United States General Accounting Office

GAO Report to the Chairmen, Committee on

Commerce, Science, and Transportation,

U.S. Senate, and the Committee on

Commerce, House of Representatives

September 1997 CONSUMER PRODUCT

SAFETY COMMISSION

Better Data Needed to

Help Identify and Analyze

Potential Hazards

GAO/HEHS-97-147

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-274042 

September , 1997

The Honorable John McCain

Chairman, Committee on Commerce,

 Science, and Transportation

United States Senate

The Honorable Thomas J. Bliley, Jr.

Chairman, Committee on Commerce

House of Representatives

Every year, children are hurt while using playground equipment; users or

spectators are injured when fireworks explode unexpectedly; and

homeowners are cut while operating chain saws and lawn mowers.

Created to protect consumers from “unreasonable risk of injury,” the U.S.

Consumer Product Safety Commission (CPSC) oversees these and about

15,000 other consumer products ranging from kitchen appliances and

children’s toys to hot tubs and garage door openers. With a budget of

about $42.5 million, CPSC carries out its mission by (1) enforcing federal

consumer product regulations (by recalling products from store shelves,

for example) and (2) conducting projects to address products with

potential hazards not covered by existing regulations.1

 These projects may

result in CPSC issuing new regulations concerning specific products,

assisting in the development of voluntary industry standards, or providing

information to consumers about how to use the products safely.

Contending that the agency is ineffectively allocating its resources, CPSC’s

critics have voiced dissatisfaction with the selection of certain agency

projects and have questioned the validity of CPSC’s risk assessment and

cost-benefit analyses supporting those projects. In addition, congressional

and interest group critics have questioned the agency’s procedures for

ensuring the accuracy of manufacturer-specific information before

releasing it to the public,

contending that such releases can mar the reputation of responsible

corporate citizens.

In light of these concerns, you asked us to review CPSC’s project selection,

use of cost-benefit analysis and risk assessment, and information release

procedures. Specifically, this report (1) identifies the criteria CPSC uses to

1

Projects vary widely in scope, and CPSC has no standard definition of what constitutes a project. For

our review, we defined a “project” as work CPSC conducted on any specific consumer product that

was associated with a potential hazard or hazards not covered by existing regulation.

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B-274042 

select projects and reviews the information it relies upon in making these

choices, (2) assesses the information CPSC draws on to perform risk

assessment and cost-benefit analyses and evaluates the agency’s

methodology for conducting cost-benefit analyses, and (3) describes CPSC’s

procedures for releasing manufacturer-specific information to the public

and reports whether evidence exists that CPSC violated its statutory

requirements concerning the release of such information.

To address these objectives, we reviewed internal CPSC documents,

relevant legislation and regulations, and the literature on cost-benefit

analysis and on consumer product safety issues. We interviewed CPSC

commissioners and staff, four former commissioners, consumer

advocates, industry representatives, and outside experts to obtain their

perspectives on CPSC’s work. We identified CPSC projects by compiling from

various agency documents a list of 115 potential product hazards

examined by the agency from January 1990 to September 30, 1996, and we

reviewed available agency documentation on each of these projects. We

examined the agency’s internal databases to obtain project information

and to assess the agency’s information on product hazards. In reviewing

CPSC’s cost-benefit analyses, we consulted with experts to develop

objective criteria that reflected elements commonly used in the evaluation

of cost-benefit analyses. These evaluation questions were designed to elicit

whether CPSC conducted comprehensive analyses and reported them in

sufficient detail. However, they do not make up a complete measure of the

quality of a cost-benefit analysis; for example, our evaluation assessed

whether these elements were included but not how well they were

measured or incorporated. We reviewed CPSC’s internal procedures

concerning information clearance and release, and we examined relevant

legal cases in this area. For more detailed information on our scope and

methodology, see appendix I.

Results in Brief Although CPSC has established criteria to help select new projects, with the

agency’s current data these criteria can be measured only imprecisely, if at

all. The criteria for selecting projects include the number of

product-related injuries, chronic illnesses, and deaths. However, although

CPSC has described itself as “data driven,” its information on

product-related injuries and deaths is often sketchy. For example, because

the agency’s measure of injuries generally includes only hospital

emergency room reports, CPSC has an incomplete picture of injuries.

Similarly, CPSC’s data on product-related deaths understate the total

number of deaths and are available to the agency only with a 2-year time

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lag. In addition, CPSC does not maintain a comprehensive list or description

of either its past or ongoing projects. This makes it more difficult not only

for agency management to monitor current projects but also for staff and

commissioners to assess and prioritize the need for new projects in

different hazard areas. As a result, CPSC has insufficient data on both

internal agency efforts and external product hazards to assess the impact

and cost of each project, either when it is selected or after it has been

implemented.

To help evaluate alternative methods of addressing potential hazards, CPSC

may perform a risk assessment to estimate the likelihood of injury

associated with a hazard or conduct a cost-benefit analysis to assess the

potential effects of a proposed regulation. Although CPSC does not

complete either a risk assessment or cost-benefit analysis for every

project, the agency conducts these analyses more often than it is required

to by law. Nevertheless, CPSC’s data are often insufficient to support a

thorough application of these analytical techniques—a problem that

frequently arises in doing both risk assessment and cost-benefit analysis.

To evaluate relative risks, it is usually necessary to have information on

how many consumers use the product—information that CPSC frequently

does not have. In addition, risk assessment of consumer products requires

measurement of the number of harmful incidents. CPSC’s imprecise and

incomplete death and injury data make risk assessment and cost-benefit

analysis at best less reliable and at worst impossible to do. Furthermore,

the cost-benefit analyses conducted by CPSC between 1990 and 1996 were

often not comprehensive, and the reports on these analyses were not

sufficiently detailed. For example, experts generally agree that sensitivity

analysis—a technique that enables the reader to determine which

assumptions, data limitations, or parameters are most important to the

conclusions—should be incorporated in cost-benefit analyses. Most of

CPSC’s cost-benefit analyses did not include such information. We are

making recommendations to the Chairman of CPSC to improve the agency’s

project selection and cost-benefit analyses.

CPSC has established procedures to implement statutory requirements

concerning the release of manufacturer-specific information. When

releasing information to the public that identifies a specific

manufacturer—for example, in a safety alert or recall notice—CPSC is

required to verify the information and allow the manufacturer an

opportunity to comment. Evidence from the industry and from legal cases

suggests that CPSC has met its statutory requirements in this area.

Individuals within CPSC, as well as some industry representatives and

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consumer groups, expressed dissatisfaction with the requirements of this

law. Some of these individuals have proposed statutory changes that range

from reducing to expanding the current requirements.

Background CPSC was created in 1972 under the Consumer Product Safety Act (P.L.

