

injury classification and every age and sex group.

One major obstacle to utilizing the input variables derived from

CHAMPUS data is that injuries are coded in terms of the ICDA classification

system. In order to relate these variables to the NEISS injury data, which are coded according to a classification scheme specific to NEISS, the development of a mapping or correspondence between the ICDA and NEISS injury classifications was required. Because this correspondence is not, in general, one

to one, a weighted averaging technique was also required in order to transform

ICDA-coded variables into values classified according to the NEISS injury

code.

Retreatment costs were based on an estimate of the probability that

an injury of a given type results in additional treatment and on an estimate

of the conditional probability that the retreatment will necessitate surgery.

Expected or average retreatment costs for each injury type were then determined from estimates of representative retreatment costs for surgical and

non-surgical cases.

Foregone Earnings

Foregone earnings reflect the social value of the time lost from an individual's normal activities as the result of an injury. The associated

injury cost component consists of two multiplicative elements: (1) the number

of bed days, restricted activity days, work loss days, and school loss days;

and (2) the opportunity costs per day for each of these categories.

Data from the National Health Interview Survey permitted estimates of

the time loss categories as a function of the age, sex, and employment status

of the victim and the nature of the injury (ICDA-coded). Data were available

for the years 1970-1978. However, due to the relatively small sample size, it was necessary to aggregate the NH IS data over a smaller number of injury

groupings in order to derive reliable estimates for individual age, sex, and

injury categories. In addition, the ICDA-NEISS injury code correspondence

described above was required to relate the NHIS restricted activity estimates

to the NEISS injury data base.

The opportunity costs of these activity restrictions were estimated

in terms of the economic value of production losses due to the injury. These

losses include the value of work performed in the labor market as well as the

value of non-market activities performed at home and at school. The average

opportunity cost per day for a given age-sex group depends on the labor force

participation rate, the unemployment rate, and the school enrollment rate.

Health Insurance Costs

Since health insurance provides protection against medical costs

incurred as the result of consumer product-related injuries, the costs of such

insurance must necessarily be included in estimates of the societal costs of

these types of injuries. The relevant magnitude to be evaluated involves the
F-4

cost of providing the insurance and settling claims rather than the total

amount of premiums paid. These costs include overhead costs such as statistical services, marketing, public relations, and so forth, as well as the

adjustment costs of handling claims. On the basis of data from Blue CrossBlue Shield and other insurance plans, a relationship was estimated which

predicts health insurance costs for a given injury type in terms of a fixed

component which reflects the average overhead costs of insurance provision and

a variable component, proportional to the associated hospital and medical

costs, which reflects the influence of the size of the claim on the resultant

insurance cost.

Product Liability Insurance Costs

Product liability insurance provides protection to manufacturers and

retail establishments against injury cost damages sought by victims of con- sumer product-related accidents. As in the case of health insurance, the

relevant costs are those associated with providing the insurance and settling

the claims rather than total premiums paid. On the basis of insurance data

and prior studies in this area, estimates were obtained for: (1) the variable

costs per claim which reflect the costs associated with settling the claim;

and (2), average overhead costs per claim. Utilizing these estimates a relationship for estimating liability insurance costs per claim for a given

injury was determined.

Litigation Costs

Litigation costs reflect the legal expenses incurred by injured

parties where compensation is sought as the result of alleged negligence in

consumer product-related accidents. Since not all product-related injuries

result in litigation, estimates of expected litigation cost per injury depend

on the probability that compensation is sought, the percentage of compensation

attempts where legal counsel is retained, and the legal expenses in compensation attempts involving legal counsel. Legal expenses per litigation, in

turn, depend on whether the case was settled out of court, the probability of

a favorable verdict, and the size of the award. By combining estimates of the

litigation probabilities obtained from studies of claim experience for product

liability and automobile injuries with data on average product liability claim

values, estimates of average litigation costs for a given injury type were developed which depend directly on the total cost of the injury.

Transportation Costs

The transportation cost component involves those expenditures asso- ciated with transporting persons in consumer product-related accidents to and

from medical facilities. Transportation costs incurred during the recovery

period as a result of bed visits by friends and relatives are treated separately as part of visitor costs.

The critical determinant of transportation costs is the mode of

transportation, the principal options being automobile and ambulance. On the
F-5

basis of assumptions regarding the probabilities of each transportation mode

for both initial and return trips, given (1) the severity of the injury (the

NEISS severity code) and the age of the victim, and (2) estimates of average

costs per trip for each mode, estimates of average transportation costs per

injury were developed as a function of the severity of the injury and the sex

of the victim.

Visitor Costs

Visitor costs consists of: (1) transportation expenditures incurred

by friends and relatives making visits during the victim's recovery period;

and (2), the opportunity cost of the time spent transporting the victim to a medical facility or visiting the victim.

Visitor transportation costs were estimated in terms of a representative scenario regarding the number of visitors per victim bed day, the time

spent with the victim, the miles traveled per visit, and the estimated cost

per mile. Visitor opportunity costs depend on the number of visitors and the

number of hours spent with the victim. The estimated total time is then

valued in terms of the foregone earnings per hour.