92-573) to regulate consumer products that pose an unreasonable risk of

injury, to assist consumers in using products safely, and to promote

research and investigation into product-related deaths, injuries, and

illnesses. CPSC currently has three commissioners, who are responsible for

establishing agency policy.2

 One of these commissioners is designated the

chairman; the chairman directs all the executive and administrative

functions of the agency.

The Consumer Product Safety Act consolidated federal safety regulatory

activity relating to consumer products within CPSC. As a result, in addition

to its responsibilities for protecting against product hazards in general,

CPSC also administers four laws that authorize various performance

standards for specific consumer products. These laws are the Flammable

Fabrics Act (June 3, 1953, c.164), which authorizes flammability standards

for clothing, upholstery, and other fabrics; the Federal Hazardous

Substances Act (P.L. 86-613), which authorizes the regulation of

substances that are toxic, corrosive, combustible, or otherwise hazardous;

the Poison Prevention Packaging Act of 1970 (P.L. 91-601), which

authorizes requirements for child-resistant packaging for certain drugs and

other household substances; and the Refrigerator Safety Act of 1956

(Aug. 2, 1956, c.890), which establishes safety standards for household

refrigerators.

In fiscal year 1997, CPSC carries out this broad mission with a budget of

about $42.5 million and a full-time-equivalent staff of 480. As figure 1

shows, after adjusting for inflation, the agency’s budget has decreased by

about 60 percent since 1974. Similarly, CPSC’s current staffing level

represents 43 percent fewer positions as compared with the agency’s 1974

staff.

2

The Consumer Product Safety Act provides for the appointment of five commissioners by the

President of the United States for staggered 7-year terms. However, since 1986, no more than three

commissioners have served at one time.

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Figure 1: CPSC Funding, in Inflation-Adjusted Dollars, 1974-96

1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Year

CPSC Funding (in Thousands)

Notes: Budget figures were obtained from CPSC. The 1993 budget figure excludes a special

appropriation for office space relocation. Budget figures were adjusted for inflation using the

Gross Domestic Product deflator for federal nondefense spending, with 1992 as the base year.

CPSC uses a number of regulatory and nonregulatory tools to reduce

injuries and deaths associated with consumer products. Under several of

the acts that it administers, CPSC has the authority to issue regulations that

establish performance or labeling standards for consumer products. For

example, in 1993, CPSC issued regulations under the Consumer Product

Safety Act requiring disposable cigarette lighters to be child-resistant. If

CPSC determines that there is no feasible standard that would sufficiently

address the danger, CPSC may issue regulations to ban the manufacture and

distribution of the product. In addition, under the Consumer Product

Safety Act, if a product violates a safety regulation or presents a

“substantial hazard,” CPSC may order a product recall, in which the item is

removed from store shelves and consumers are alerted to return the item

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B-274042 

for repair, replacement, or refund.3 CPSC can also impose civil penalties for

violations of federal safety standards.

Although CPSC has these broad regulatory powers, much of the agency’s

efforts are carried out using nonregulatory methods. In addition to

federally mandated product safety standards, many consumer products

are covered by voluntary standards. These voluntary standards, which are

often established by private standard-setting groups, do not have the force

of law. However, many voluntary standards are widely accepted by

industry.4

 The 1981 amendments to the Consumer Product Safety Act

require CPSC to defer to a voluntary standard—rather than issue a

mandatory regulation—if CPSC determines that the voluntary standard

adequately addresses the hazard and that there is likely to be substantial

compliance with the voluntary standard. As a result, voluntary standards

development is an important tool in CPSC’s hazard-reduction efforts. For

example, in 1996 CPSC helped a private group develop a voluntary standard

to address the risk of children getting their heads stuck between the slats

of toddler beds, and in 1995 CPSC assisted a standard-setting group in

upgrading safety standards to prevent fires associated with Christmas tree

lights.

CPSC also addresses product hazards by providing information to

consumers on safety practices that can help prevent product-related

accidents. For example, to encourage consumers to use electricity

safely—and particularly to promote the use of ground fault circuit

interrupters—CPSC conducted a far-reaching publicity campaign that

included radio public service announcements, messages printed on

carryout bags for hardware stores, a joint press conference with industry

representatives, presentations on television’s Home Shopping Network,

and promotional letters to real estate and home inspection associations. In

addition to its own active efforts to disseminate information, CPSC provides

considerable amounts of information in response to requests from the

public. Like other federal agencies, CPSC must comply with the Freedom of

Information Act (FOIA) when responding to requests from the public for

information. A notable feature of FOIA is its presumption in favor of

disclosure: any person has the right to inspect and copy any government

3

In practice, CPSC rarely uses its regulatory power to order a recall, but works cooperatively with

manufacturers to carry out recalls.

4

Voluntary standards may benefit manufacturers by giving consumers added confidence in a product,

providing some degree of protection from product liability, and allowing manufacturers to benefit

from the safety expertise developed by voluntary standards groups. In addition, although federal law

does not compel manufacturers to comply with voluntary standards, state or local regulations may

incorporate some voluntary standards regarding consumer products, and some retailers prefer to carry

only those goods that comply with the applicable voluntary standards.

Page 6 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

records unless the documents requested fall within one of the exemptions

to the act (for example, disclosure of trade secrets). FOIA requests may

come to CPSC from regulated industries, the press, consumer groups, or

individuals. During calendar year 1995, CPSC responded to 16,424 formal

requests made under FOIA.

CPSC’s resource base and extensive jurisdiction require the agency to select

among potential product hazards. New initiatives may come to CPSC in

several ways. First, any person may file a petition asking CPSC to issue,

amend, or revoke a regulation. Petitions, which can be as simple as a letter

or as formal and detailed as a legal brief, have come to CPSC from doctors

and nurses, consumers and advocacy groups, and industry representatives.

CPSC may grant or deny a petition either in full or in part. Even when CPSC

denies a petition and declines to issue a regulation, it may still begin a

project to address the hazard by promoting a voluntary standard or

conducting a consumer education campaign. For example, a project on

heat tapes (heated wraps for exposed pipes) originated with a petition

from a concerned consumer. CPSC denied the petition for a mandatory

standard, but conducted a research study and review of the existing

voluntary standard for heat tapes.

Second, CPSC receives some product hazard projects from the Congress.

The Congress may require CPSC to study a wide-ranging product area. For

example, the Consumer Product Safety Improvement Act of 1990 resulted

in a large body of work on products affecting indoor air quality, including

wood stoves, kerosene heaters, and carpets. The Congress may also direct

CPSC to impose a specific regulation, such as when it directed CPSC to

require additional labeling on toys intended for children aged 3 to 6

warning parents of possible choking hazards when the toy is used by

children under age 3.5

Finally, CPSC commissioners and agency staff may initiate projects or

suggest areas to address. CPSC gathers death and injury information to help

identify potential product hazards and also obtains input from the public.