Pain and Suffering Costs

Pain and suffering refers to the physical and emotional trauma and

mental anguish associated with an injury. Pain and suffering costs are the

assignment of an imputed monetized value for short-term and long-run effects

endured by the injured party.

Imputing a cost to pain and suffering consisted of a two-step process

involving: (1) the development of a physical measure of the level of pain and

suffering; and (2), a translation of each identified level into a monetized

value. Given the requirements that injury-specific aspects of costs be relatable to dimensions of the NEISS data base, the NEISS severity code was utilized as an index for physical pain. This code is an ordinal measure of severity based on the threat to life of specific types of injuries to different

parts of the body.

The NEISS severity code was then related to monetary values of pain

and suffering through a regression analysis of jury pain and suffering awards

for personal injury and death in negligence cases. The result of this analysis was an empirical relationship between the NEISS severity code and the

value of pain and suffering. This relationship was then utilized to assign

pain and suffering costs on an injury-specific basis.

Disability Costs

Disability costs reflect the imputed value for functions foregone by

the injured party permanently or for an extended period and the social loss

i
F-6

associated with the victim's disability including the pain and suffering of

friends and relatives and the replacement training costs borne by business.

The compensation for functions foregone by the injured party represents, in an approximate manner, the long-run analog of foregone earnings.

The major difference concerns the fact that foregone earnings refer to losses

in "productive" capacity, while disability encompasses degradation of all

human functions, including both market and non-market activities. For the

purposes of this study, disability costs for a given injury type and age-sex

category were imputed on the basis of expected lifetime earnings and subjective estimates of the probability and extent of disability for each type of

injury.

Valuation of Loss of Life

As in the case of pain and suffering and disability, the interpretation and treatment of valuation of loss of life must be fundamentally different from those cost components reflecting reimbursement for injury-related

expenditures. Valuation of loss of life cannot be evaluated in terms of

payment for a consumer product-related fatality. The relevant question,

rather, is the value of a marginal reduction of the probability of dying in a consumer product-related accident. It is this imputed valuation of loss of

life, as identified in the risk-reduction conceptual framework, which is the

appropriate cost component to measure.

The valuation of loss of life includes the imputed value to both the

individual (the potential fatality) and the rest of society (family, friends,

and employer). It should be noted that the value of loss of life really mea- sures not life-saving, per se, but increased life expectancy. In that sense,

the imputed valuation of loss of life is sensitive to the age and sex of a consumer product-related fatality, since age and sex are primary determinants

of life expectancy. For more details of this component, see Appendix G.
G-1

APPENDIX G. VALUATION OF LOSS OF LIFE*

Introducti on

The valuation of loss of life is a particularly sensitive topic in

cost/benefit calculations. For that reason, considerable discussion is

devoted here to the definition and estimation of the value of loss of life.

No particular methodology for estimation of the value of loss of life or any specific estimates which purportedly represent the value of loss of

life is endorsed. Rather, we have developed alternative values of loss of

life, each derived from different methodologies, and suggested the merits of

each approach.

Definition and Application

As in the case of pain and suffering and disability, the interpretation of valuation of loss of life must be fundamentally different from those

cost components reflecting reimbursement for injury-related expenditures.

Loss of life cannot be evaluated ex post in terms of monetary payment for a consumer product-related fatality. The relevant question, rather, is the

value of a reduction of the probability of dying in an accident. In other

words, for a small reduction of the risk of a premature death, there exists an imputed valuation of life which, when multiplied by this probability, yields

the value of the risk reduction. This imputed valuation of life, as identified in the risk reduction conceptual framework, is the cost component we are attempting to measure.

Figure G-1 depicts graphically what we mean by valuation of loss of

life. P, on the horizontal axis, represents the probability of an individual's surviving a specific time period (e.g., the next year) or a specific

event or series of events (e.g., climbing the stairs). On the vertical axis,

W represents an individual's lifetime wealth. Curve UlT is an indifference

function indicating the individual's willingness to exchange wealth for an increase in survival probability (life expectancy). The value of loss of life

is just the slope of the indifference function.

Note that Curve UU' in Figure G-1 is nonlinear (convex). As a result, the value of life, as measured by the slope of UU' , is not unique but

depends on the level of P. Higher risk activities imply larger concessions of

wealth (and a larger value of life) for a marginal risk reduction. It is

clear that the risk of fatality from fracture is quite small in absolute

terms. What this means is that the relevant P is very close to 1 unity,

approximately P* in Figure G-1.

* This Appendix was prepared by Technology & Economics, Inc., of Cambridqe,

Massachusetts, under a subcontract from Battel le.
G-2

FIGURE G-l . THE VALUATION OF LOSS OF LIFE IN A

RISK-REDUCTION FRAMEWORK
G-3

Having defined the meaning of valuation of loss of life, we turn now

to its estimation. Three different approaches will be utilized: human capital, quality-adjusted life-years, and willingness to pay. A total of six

(alternative) estimates of the value of loss of life will be derived.