The agency maintains a toll-free hot line and an Internet site that the

public can use to notify agency staff of a possible product hazard. In

addition, CPSC holds public meetings to get input on possible hazards to

address and on which hazards should receive priority. For example, CPSC

increased its efforts to remove drawstrings from children’s clothing after

receiving a letter from a woman whose daughter was strangled when her

jacket string caught on a playground slide.

5

This mandate was imposed in the Child Safety Protection Act (P.L. 103-267, June 16, 1994).

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The selection of projects to address new product hazards takes place at

different levels of the agency throughout the year. For a petition, the

commissioners decide whether the product hazard warrants further

agency involvement, and the commissioners vote on whether to grant or

deny the petition. If a project is believed to have a high potential for

regulatory action or involve a substantial amount of agency resources, the

commissioners decide whether to pursue it. Projects of this caliber are

often noted in the agency’s annual budget and operating plan, which must

also be approved by commissioner vote.6

 Staff request a decision on such

a project by preparing a briefing package about the product hazard for the

commissioners, who vote to begin the regulatory process, take some other

action, or terminate the project. Agency staff generally may decide to

initiate projects that are unlikely to result in regulation, and no briefing

package is sent to the commissioners for a vote.7

 (Of the 115 CPSC projects

we identified, 80 (70 percent) were detailed in briefing packages.)

The scope of the agency’s projects varies greatly, and CPSC has no standard

definition of what constitutes a project. A project might cover general

product areas, such as fire hazards, or address only a specific product, like

cigarette lighters. A project might require undertaking an extensive

research study or providing technical assistance to a group that is

developing a voluntary standard.

CPSC Has Limited

Information Available

to Assist in Project

Selection

The bulk of CPSC’s workload is made up of projects selected by the agency

rather than by the Congress. CPSC has established criteria to help in project

selection, such as the numbers of deaths and injuries associated with a

product. However, CPSC is unable to accurately measure these criteria

because its data on potential hazards are incomplete. In addition, CPSC

does not maintain systematic information on past and ongoing projects,

which makes it difficult to assess and prioritize the need for new projects

in different hazard areas. The lack of comprehensive data on individual

product hazards and on agency initiatives raises questions about CPSC’s

ability to evaluate its own effectiveness—which it is now required to do

under the Government Performance and Results Act of 1993 (the Results

Act).

6

Commission votes are also taken in several other instances, such as initiating a regulation, the use of

the agency logo by outside groups, and the application of civil penalties.

7

For more information about the agency’s organization and structure, see app. II.

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B-274042 

Agency Has Considerable

Discretion in Project

Selection

CPSC has wide latitude over which potential product hazards it targets for

regulatory and nonregulatory action. Although it has little or no discretion

over projects mandated by the Congress, CPSC can choose to accept or

reject suggestions that are submitted by petition or proposed by the

agency staff. As shown in figure 2, 59 percent of CPSC projects were

initiated by CPSC, 30 percent originated from a petition, and about

11 percent resulted from congressional mandates. Of the 115 projects the

agency worked on from January 1, 1990, to September 30, 1996, 97 (about

90 percent) were chosen by the agency.8

 Data were unavailable to assess

the extent to which staff suggestions for projects were accepted or

rejected. Of the petitions filed with CPSC between January 1, 1990, and

September 30, 1996, 60 percent resulted in projects (32 percent by granting

the petition in whole or in part, and 27 percent by denying the petition to

establish a mandatory regulation but creating a nonregulatory project). In

27 percent of cases, CPSC decided that no action was needed or that

existing actions or standards were sufficient to address the issue raised by

the petition. In the remaining cases, a decision is still pending or the

petition was withdrawn before a decision was rendered.

Figure 2: Origination of CPSC Projects,

January 1, 1990-September 30, 1996

Petition

Internal

Mandate

30.0%

59.0%

11.0%

CPSC Project Selection

Criteria Open to

Differences in Emphasis

and Interpretation

CPSC has established criteria for setting agency priorities and selecting

potential hazards to address. These criteria, which are incorporated in

agency regulations, include the following:

• the frequency of injuries and deaths resulting from the hazard;

• the severity of the injuries resulting from the hazard;

8

For a listing of these 115 projects, see app. III.

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• addressability—that is, the extent to which the hazard is likely to be

reduced through CPSC action—agency regulations note that the cause of

the hazard should be analyzed to help determine the extent to which

injuries can reasonably be expected to be reduced or eliminated through

CPSC action;

• the number of chronic illnesses and future injuries predicted to result from

the hazard;

• preliminary estimates of the costs and benefits to society resulting from

CPSC action;

• unforeseen nature of the risk—that is, the degree to which consumers are

aware of the hazard and its consequences;

• vulnerability of the population at risk—whether some individuals (such as

children) may be less able to recognize or escape from potential hazards

and therefore may require a relatively higher degree of protection;

• probability of exposure to the product hazard—that is, how many

consumers are exposed to the potential hazard, or how likely a typical

consumer is to be exposed to the hazard; and

• other—additional criteria to be considered at the discretion of CPSC.

Vulnerable Populations,

Numbers of Deaths and

Injuries, and Causality

Emphasized Over Other

Selection Criteria

CPSC’s regulations allow for considerable freedom in applying these

criteria; commissioners and staff can base their project selections on what

they perceive as the most important factors. For example, the regulations

do not specify whether any criterion should be given more weight than the

others, nor must all criteria be applied to every potential project. Indeed,

our interviews with present and former commissioners and our review of

CPSC briefing packages revealed a pattern in which three criteria—the

numbers of deaths and injuries, the causality of injuries, and the

vulnerability of the population at risk—were more strongly emphasized

than the others. In addition, each of the commissioners we interviewed

identified some criteria as being more important than others for project

selection. For example, one commissioner indicated that the number of

deaths and injuries was most important, while another commissioner

included awareness of the hazard in a list of several criteria she believed

were most important. However, there was considerable agreement among

the commissioners about the importance of several criteria. The

commissioners cited two criteria—vulnerability of population and number

of deaths and injuries—as especially important for project selection. In

addition, several—but not all—commissioners emphasized causality of

injuries. None of the other criteria was emphasized by more than one or

two commissioners.

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Because the commissioners use their judgment in applying these criteria,

there is no systematic checklist or scoring system that would enable us to

determine which factors were considered most important for a particular

product. However, information related to some or all of these criteria is

sometimes contained in briefing packages and other documents. Our

review of CPSC project documentation showed that information on

vulnerable populations and the numbers of deaths and injuries associated

with the product was likely to be compiled at some time during the

project, but information associated with other criteria was less likely to be

documented. For example, of the 115 projects we reviewed, death and

injury information was available in 97 cases. However, only 26 cases

included information on exposure to the hazard, a less-emphasized

criterion.

Although data were insufficient to compare the universe of possible

projects with the ones selected by CPSC, the characteristics of CPSC projects

appear generally consistent with the stronger emphasis on death and

injury data and on vulnerable populations expressed by the current and

former commissioners. For example, while 76 of the 115 projects we

examined were directed at least partially at a vulnerable population group,

only 13 projects mentioned chronic illness. However, although the number

of deaths and injuries associated with product hazards was almost always

available in project documentation, there was no pattern of only those

projects with high numbers of injuries or deaths being selected. Of the 97

projects that had death and injury statistics, 19 showed fewer than 50

injuries and/or deaths associated with the product. The estimated number

of annual injuries associated with product hazards ranged from 1 to

162,100 (for baseball injuries), and the estimated number of deaths

associated with product hazards ranged from zero to a high of 3,600

annually (for smoke detectors). This wide range is consistent with CPSC

staff’s statement that there is no threshold for the number of deaths and

injuries that would require acceptance or rejection of a project.

Commissioners Interpret Some

Selection Criteria Differently

Although the commissioners and former commissioners we interviewed

generally agreed on the criteria they emphasized for project selection, they

expressed very different views on how some of these criteria should be

interpreted. For example, several commissioners viewed vulnerable

populations as focusing on children, while others highlighted additional

segments of the population that they considered vulnerable. One

commissioner also listed low-income and poorly educated consumers as

vulnerable populations, and another expressed concern that the elderly

were especially vulnerable to injury from product hazards. Project

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documentation focused on children more frequently than on other

population segments thought to be at special risk. Many projects we

examined contained no information in the documentation that indicated a

particular population was being considered vulnerable. However, of the 76

projects for which information was available on special populations, 69

(91 percent) mentioned children.9

Industry observers, consumer advocates, current and former

commissioners, and others expressed widely diverging views on how to

apply causality of injuries in selecting projects. All seven commissioners

we interviewed mentioned this as an important criterion, and several

stressed causal factors. A major issue surrounding the application of

causality is determining the appropriate level of protection the agency

should provide when a product hazard results, at least in part, from

consumer behavior. For example, a consumer advocate stated that

regulatory action may be necessary whatever the cause of the incident if

children who were incapable of protecting themselves get hurt. Similarly,

another individual told us that CPSC should deal with potential hazards on

the basis of the behavior that actually took place, not the behavior that

might be expected or considered reasonable. However, other individuals

asserted that CPSC should address only those hazards that result from

products that are defective—that is, products that create a hazard even

when used as intended by the manufacturer. Some industry

representatives stated that it was inappropriate for CPSC to take action

concerning a product if the product was “misused” by the consumer.

Complicating this debate is the difficulty of defining misuse of the product

or negligence of the consumer. For example, the appropriate degree of

parental supervision is frequently an issue with children’s products. One of

the agency’s more controversial projects illustrates this point. CPSC staff

conducted a project to investigate the deaths of children using baby bath

seats or rings. In these incidents, infants slipped out of the seat and

drowned in the bathtub when the parent or caregiver stepped out of the

room and left the child unsupervised, despite warning signs on the seats

not to leave children unattended. The Commission disagreed on the proper

course of action, largely because of differing views on causality. In 1994,

the staff recommended that the Commission issue an Advance Notice of

Proposed Rulemaking (ANPR), the first step in the regulatory process. The

staff argued (and one commissioner agreed) that some parents will leave a

9

Many of these projects involved children’s products, for which only children would be affected, such

as cribs or baby walkers. Other projects dealt with products the general public would be exposed to

but for which children would be more likely to receive injury, including mouthwashes with high

concentrations of alcohol and automatic garage doors that could crush a child when they close.

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B-274042 

young child alone in the bathtub regardless of a warning not to. However,

in voting against issuing an ANPR, the other two commissioners stated that

they believed regulation was not appropriate because the lack of

supervision, not the product, caused the tragedies.

CPSC staff have also encountered other instances in which the behavior of

consumers might be viewed as inappropriate. For example, the role of

alcohol and drug use in accidents can also raise questions about the

appropriate level of regulatory protection.10 In addition, a 1991 CPSC study

found that at least 33 percent of bicycle accidents involved behaviors such

as performing stunts and going too fast. Similarly, a 1991 CPSC study of

fires associated with heat tapes found that at least 38 percent of the heat

tapes had been installed improperly. In each of these cases, no regulatory

action was taken; in the case of bicycles, the staff did recommend

increasing efforts to encourage consumers to take safety precautions such

as using lights at night and wearing helmets.

Data Systems Provide

Insufficient Information to

Measure Selection Criteria,

Monitor All Projects, or

Evaluate Results

CPSC uses data from internal management systems and from external

sources to assist in project selection. CPSC collects information on

product-related deaths and injuries to provide information for project

selection as well as to perform risk assessments and cost-benefit analyses.

Furthermore, the agency maintains a computerized management

information system (MIS) that contains information on some of its major

activities and is used by the agency to develop its annual budget. Both

these internal and external data are of limited value. The inadequacy of the

information raises questions about CPSC’s ability to make informed project

selection decisions so that agency resources are being spent efficiently.

Significant Gaps Exist in

CPSC’s Data on

Product-Related Injuries and

Deaths

CPSC has developed a patchwork of independent data systems to provide

information on deaths and injuries associated with consumer products. To

obtain estimates of the number of injuries associated with specific

consumer products, CPSC relies on its National Electronic Injury

Surveillance System (NEISS). NEISS gathers information from the emergency

room records of a nationally representative sample of 101 hospitals. CPSC

also obtains information on fatalities by purchasing a selected group of

death certificates from the states. It supplements this information with

anecdotal reports from individual consumers and with data from private

organizations such as fire-prevention groups and poison control centers.

10Alcohol and drug use contributed to an estimated 1.35 million injury-related visits to hospital

emergency departments in 1992. See Cheryl R. Nelson and Barbara J. Stussman, “Alcohol- and

Drug-Related Visits to Hospital Emergency Departments: 1992 National Hospital Ambulatory Medical

Care Survey,” Advance Data, No. 251 (Aug. 10, 1994).

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Because neither NEISS nor death certificate data provide detailed

information on hazard patterns or injury causes, CPSC investigates selected

incidents to obtain more detailed information. In addition, CPSC sometimes

uses mathematical modeling techniques or conducts special surveys to

obtain information on product exposure. (For more information on CPSC’s

data sources, see app. V.)

CPSC’s data give the agency only limited assistance in applying its project

selection criteria. (These criteria, the measures used for each, and major

data limitations are given in table 1.) CPSC’s injury and death data allow the

agency to piece together at best an incomplete view of the incidents that

result from consumer product hazards. Product-related injuries may be

treated in a variety of ways—in an emergency room, in a physician’s office,

or through an outpatient clinic, for example. As figure 3 illustrates, CPSC

obtains systematic surveillance information only on deaths and on injuries

treated in the emergency room; injuries treated in other settings (such as

physicians’ offices) are not represented in CPSC’s surveillance data.