The "Human Capital" Approach

The human capital approach to valuation of loss of life is based on an individual's economic worth as a productive member of society. In that

sense, this approach is consistent with other human capital valuations, such

as the returns to education.

The human capital approach to loss of life valuation is normally

presented in one of two forms: the "net" value method or the "gross" value

method. The "net" human capital method values the economic contribution lost

by the remainder of society were an individual to die. The usual estimation

procedure is to calculate the present discounted value of the individual's

expected gross earnings minus consumption over the expected duration of his

lifetime. This approach is unsatisfactory, however, because it ignores the

interests of the potential victim. It disregards the interests of society

ex ante and concentrates only on society ex post. Taken to its logical

conclusion, this method suggests that the death of any individual whose

expected discounted consumption exceeds his expected discounted earnings

confers a net benefit on society. This category of individuals would include,

at a minimum, most retired and disabled persons. The unpalatable implications

of this approach stem directly from the assumptions concerning the value of

production. The net contribution approach has merit only if we believe that resources derive value from investment alone.

The gross human capital method is probably the most widely used

method of valuing lifesaving programs. In brief, this approach derives a value for loss of life by calculating the present discounted value of the

individual's gross earnings over the anticipated remainder of his lifetime.

Notice that expected gross earnings may be differentiated on the basis of the

NEISS age and sex variables.

For the gross human capital approach, the estimation of the value of

loss of life, for each age and sex category, is calculated using the following

formula

:

Vl = S Y it P it (T) (1 + r)-^-''

t=T

where V-j is the value of life of an individual in the i tn age/sex category; Y-j t is expected gross earnings, exclusive of returns on own-human

capital assets, per individual in the i tn category; P-j t

( T ) is the probability in the current (T th

) year of an individual in the i tn category

being alive during the ttn year; and or C is the discount rate. The discount rate reflects a time preference for money, since money has an opportunity cost. As a result, income earned in the future is worth less than if it

were currently available.
G-4

The values these variables assume were obtained from Cooper and

Brody(6)*. Several values for the discount rate were offered. We assumed a "nominal" discount rate of twelve percent. However, we concurrently assumed

that earnings in future years will, on average, increase by six percent

because of inflation and by an additional two percent because of annual productivity increases. Thus, the "real" discount rate employed was (approximately) four percent. Finally, since Cooper and Brody's estimates were presented in 1972 dollars, we inflated their figures by 55.9 percent to convert

their values to a 1978 base year. The present value estimates of expected

future earnings, by age and sex, are provided in Table G-l. These estimates constitute the first option for the value of loss of life.

Quality-Adjusted Life- Years

The concept of quality-adjusted life-years (QALY) offers a solution

to two recurring problems in the valuation of loss of life. The first problem

is how to account for differences in the characteristics of the (expected)

victims in placing a value on the loss of life. Often a single number is

presented for the value of loss of life (e.g., $200,000 per life lost or

saved), regardless of the characteristics of the victim. Using this approach,

one need only to add up the number of lives saved and multiply by the value of

loss of life in order to calculate the benefits of a fatality-reducing program. However, even though we conventionally use the terminology "lives

saved", lives are not saved, but prolonged. The relevant question then

becomes not how many lives are saved, but rather how many years has life been

extended. Life expectancy, from this viewpoint, assumes crucial importance in

placing value on human life.

The second problem concerns the fact that different years of an individual 's life saved are not homogeneous; they vary in quality, however measured. QALY weights years of life saved according to an index of the quality

of life during those years. Admittedly, any such index must be subjective in

nature; nevertheless, if the basic relationships can be agreed upon, then the

actual weights chosen should provide a reasonable approximation to the relative quality of years of life saved.

We assume that the principal determinant of the quality of a lifeyear is the age of the individual at the time the year is "consumed". The

standard of quality is the "prime of life", the ages between 20 and 40.

Slightly less desirable are the ages between 10 and 20 and between 40 and 60,

followed by the ages from 0 to 10. The least desirable years are those after

the age of 60. Poorer health and a reduction in available activities are the

major reasons for scaling down later years. The ages from 0 to 20 are demoted

in value because they are years of dependency. A quality-adjusted weighting

of life-years, compatible with the criteria suggested above, is contained in

Table G-2. In order that the average value per life-year be (approximately)

unity, the weights for some years exceed unity.

References are found at the end of this Appendix.
G-5

TABLE G-l. VALUE OF LOSS OF LIFE: OPTION 1 PRESENT VALUE OF EXPECTED FUTURE EARNINGS

Age Male Fema 1 e

Under 2 $156,737 $ 95,312

2- h 163,863 99,516

5- 9 200,001 121 ,346

10-1 *t 243,708 147,840

15-19 290,755 173,989

20-24 329,788 186,670

25-3*» 338,794 172,757

35-44 286,304 138,874

45-54 194,609 96,069

55-64 90,952 48,067

65+ 12,499 7,980

Source: See Appendix VII, Section 3
G-6

TABLE G-2. WEIGHTS FOR LIFE-YEARS

Age Weight (per year)

0- 9 .8

10-19 1 .0

20-29 1.2

30-39 1.2

1*0-49 1 .0

50-59 1.0

60-69 .8

70-79 .6

80=89 ,k

90+ .2
G-7

Quality-adjusted life-years can be developed by combining life expectancy figures for individuals of a given age and sex with the weights presented in Table G-2. In order to be consistent with the human capital

approach, life-years have been discounted by four percent per annum. The

formula for calculating quality-adjusted life-years is:

where QALY-j is the expected number of quality-adjusted life years of an individual in the i tn age and sex category; a-j is the age of potential

death of the individual in the i tn category; n^ is the life expectancy (at

age a-,- ) of an individual in the i tn category; and qj is the weight

representing the quality of life at age j. The number of quality-adjusted

life-years associated with "saving" the life of an individual within a given

NEISS age and sex category is given in Table G-3. Females at all ages have

more QALY's than their male counterparts because they have a longer life

expectancy.

What remains is to place a dollar value on each QALY. Because the

concept of quality-adjusted life-years was developed primarily for costeffectiveness purposes—that is, to evaluate the number of QALY's saved per

dollar expended on alternative fatality-reducing pol icies--the literature on the subject provides little guidance on how to monetize the benefits per QALY.

One plausible method, related to the human capital approach, is to evaluate

QALY in terms of the present value of expected future earnings. In order to

derive a value for QALY's, we have employed the ad hoc procedure of dividing

the expected discounted future earnings of a male and female of every age,

through life expectancy at birth (70 for males, 77 for females), and dividing

by the expected number of QALY's for that age and sex. The magnitude of the

quotient averaged over all ages, calculated separately for men and women, is

the monetary value for QALY we shall use. In mathematical notation, the

formula is:

$/QALY = Z

q

($f£j ^/ns

where the term in parenthesis is the value of discounted future earnings per

quality-adjusted life-year of a potential victim of the i tn age (not age

category) and the stn sex, and ns is the life expectancy at birth of an individual of the s tn sex. The monetary value per QALY, as calculated from

this equation, is $9,622 for males and $4,386 for females. Applying these

figures to the QALY estimates in Table G-3 yields the value of loss of life

estimates provided in Table G-4. These estimates, based on the integration of

the human capital and quality-adjusted life-year approaches, constitute the

second option for the value of loss of life.
G-8

TABLE G-3. EXPECTED NUMBER OF QUALITY-ADJUSTED LIFE-YEARS

BY AGE AND SEX OF POTENTIAL VICTIM

Age Male Fema 1

Under 2 37-60 38.68

2- k 37.51 38.46

5- 9 37.02 38.27

10-14 35.85 36.98

15-19 34.22 35.88

20-24 32.15 33.66

25-34 27.41 29.20

35-44 21 .00 22.82

45-54 15.26 17-30

55-64 9.57 11.19

65+ 4.22 5.13
G-9

TABLE G-4. VALUE OF LOSS OF LIFE: OPTION 2 INTEGRATION

OF QALY* AND DISCOUNTED FUTURE EARNINGS

Age Male Fema 1

e

Under 2 $361 ,787 $169,650

2- 4 360,921 168,686

5- 9 356,206 167,852

10-14 344,949 162,194

15-19 329,265 157,370

20-24 309,347 147,633

25-34 263,739 128,071

35-44 202,062 100,089

45-54 146^32 75,878

55-64 92,083 49,079

65+ 40,605 22,500

* Quality-adjusted life-years

Source: See Appendix Vii, Section 4
G-10

The "Willingness To Pay" Approach

In accordance with the interpretation prescribed earlier, probably

the most appropriate measure of the value of loss of life would be one based

on an individual's willingness to pay for a marginal increase in life expectancy. Certainly one's willingness to pay is the method used to value most

other goods and services in the marketplace. As Schelling (9) points out, if

individuals are willing to pay some amount to improve their probability of

survival, then they should be allowed to pay that amount and reap the

benefits

The willingness to pay for a reduction in the risk of loss of life is

usually calculated in one of two ways, either by consumer survey or by infer- ence from consumers' observable market behavior. Estimating the value of

lifesaving from consumer surveys suffers from the usual shortcomings of market

surveys, namely, that hypothetical questions have proved to be a poor indicator of consumer behavior or choice. This is particularly true for questions

about important events, since the mood and motive of actual choice are difficult to simulate. The poor performance of hypothetical questions in consumer

surveys is compounded here by the fact that questions concerning death involve

minute probabilities for awesome events. The average consumer is inexperienced in dealing with infinitesimal probabilities and with death in general;

so any value ascribed to reducing the probability of death is probably not

based on an analytic assessment and probably dominated by anxiety, which can

be expected to accompany any contemplation about loss of life regardless of

the level of risk or the amount of risk reduction.