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Figure 3: Types of Death and Injury

Data Covered by CPSC’s Systematic

Surveillance Information Treated in

Physician’s

Office Treated in

ER

Hospitalized:

Admitted

Through ER

Treated in

Outpatient

Clinic

Treated at

Home

Hospitalized:

Admitted

Through 

Physician

Not

Treated 

Death

Near

Miss

Partially Covered

Covered

Not Covered

Note: Death data are considered partially included because CPSC obtains death certificates for

selected causes of death. For the other sources of treatment, CPSC may obtain some anecdotal

information from consumer reports or other sources (see app. V). The actual numbers of injuries

treated in each setting is unknown.

A “near miss” refers to an incident in which a product-related injury nearly

occurred but was narrowly averted. In its regulations that address

priority-setting, CPSC states that such incidents can be as important as

actual injuries in identifying potential hazards.

Page 15 GAO/HEHS-97-147 Consumer Product Safety Commission
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Table 1: CPSC Regulatory

Priority-Setting Criteria and Systematic

Information Available

Criterion Measure used by CPSC Major limitations

Number of deaths Number of reported deaths

where consumer product

involvement can be inferred.

Incomplete because not all

certificates are gathered and

not all product-related

incidents are coded.

Number of injuries Estimated number of injuries

involving consumer products

treated in emergency rooms.

Generally omits injuries treated

in other settings.

Severity of injuries Estimated percentage of

emergency-room-treated

injuries requiring

hospitalization.

Not representative of the

severity of all injuries treated in

all settings.

Chronic illnesses Some limited information from

emergency room diagnosis

information.

Little systematic information.

Predicted future injuries Prediction based on NEISS

data.

Of questionable validity

because of changes in

medical care over time.

Vulnerable populations Percentage of

emergency-room-treated

injuries or deaths involving

children or the elderly.

Incomplete. Information

available only on age, not on

other vulnerable populations,

such as persons with

disabilities.

Exposure Various measures, including

sales, estimated products in

use, and population.

Exposure surveys are time

consuming and expensive; not

done for all projects; done only

after project is well under way.

Addressability/

causation

Judgment based on cause of

incident, hazard pattern, and

information on product design;

investigations of selected

incidents may be conducted to

obtain this information.

Often impossible to make an

informed judgment until project

is well under way;

investigations are time

consuming and expensive.

Preliminary cost-benefit

analysis

Results of analysis. Quality data are frequently not

available; limited accuracy in

early stages of project.

CPSC staff identified the lack of data on injuries treated in physicians’

offices and other settings as a key concern. Because CPSC’s data sets reveal

only a portion of the injury picture, the agency underestimates the total

numbers of deaths and injuries associated with any given consumer

product. The extent of this undercount is unknown. For example,

researchers report widely varying estimates of the percentage of injuries

that are treated in emergency rooms as opposed to other medical settings.

For example, a 1991 study by researchers at RAND found that

Page 16 GAO/HEHS-97-147 Consumer Product Safety Commission
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approximately 65 percent of injuries were treated in the emergency room.11

 However, recent data indicate that the number of injury-related visits to

physicians’ offices alone were more than double the number of

injury-related visits to the emergency room.12 CPSC’s estimates of

product-related deaths are also undercounted, for two reasons. First, for

budgetary reasons, the agency purchases only a subset of the total number

of death certificates from states. Second, CPSC death counts include only

those cases in which product involvement can be inferred from the

information on the death certificate, and in some cases, product-related

information is not recorded.

Even if a reliable figure was available to determine the exact percentage of

product-related injuries that were treated in emergency rooms, this

percentage would not necessarily apply to any specific type of

product-related injury. For example, even if it was established that

40 percent of all product-related injuries were treated in emergency

rooms, the percentage of bunk bed injuries treated in emergency rooms

might be much larger or smaller. The setting in which injuries are treated

depends on a wide array of factors that vary among individuals, across

geographic regions, and among different types of injuries. Research

indicates that African Americans are more likely to use the emergency

room than Caucasians are.13 Access to the emergency room or to a

physician also depends on the type of medical insurance a person has. For

example, health maintenance organizations (HMO) often place restrictions

on reimbursement for emergency room care, and HMO membership as a

percentage of the total population varies widely from state to state.14 In

addition, injuries that occur at night, when most physicians’ offices are

closed, may be more likely to be treated in the emergency room. As a

result, it is unlikely that CPSC could approximate the number of injuries

associated with a specific product by using data that apply to all consumer

products as a group.

The incompleteness of CPSC’s injury information also hampers its ability to

reliably discern long-term trends in injuries, which is not only a criterion

11Deborah R. Hensler, and others, Compensation for Accidental Injuries in the United States (Santa

Monica, Calif.: RAND, 1991).

12See Susan M. Schappert, “National Ambulatory Medical Care Survey: 1992 Summary,”Advance Data

No. 253 (Aug. 18, 1994), and Linda F. McCaig, “National Hospital Ambulatory Medical Care Survey:

1992 Emergency Department Summary,” Advance Data, No. 245 (Mar. 2, 1994).

13See Linda F. McCaig, “National Hospital Ambulatory Medical Care Survey: 1992 Emergency

Department Summary,” p. 1.

141996 figures from InterStudy show that while only 1.2 percent of individuals in Mississippi belonged

to HMOs, 44.8 percent of individuals in Oregon were HMO members. See The InterStudy Competitive

Edge: HMO Industry Report 6.2, InterStudy Publications (1996), p. 28.

Page 17 GAO/HEHS-97-147 Consumer Product Safety Commission
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for project selection but also an important factor for evaluating the

success of CPSC’s injury-reduction efforts and determining the need for

follow-up actions. The relative sizes of the pieces of the injury puzzle in

figure 3 are unknown but appear to change over time. For example,

hospitalizations decreased by 5 percent on a per capita basis between 1982

and 1994, while between 1983 and 1993, hospital outpatient clinics saw a

53-percent increase in visits on a per capita basis.15 As a result, it is

impossible to determine whether any change in the number of emergency

room visits represents a true change in injuries or a shift to other medical

settings.16

According to CPSC staff, identifying chronic illnesses associated with

consumer products is nearly impossible. CPSC staff stated that little is

known about many chronic illness hazards that may be associated with

potentially dangerous substances, and even less information is available

about which consumer products may contain these substances. Chronic

illnesses are especially likely to be underestimated in CPSC’s NEISS data

because they are underrepresented among emergency room visits and

because product involvement is more difficult to ascertain. Similarly,

consumer product involvement is very seldom recorded on death

certificates in cases of chronic illnesses.