Inferring the willingness to pay for fatality risk reduction from

observable market behavior appears to be a more promising avenue. Two careful

studies, by Blomquist( 2 ) and by Thaler and Rosen( 10 )> derive empirical

estimates of the value of life based on market decisions involving risk of

life. Properly employed, these two studies provide a reasonably reliable

range of the willingness to pay for a reduction in risk to life.

Blomquist imputes a value of loss of life from data on seat-belt use,

based on multivariate probit analysis for the typical driver (who chooses not

to wear seat belts), the risk reduction from wearing a seat belt, and the

costs of seat-belt use. When the benefits of risk reduction associated with

non-fatal injuries are subtracted out, what remains is the trade-off between

fatality risk reduction and the cost (disutility) of seat-belt use. For the

average driver in the sample--aged 39 and .88 male--the empirical trade-off

implies a value of loss of life of approximately $368,000 in 1978 dollars.

Thaler and Rosen analyze a sample of adult male workers employed in

different occupations in order to estimate risk-compensated wage differentials. Their regressions imply a valuation of loss of life for the average

worker--a 42-year old male--of approximately $200,000 in 1967 or $410,000 in

1978 dollars. However, their estimate is subject to several modifications.

First, the job risk premiums include the hazards of both injury and death.

Calculations by BaileyU) suggest a range for the percentage of the wage

differential to be applied to injury reduction. The intermediate figure is 56

percent, leaving 44 percent for reduction in risk to life and implying a value

of loss of life of $180,400.
G-n

A second problem with the Thaler-Rosen results is that the mar<et

behavior toward risk is observable only on a biased sample. In general,

workers in hazardous occupations are less averse to personal risk than are those who avoid such occupations. These workers are unrepresentative of the

general population; hence, a valuation of loss of life based on an assessment

of those who voluntarily assume risky activities would tend to underestimate

the true value. Compensating for this sampling problem is a difficult task.

A rough approximation of the bias can be derived by examining the difference

in the valuation of loss of life in Blomquist's study between the average

person who uses seat belts and the average person in the sample if he were to use seat belts. The relative difference, from 11.5 percent of the sample to

the mid-point, corresponds to an increase in the valuation of loss of life of

approximately 13.7 percent (assuming an elasticity of value of loss of life

with respect to seat-belt use of .356, as derived from Blomquist's analysis).

Assuming that worker risk assessment is distributed in a manner similar to consumer seat-belt risk assessment, then compensation for the biased risk

aversion of the Thaler-Rosen sample requires increasing the value of loss of

life by 13.7 percent, to $205,000.

Finally, the Thaler-Rosen results are biased because the actual wages

for the workers in the sample are below the national average for all male

workers of that age group. The average wage for a 42-year old male was approximately $9,050 in 1967 dollars, 37 percent higher than reported for the

Thaler-Rosen sample. Adjusting the valuation of loss of life for this wage

bias--how this adjustment was made will be discussed shortly--resul ts in an increase of 17 percent over the previous estimates, to $240,000.

Recall that the Blomquist figure for the value of loss of life was calculated for the average driver in his sample--aged 39 and .88 male. By

correcting for differences in life expectancy and the present value of discounted future earnings between men and women aged 39, the Blomquist value of

loss of life should be increased to $380,000 for a 39-year old male. Again,

the basis for this adjustment will be explained shortly.

In summary, the willingness to pay for a reduction in risk to life,

based on the observable market behavior of the Thaler-Rosen and Blomquist

samples, yields values of loss of life between approximately $240,000 and

$380,000 for a 40-year old male. Although the estimates from these two

studies are not close in magnitude, they do offer a broad range within which

we might expect the "true" value to fall. Given the large number of assumptions required to derive the reported estimates, and the fact that worker and consumer samples may be intrinsically different, then the variation in the

results should not be too surprising. In any case, if we give each study

equal weight, the average value of loss of life for a 40-year old male would

be approximately $310,000.

The question remains how to estimate the value of loss of life for

individuals of different ages and sex. In order to resolve this problem, we

shall resort to the tools developed in prior sections--di scounted future

earnings and QALY. Presumably, increased wealth implies a greater desire and

ability to pay for risk reduction. This relationship is corroborated by

Blomquist, who finds that the value of lifesaving increases as discounted

future earnings increase, a 10 percent increase in the latter inducing a 3.1
G-12

percent increase in the former. Similarly,, an increase in life expectancy,

and therefore an increase in quality-adjusted life-years, should have a positive effect on the value of 1 i fesavi nq. Althouqh the precise impact of

chanqes in foreqone earninqs and quality-adjusted life-years is difficult to

predict, we shall assume that these two variables receive equal weiqht and

that the combination of chanqes in these variables will have a proportional

effect on the value of loss of life. The value of loss of life for an individual in any NEISS aqe/sex cateqory can thus be derived by comparinq his

foreqone earninqs and quality-adjusted life-year estimates (from Tables G-l

and G-3) with the estimates for males in the 35 to 44 aqe cateqory usinq the

followinq formula:

u w* ^1 QALti w i V* 9 QALY*

where Wj , Vj , and QALYj are the value of loss of life, discounted future

earninqs, and quality-adjusted life-years, respectively, for an individual in

the i'th aqe/sex cateqory, and the asterisk denotes correspondi nq values

($310,000, $286,304, and 21.00, respectively) for a male between the aqes of

35 and 44. Of course, W* is just the averaqed wi 1 1 i nqness to pay value of

li fesavi nq derived from the Blomquist and Thaler-Rosen studies. Earlier

adjustments to the estimates reported in these studies, to account for aqe and sex differentials, were based on this formula.