CPSC’s surveillance data also give an incomplete picture of the severity of

incidents. Although the data capture many relatively severe injuries—that

is, those that result in death or require treatment in an emergency medical

facility—data are missing for individuals who are admitted to the hospital

through their physician rather than through the emergency room.

Potentially less severe cases—for example, those treated in physicians’

offices, walk-in medical centers, or hospital outpatient clinics—are not

represented at all in CPSC’s

systematic surveillance data systems, and consequently, CPSC has no data

on some consumer product problems that may result in numerous but

potentially less severe injuries.

Sketchy information about accident victims also limits CPSC’s ability to

assess which consumer product hazards have a disproportionate impact

on vulnerable populations. NEISS and death certificates provide only the

15These figures were derived from data provided by the American Hospital Association.

16Precise estimates on the impact of changing treatment patterns are rare, and the impact may vary

among local areas. However, one research team found that because of the growth in alternative

facilities in their local area, emergency rooms handled about half of outpatient injury cases—down

from a previous estimate of 75 percent. See Julian A. Waller, Joan M. Skelly, and John H. Davis,

“Treated Injuries in Northern Vermont,” Accident Analysis and Prevention, 27 (6) (1995), pp. 819-28.

Page 18 GAO/HEHS-97-147 Consumer Product Safety Commission
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age of the victim; no systematic or comprehensive information is available

to determine whether a given hazard has a special impact on other

vulnerable populations, such as persons with disabilities. A former

commissioner told us that the lack of other demographic information such

as race, income, and disability status made it difficult for her to know

which subpopulations were predominantly affected by a particular hazard.

Another commissioner echoed this concern, and said that such

information would be useful in targeting public information campaigns on

certain hazards to those groups that needed the information most.

CPSC staff identified the need for additional exposure data as a major

concern. However, they also told us that obtaining information on

exposure to products and establishing causation requires special efforts

that can be time consuming and costly. Although CPSC’s priority-setting

criteria include exposure to the hazard, exposure data are generally not

included in CPSC’s ongoing data collection efforts. As a result, exposure is

assessed either not at all or further along in the project, precluding the use

of exposure as an effective criterion for project selection. Similarly, CPSC’s

emergency room and death certificate data provide little information on

the circumstances surrounding the incident. As a result, CPSC staff perform

follow-up investigations of selected incidents to obtain additional detail.

These investigations may include detailed interviews with victims and/or

witnesses, police or fire reports, photographs of the product and/or

accident site, laboratory testing of the product, or recreations of the

incident. As with exposure data, these investigations are not conducted for

every project and are completed only after a project is well under way.

Thus, assessment of causation at the project selection stage is unavoidably

speculative.

Agency Project Management

Information Incomplete or

Unavailable

CPSC conducts a number of projects annually, but staff were unable to

provide a comprehensive list of projects the agency had worked on in the

6-year period we examined. CPSC was also unable to verify the

completeness of the project list we compiled from agency documents and

interviews with staff. According to CPSC staff, internal management

systems do not contain this information and such a list could be compiled

only by relying on institutional memories of staff members who had been

with the agency long enough to know which products the agency had

addressed. Without systematic and comprehensive information on its past

efforts, CPSC cannot assess whether some hazard areas have been

overrepresented and whether agency resources might be more efficiently

employed.

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CPSC also lacks information on the characteristics of, resources used on, or

outcomes of individual projects. CPSC’s MIS tracks contract dollars and staff

time by accounting codes that cover some specific projects and general

categories, such as compliance work, which are composed of numerous

activities. According to agency officials, CPSC’s MIS generally cannot

provide descriptive information on individual projects, such as when a

project was started or concluded; the number of staff days used; what

aspect of the product was addressed; whether the project originated from

a petition, congressional mandate or other source; or what action was

taken to address the hazard (mandatory standard, voluntary standard, or

public information campaign, for example). In addition, CPSC staff told us

that two separate projects involving the same or similar products at

different times may be assigned the same MIS code. As a result, even if a

project appears to be tracked in the MIS, reliable inferences cannot be

drawn from MIS data.

CPSC Has Limited Ability to

Evaluate Agency Impact

CPSC’s limited data on deaths and injuries, combined with its lack of

information on projects, reduce the agency’s ability to evaluate the impact

of its work, a process it is now required to undertake under recently

passed legislation. The Results Act requires every federal agency to

evaluate the effectiveness of its efforts starting in fiscal year 1999. The

Results Act is aimed at increasing the investment return of tax dollars by

improving agencies’ performance. Under the Results Act, an agency is to

set mission-related goals and measure progress toward these goals to

evaluate agency impact. CPSC has preliminarily identified results-oriented

goals in four areas: (1) reducing head injuries to children, (2) reducing

deaths from fires, (3) reducing deaths from carbon monoxide poisoning,

and (4) reducing deaths from electrocutions. However, the limitations in

CPSC’s injury and death data raise a question about how well CPSC will be

able to evaluate the effectiveness of agency actions in these and other

areas.

CPSC Uses

COST-BENEFIT

Analysis and Risk

Assessment, but

Improvements Are

Needed in Data and

Methodology

CPSC uses two analytical tools—risk assessment and cost-benefit

analysis—to assist in making decisions on regulatory and nonregulatory

methods to address potential hazards. Risk assessment involves estimating

the likelihood of an adverse event (such as injury or death). For example,

CPSC estimated that the risk of death from an accident involving an

all-terrain vehicle (ATV) was about 1 death for every 10,000 ATVs in use in

1994. Cost-benefit analysis details and compares the expected effects of a

proposed regulation or policy, including both the positive results

(benefits) and the negative consequences (costs). Although cost-benefit

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analysis may not be applicable to every decision and may not be the only

factor appropriately considered in a decision, it can be a useful

decision-making tool. The Congress requires CPSC to perform cost-benefit

analysis before issuing certain regulations, and CPSC has conducted

cost-benefit analysis for these regulations and in other situations in which

it was not required. Although perfectly complete and accurate data are

rarely available for any analysis, CPSC’s data are frequently inadequate to

support detailed, thorough, and careful risk assessment and cost-benefit

analysis. In addition, CPSC’s cost-benefit analyses are frequently not

comprehensive, and the reports on these analyses are not sufficiently

detailed. Improvements in the agency’s methodology and in the quality of

the underlying data are necessary to ensure the clarity and accuracy of

CPSC’s risk assessments and cost-benefit analyses.

CPSC Performs

Cost-Benefit Analysis More

Often Than Required by

Law

Cost-benefit analysis can help decisionmakers by organizing and

aggregating all the relevant information to clarify the nature of the

trade-offs involved in a decision. Although cost-benefit analysis may not be

appropriately used as the sole criterion for making a decision, a

well-constructed cost-benefit analysis can highlight crucial factors, expose

possible biases, and facilitate informed decisions even when it is

impossible to measure all the potential effects of a specific regulatory

proposal. The Congress has required CPSC to perform and publish a

cost-benefit analysis when issuing a regulation (such as a mandatory

standard or product ban) under the Consumer Product Safety Act. In

addition, CPSC is also required to conduct cost-benefit analyses before

issuing regulations under the authority of portions of the Federal

Hazardous Substances Act (specified labeling provisions are exempt from

this requirement) and the Flammable Fabrics Act.17

Because most of the agency’s projects do not involve mandatory

regulation, relatively few CPSC projects conducted between January 1,

1990, and September 30, 1996, were subject to these requirements. We

identified 8 cost-benefit analyses that CPSC performed in accordance with

these requirements, and an additional 21 analyses it conducted in

situations in which it was not required. For example, CPSC performed

cost-benefit analyses in eight instances in which it was considering issuing

requirements for child-resistant packaging under the Poison Prevention

17As an independent agency, CPSC is not required to comply with Executive Order 12866, which

requires federal agencies to perform a cost-benefit analysis and submit it to the Office of Management

and Budget (OMB) for review whenever the agency issues a regulation that is economically significant.

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Packaging Act, which does not require cost-benefit analysis.18 CPSC

frequently conducts cost-benefit analysis with respect to regulatory

procedures, whether or not it is required to do so. However, a complete

cost-benefit analysis is done less frequently for voluntary standards

projects or information and education efforts, although some economic

information may be generated to assist such projects. In addition to the

complete cost-benefit analyses, we identified an additional 23 cases in

which some information was provided on some economic benefits or

costs.

Before issuing a mandatory regulation, CPSC is required to consider the

degree and nature of the risk of injury the regulation is designed to

eliminate or reduce. However, CPSC usually does not conduct a formal

numerical risk assessment before issuing a regulation, and the law does

not require it. We found 24 risk assessments conducted by CPSC between

January 1, 1990, and September 30, 1996; only 4 of these were associated

with regulatory action.

Agency Data Are Generally

Insufficient to Support

Thorough and Detailed

Analysis

Both risk assessment and cost-benefit analysis require extensive data. Risk

assessment requires information both on the adverse event and on

exposure to the precipitating circumstances. For example, when CPSC

performed a risk assessment on floor furnaces, the agency estimated the

number of previous injuries associated with floor furnaces and the number

of floor furnaces in use.19 Similarly, when CPSC performed a risk

assessment to examine the risk of contracting cancer from dioxin traces in

common paper products, the agency used information from laboratory

studies on dioxin’s link to cancer and also incorporated data on exposure

to paper products.20 Because cost-benefit analysis includes a

comprehensive delineation of the expected effects of a given proposal, a

careful and thorough cost-benefit analysis will also be very data intensive

and rich with detail.

CPSC’s data systems are frequently unable to adequately meet the extensive

demands for information posed by risk assessment and cost-benefit

analysis. As a result, the agency’s estimates of risks, costs, and benefits are

18For child-resistant packaging regulations, CPSC is legally required to consider only whether requiring

child-resistant packaging is “technically feasible, practicable, and appropriate.”

19CPSC found that the risk of injury associated with floor furnaces was small in terms of the number of

incidents but relatively higher when considered in relation to the number of products in use.

20CPSC’s study found that the risk from this type of dioxin exposure was negligible—at most, 5 cases

per billion people exposed—and as a result no action was taken.

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less accurate because they reflect the substantial limitations of the

underlying data. Available information does not permit us to determine the

potential impact of better data on the results of CPSC’s cost-benefit

analyses and risk assessments. Some of these data weaknesses tend to

make product hazard risks seem larger, and other problems tend to make

the same risks appear smaller. For example, because CPSC’s data

undercount the deaths and injuries associated with particular consumer

products, estimates of risk—and the potential benefits of reducing that

risk—appear smaller. However, CPSC’s surveillance data provide

information only on whether a product was involved in an accident, not on

whether the product caused the accident. At least at the initial stages of a

project, this can make the risks assessed by CPSC—and the benefits of

reducing those risks—appear larger.

For risk assessment, CPSC must also obtain information on exposure to the

hazard. For example, to assess the risk associated with aluminum ladders,

CPSC obtained estimates of the number of ladders available for use and on

the number of times each year the ladder was used. Obtaining exposure

data presents special challenges for CPSC. Because the product definition

that relates to a particular hazard is often relatively narrow, existing data

sources frequently offer insufficient detail. For example, CPSC was unable

to use Census sources to determine the number of saunas in the United

States because saunas were included in a broader classification of

products when government data were collected. In addition, CPSC staff told

us that it is often difficult to find accurate information on the number of

products that are in households and available for use.

CPSC sometimes responds to these challenges by using mathematical

modeling techniques or easier-to-obtain proxy measures (such as

population) to estimate product exposure. In addition, for a few

large-scale projects, CPSC has incurred the substantial expenses necessary

to conduct its own detailed exposure survey. For example, CPSC conducted

a survey of households that asked detailed questions on matches and

disposable cigarette lighters—the number purchased, where they are

generally kept, how they are used, and other details. However, for the

majority of the projects we reviewed, CPSC did not gather any data on

exposure. Of the 80 projects we reviewed for which briefing packages

were prepared, only 26 included information on exposure to the hazard,

and CPSC’s risk assessments were confined to 24 cases between 1990 and

1996—approximately 21 percent of all projects conducted over that time

period.

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CPSC Cost-Benefit

Analyses Are Often Not

Comprehensive and Not

Reported in Sufficient

Detail

The methodology used to conduct a cost-benefit analysis will frequently

depend on the circumstances and the context of the analysis. For this

reason, there is no complete set of standards for evaluating the quality of

an individual cost-benefit analysis. However, the professional literature

offers some guidance for analysts, and certain specific elements are

frequently mentioned as essential for cost-benefit analysis. For example,

because cost-benefit analysis is meant to be a complete delineation of the

expected effects of a proposed action, all potential impacts (even those

that cannot be quantified) should be discussed. To ensure that the reader

is able to make an informed judgment, it is important to be explicit about

the underlying data, methodology, and assumptions. Accordingly, the

literature suggests that all methodological choices and assumptions should

be detailed, all limitations pertaining to the data should be revealed, and

measures of uncertainty should be provided to allow the reader to take

into account the precision of the underlying data. Similarly, the literature

calls for sensitivity analysis, which enables the reader to determine which

assumptions, values, and parameters of the cost-benefit analysis are most

important to the conclusions.

On the basis of our review of the cost-benefit literature, we developed a

list of the elements that are frequently used in evaluating cost-benefit

analysis. This list, and a description of all the factors we examined, is in

appendix IV.21 Although we compared each of these elements with each of

CPSC’s analyses, not all elements were applicable to each case. For

example, in some cases, the circumstances indicated by a given

element—such as reliance on statistical data—were not found, and those

cases were treated as not applicable to that element. In addition, for some

elements it was not always possible to determine whether CPSC’s analysis

was consistent with the element. For these reasons, and to emphasize

those areas that we viewed as most critical, we reported only the

evaluation results that relate to key elements, applied to the majority of

CPSC’s analyses, and for which a determination was possible in all or nearly

all cases.