The value of loss of life estimates qenerated by the precedinq equation are displayed in Table G-5. These estimates, based on the willinqness to

pay approach and adjusted both for discounted future earninqs and qualityadjusted life-years, constitute the third option for the value of loss of

life.

In liqht of the larqe number of manipulations required to derive the

estimates for the third option, is it likely that they bear any resemblance to

the "true" value of loss of life? Economic theory and intuition would suqqest

that the answer is "yes". First, quality-adjusted life-years (or some other

weiqhted measure of life expectancy) would seem to have a positive influence

on the value of 1 i fesavi nq. Even if an individual were no lonqer earninq

income, he would be Willi nq to pay for a reduction in risk to life. (The

ability to pay, in this case, would come from wealth saved in previous years.)

The point is that periods of earninq and periods of consumption (utility) do

not necessarily coincide; indeed the motivation for production in earlier

years is often the enjoyment of life without work (disinvestment) in later

years. Quality-adjusted life-years permits the continuity of the staqes of

life to be maintained in valuinq the loss associated with the premature

termination of life.

A second point is that all of the values for loss of life in the

third option exceed the correspondi nq present value of expected future

earninqs (compare Tables G-5 and G-2). Several sources arque that this

relationship must obtain; that the value of loss of life must exceed foreqone

earninqs. Conley(3»4) } for example, shows that with a concave lifetimeconsumption utility function and for a value of expected lifetime consumption

above some low, presumably near-subsistence level, the value of human life
G-13

TABLE G-5. VALUE OF LOSS OF LIFE: OPTION 3 WILLINGNESS TO

PAY ADJUSTED BY DISCOUNTED FUTURE EARNINGS AND

QALY*

Age Male Fema I

e

Under 2 $306,900 $242,730

2- 4 313,410 247,690

5- 9 344, 100 272,490

10-14 365, 180 295,740

15-19 398,970 315,890

20-24 41 1 ,680 316,820

25-34 385,330 283,960

35-44 310,000 225,060

45-54 217,930 163,060

55-64 1 17,800 92,690

65+ 29, 140 25,730

* Quality-adjusted life-years

Source: See Appendix VII, Section 5
G-14

exceeds expected lifetime earnings. Cook and Graham(^) treat human life as one commodity within the general class of irreplaceable commodities, where an irreplaceable commodity can be identified according to whether, in its owners

view, there are equivalent commodities available on the market. Adopting a state-preference approach, with the two states "alive" and "dead", the authors

find that the value of loss of life is bracketed by what the owner would pay

to avoid its loss and by the amount of money required to fully compensate him

for its loss.* Furthermore, these brackets correspond, under certain assumptions, to the present value of expected future earnings as a lower bound and

the infinite amount required as compensation for immediate, certain death as

an upper bound. Conley's analysis follows from a maximization of the lifetime

utility of wealth whereas Cook and Graham rely on the maximization of lifetime

utility, with wealth as one of its arguments. The latter function would

appear to be more flexible and realistic, allowing non-material activities to

contribute to the value of human life and increasing its value relative to

discounted future earnings. In summary, the consensus is that the human

capital approach to valuing human life constitutes only a lower bound to the

value we desire. The third option satisfies this condition.

Finally, some support for the values of loss of life represented by

the third option can be obtained by examining the elasticity of the value of

life with respect to foregone earnings. Conley indicates that in the usual

case, above some critical level of lifetime consumption, this elasticity must

be less than unity. Blomquist develops an empirical estimate of .31 as the

elasticity evaluated for the average driver. In the third option, the elasticity of the value of life with respect to foregone earnings, E wv , can be

represented by the following equation:

Ewv

1 / Vj QALYj

2 J V* * QALY*

Based on the figures in Tables G-l and G-3, the average value of Ewv is

roughly .45, .which falls within the boundaries established by Conley's and

Blomquist's studies.-. \ x \^

Adjustments To Reflect the Societal Value of Loss of Life

The discussion to this point has been predicated on the assumption

that either the social value of loss of life is restricted to the victim's

loss or the victim's value of loss of life incorporates the loss to family and

the rest of society. The former assumption corresponds to the potential victim as a "lone bachelor", without family or friends who would value a reduction in his risk to lire. The latter assumption, probably more realistic, is

that the family is the appropriate decision unit in valuing lifesaving activity (so that the value of^loss of life for any family member in the previous

options is the composite j/alue to' the family) and that any other social loss

is negligible. /

*0ne cannot, of course, be directly compensated for his own death.
G-15

Several studies suggest, however, that the societal value of loss of

life is well in excess of those developed for the previous options.

Fromm(w, -j n a ig60 study of civil aviation, estimated that the total social

value of loss of life, ignoring losses specific to the airline industry, was

75 percent more than the present value of expected future earnings.

Joksch(S), in a 1975 study of highway traffic safety, derived estimates,

when adjusted for a 4 percent discount rate, that were approximately 60

percent higher. The societal losses in these studies, in addition to the

victim's own loss of life, included the loss to family, friends, community,

employer, and government. There is no question that if these social losses

exist they should be included in the valuation of loss of life. Just as it was improper to exclude the value of lifesaving to the victim in the human

capital approach (i.e., the "net" human capital approach), it is equally

improper to exclude the value to society.

Probably the best way to derive estimates of the magnitude of social

loss is to attempt to place a value on each of its components. Bailey provides some evidence that the government component of the social loss is equal

to the amount of indirect business taxes on the victim's foregone labor

income. That value translates into approximately 9 percent of the individual's value of loss of life. Fromm estimates that employer losses, presumably

from the foregone benefits of job-specific training (not captured in the

employee's wage), constitute approximately 2 percent of the individual's value

of loss of life. Fromm further suggests that the loss to community and

friends is equal to about 13 percent of the individual's value of loss of

life. Bailey corroborates the magnitude of this estimate by considering the

willingness of society to subsidize the insurance premiums for workers in

higher risk positions. Based on the benefits versus the costs of survivor's

benefits from social security, he imputes a "third-party" contribution of

approximately 15 percent of the individual's value of loss of life. Using an averaged figure of 14 percent for the loss to community and friends, the total

social loss, net of family loss, is approximately 25 percent of the value of

loss of life calculated in the three earlier options.

The remaining issue is how to value the family loss associated with a fatality. Here, there appears to be virtually no basis for selecting a value.

Fromm suggests that the family loss is equal to almost 60 percent of the individual's discounted future earnings. If we accept this crude number, and

further assume that approximately half this amount is already captured in the

individual's life valuation, then the individual's value of loss of life would

have to be increased by 30 percent to encompass the loss to family members.

Based on the previous discussion, the total societal losses--for the

loss to family, friends and community, employer, and government- -would correspond to roughly 55 percent of the individual's value of loss of life.

Admittedly these estimates are highly subjective, but that should not constitute a justification for ignoring societal losses to the extent they are not

reflected in the individual's value of loss of life. In order to include the

societal loss in loss of life valuation, the estimates presented in the

earlier options must be increased by 55 percent. Tables G-6, G-7, and G-8

contain revised estimates of the value of loss of life for Option 1, Option 2,

and Option 3, respectively. These revised estimates, which are adjusted to
G-16

TABLE G-6. VALUE OF LOSS OF LIFE: OPTION la PRESENT VALUE OF

EXPECTED FUTURE EARNINGS PLUS ADDITIONAL SOCIETAL

LOSS

AAge Ma 1 e Fema 1

Under 2 $242,942 $147,734

2- 4 253,988 154,250

5- 9 310,002 188,086

10-1 /f 377,747 229,152

15-19 450,670 269,683

20-24 511,171 289,339

25-34 525,131 267,773

35-44 443,771 215,255

45-54 301 ,644 148,907

55-64 140,976 74,504

65+ 19,373 12,369

Source: See Appendix VII, Section 6
G-17

TABLE G-7. VALUE OF LOSS OF LIFE: OPTION 2a INTEGRATION OF QALY

AND DISCOUNTED FUTURE EARNINGS PLUS ADDITIONAL SOCIETAL

LOSS

Age Male Fema 1

e

Under 2 $560,770 $262,958

2- 4 559,^28 261 ,463

5- 9 552 J 19 260,171

10-14 534, 671 251 ,401

15-19 510,361 243,924

20-2*4 479,488 228,831

25-34 403,795 198,510

35-44 3D 3, 196 155J38

45-54 227,590 1 17,61

1

55-64 142, 729 76,072

65+ 62,938 34,875

* Quality-adjusted life-years

Source: See Appendix VII, Section 6
G-18

TABLE G-8. VALUE OF LOSS OF LIFE: OPTION 3d WILLINGNESS TO PAY

ADJUSTED BY DISCOUNTED FUTURE EARNINGS AND QALY*

PLUS ADDITIONAL SOCIETAL LOSS

Age Male Fern a 1

Under 2 $*»75,695 $376,232

2- * *»85,786 383,920

5- 9 533,355 *»22,360

566,029 *»58,397

15-19 618, A0*4 *»89,630

20-2^ 638, 10*» 1 ,071

25-3*4 597,261 *»*»0, 138

35-*»*» *»80,500 3*»8,8*»3

*»5-5*» 337,792 252,7*»3

55-6*» 182,590 1*»3,670

65+ *»5,167 39,882

* Quality-adjusted life-years

Source: See Appendix VII, Section 6
G-19

include the societal value of lifesaving, represent the final three options

for the value of loss of life.
G-20

References

1. Bailey, M. J., Reducing Risks to Life: Measurement of the Benefits , American Enterprise Institute for Public Policy Research, Washington,

D.C., 1980.

2. Blomquist, G. , "Value of Lifesaving: Implications of Consumption

Activity", Journal of Political Economy , 87 , June 1979, pp 540-558.

3. Conley, B. C. , "The Value of Human Life in the Demand for Safety",

American Economic Review , 66 , March 1976, pp 45-55.

4. Conley, B. C, "The Value of Human Life in the Demand for Safety:

Extension and Reply", American Economic Review , 68 , September 1978, pp

717-720.

5. Cook, P. J., and Graham, D. C. , "The Demand for Insurance and Protection:

The Case of Irreplaceable Commodities", Quarterly Journal of Economics , 91, February 1977, pp 143-156.

6. Cooper, B. S., and Brody, W. H. , "1972 Lifetime Earnings by Age, Sex,

Race, and Educational Level", Research and Statistical Note , U.S.

Department of Health, Education and Welfare, 1975.

7. Fromm, G. , "Civil Aviation Expenditures", Measuring Benefits of Govern - ment Investment , R. Dorfman (editor), Washington, D.C., Brookings

Institution, 1965.

8. Joksch, H. C. , "A Critical Appraisal of the Applicability of Benefit-Cost

Analysis to Highway Traffic Safety", Accident Analysis Prevention , 7:2,

June 1975, pp 133-153.

9. Schelling, T. C, "The Life You Save May Be Your Own", Problems in Public

Expenditure , S.B. Chase (editor), Washington, D.C., Brookings Institution, 1968.

10. Thaler, R. , and Rosen, S. , "The Value of Saving a Life: Evidence from

the Labor Market" in Household Production and Consumption , N. Nerleckyj

(editor), NBER Studies in Income and Wealth, Vol. 40, New York, Columbia

University Press, 1975, pp 265-297.
APPENDIX H. DETAILED COMPUTER PRINTOUTS OF SELECTED INPUT/OUTPUT

MATRICES (SEPARATELY BOUND)

Direct Technical Coefficients, World I Direct Technical Coefficients, World II Direct Technical Coefficients, World III

Capital /Output Coefficients, World I Capital /Output Coefficients, World II Capital /Output Coefficients, World III

Useful Lives, World I Growth Matrix

Social Capital Infrastructure, World I Average Annual Capital Replacement Rate, World I Average Annual Capital Replacement Rate, World II Average Annual Capital Replacement Rate, World III

Direct and Indirect Effects, World I Direct and Indirect Effects, World II Direct and Indirect Effects, World III

Dollar Value of Interindustry and Final Transactions,

World I Dollar Value of Interindustry and Final Transactions,

World II

Dollar Value of Interindustry and Final Transactions,

World III

Dollar Value of Interindustry and Final Transactions,

World I minus World II Difference

Dollar Value of Interindustry and Final Transactions,

World I minus World III Difference

Dollar Value of Interindustry and Final Transactions,

World III minus World II Difference
NBS-IUA (REV. 2-BC) U.S. DEPT. OF COMM.

BIBLIOGRAPHIC DATA

SHEET (See instructions)

PUBLICATION OR

REPORT NO.

NBS SP 647-2

2. Performing Organ. Report No. 3. Publication Date March 1983

4. TITLE AND SUBTITLE

The Economic Effects of Fracture in the United States— A Report to NBS

by Battelle Columbus Laboratories

5. AUTHOR(S) J.J. Duga, W.H. Fisher, R.W. Buxbaum, A.R. Rosenfield, A.H. Buhr,

E.J. Honton, and S.C. McMillan

6. PERFORMING ORGANIZATION (If joint or other than NBS, see instructions)

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE

WASHINGTON, D.C. 20234

7. Contract/Grant No.

8. Type of Report & Period Covered

Final

9. SPONSORING ORGANIZATION NAME AND COMPLETE ADDRESS (Street. City. State, ZIP)

National Bureau of Standards

Washington, DC 20234

National Bureau of Standards

10. SUPPLEMENTARY NOTES

Library of Congress Catalog Card Number: 83-600705

[] Document describes a computer program; SF-185, FlPS Software Summary, is attached.

11. ABSTRACT (A 200-word or less factual summary of most si gnifi cant information. If document includes a significant

bibliography or literature survey, mention it here) A study was conducted to determine the cost of material fracture in the

U.S. economy and to identify means of reducing the cost. An Input/Output (I/O)

model of the economy was used to assess the costs of fracture. Fracture costs

were determined for all materials, all sectors of the economy, and all

fracture modes. The costs were associated with both the occurence of fracture

and the prevention of fracture. The total cost of fracture was determined to

be $99 billion (1978 dollars) . Full application of presently known

technologhy through technology transfer could reduce this amount by $29

billion. Further research in fracture related technology could reduce the

cost of fracture another $23 billion.

12. KEY WORDS (Six to twelve entries; alphabetical order; capitalize only proper names; and separate key words by semicolons)

economics; fracture; fracture costs; input-output model; resources;

technological assessment

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