Our review of all the cost-benefit analyses that CPSC conducted between

January 1, 1990, and October 31, 1996, showed that for many—but not

all—elements, CPSC’s analyses were not comprehensive and not reported in

sufficient detail (see table 2). For example, CPSC provided descriptive

information on proposals and also provided information on a variety of

reasonable alternatives in almost 100 percent of cases. However, CPSC

21These elements are also similar to guidance OMB issued in January 1996 for preparing economic

analyses of significant regulatory actions.

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analyses generally did not provide measures of uncertainty for the

underlying data. Estimates derived from samples are subject to sampling

error, which can be especially large when the estimates are projected from

relatively fewer cases. In only 17 percent of its analyses did CPSC provide

any statistical information on the precision of the underlying estimates.

Similarly, when estimates are based on a relatively small sample size,

projections are generally not considered reliable. CPSC analysts cautioned

the reader against making conclusions based on small sample data only

45 percent of the time. In addition, some of CPSC’s data sets have a known

upward or downward bias because of the way the data were constructed.

For example, CPSC’s estimates of deaths based on CPSC’s death certificate

database will be understated, and when estimates of incidents are based

only on investigated or reported cases (such as cases reported to CPSC’s

hot line), two potential biases are likely to be introduced into the analysis:

(1) the estimates are likely to be biased downward by nonreporting and

(2) the incidents reported tend to be the more severe ones. In only

53 percent of applicable cases did CPSC’s analysis inform the reader of

known limitations inherent in the data being used for cost-benefit analysis.

Table 2: Evaluation of CPSC Analyses

Shows Inconsistencies With Several

Evaluation Elements

Evaluation element

Percentage of

CPSC’s analyses

that were consistent

with this element

Provided descriptive information about a well-defined proposal 98

Addressed multiple alternatives 95

Reported measures of precision for underlying data 17

Cautioned reader about making inferences from data with a small

sample size 45

Reported known biases in underlying data 53

Provided any sensitivity analysis information 26

Included all important categories of benefits and costs 54

Considered “risk-risk” trade-offsa 49

aA “risk-risk” trade-off refers to an action to decrease a hazard’s risk that unintentionally increases

that or another risk.

We identified several other areas in which CPSC analyses could benefit

from improvement. For example, researchers agree that sensitivity

analysis—a technique that enables the reader to determine which

assumptions, data limitations, or parameters are most important to the

conclusions—should be incorporated in cost-benefit analyses. CPSC usually

did not provide sensitivity analysis information. For example, agency

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briefing packages did not include any information on how CPSC’s injury

cost estimates were derived or what factors were the largest components

of injury costs. CPSC applies a statistical model to injury estimates to derive

a figure for injury cost. The model that computed injury cost estimates

accounts for a number of components, including medical costs, forgone

wages, and pain and suffering. With only one exception, CPSC briefing

packages provided only the total cost, without any information on the

derivation of those costs or the individual components. In addition, CPSC

provided only an average injury cost, not a range of injury cost estimates.

For situations in which injuries differ in severity, or for projects in which

severity is probably overstated or understated in the data, the reader

would find such information useful.

Forty-six percent of CPSC analyses did not consider the full range of costs

and benefits likely to result from regulation. For example, CPSC analysts

frequently omitted mentioning intangible costs and/or benefits (costs or

benefits that are difficult to quantify, such as loss of consumer enjoyment)

or potential indirect effects (such as changes in the prices of related

goods). In addition, CPSC frequently excluded risk-risk considerations from

its evaluation of the costs and benefits of potential actions. Sometimes

actions taken to reduce one risk can have the unintended effect of

increasing that or another risk. Individuals may take more or fewer

precautions in response to a change in a product’s safety features, and this

behavior can result in an increase in the risk the intervention was designed

to mitigate. For example, in establishing a standard for child-resistant

packaging that was also “senior-friendly,” CPSC considered that because

child-resistant medicine bottles can be difficult to open, a grandparent

may leave the cap off the bottle, creating an even greater risk than would

be the case with the original cap. Although CPSC considered such factors in

some cases, only 49 percent of its analyses reflected potential risk-risk

trade-offs.

CPSC has not established internal procedures that require analysts to

conduct comprehensive analyses and report them in sufficient detail. For

example, according to CPSC staff, the agency has little written guidance

about what factors should be included in cost-benefit analyses, what

methodology should be used to incorporate these factors, and how the

results should be presented. Staff also told us that CPSC analyses are not

generally subject to external peer review. Such reviews can serve as an

important mechanism for enhancing the quality and credibility of the

analyses that are used to help make key agency decisions.

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CPSC Has Established

Procedures for

Complying With

Statutory

Requirements for

Releasing

Manufacturer-Specific

Information

To help minimize the possibility that a product might be unfairly

disparaged, in section 6(b) of the Consumer Product Safety Act the

Congress imposed restrictions on the disclosure of manufacturer-specific

information by CPSC.

22 Before CPSC can disclose any information that

identifies a manufacturer,23 the agency must

• take “reasonable steps” to verify the accuracy of the information and to

ensure that disclosure is fair,

• notify the manufacturer that the information is subject to release, and

• provide the manufacturer with an opportunity to comment on the

information.

If the manufacturer requests that its comments be included in CPSC’s

disclosure of the information, CPSC can release the information only if

accompanied by the manufacturer’s comments. If the manufacturer

objects to the release even if its comments are included, it can challenge

CPSC in U.S. district court to block disclosure. These restrictions on the

release of information apply not only to information the agency issues on

its own—such as a press release—but also to information disclosed in

response to a request under FOIA. In addition, section 6(b) also requires

CPSC to establish procedures to ensure that releases of information that

reflect on the safety of a consumer product or class of products are

accurate and not misleading, regardless of whether the information

disclosed identifies a specific manufacturer.

CPSC has established procedures to implement these requirements,

including requiring technical staff to “sign off” on information releases and

notifying manufacturers. Evidence from several sources—industry

sources, published legal decisions, and agency retractions—suggests that

CPSC has complied with its statutory requirements. CPSC staff and

commissioners, industry representatives, and consumer advocates

expressed a wide variety of opinions on the effectiveness of these

requirements, and some individuals favored specific changes.

22An exception to these restrictions is given if CPSC has declared that the product is an “imminent

hazard” under section 12 of the Consumer Product Safety Act.

23These restrictions also apply even if the manufacturer is not named but the information would allow

the reader to readily identify the manufacturer from the context. For example, if there is only one

manufacturer of a product that is identified in the information, the information may be subject to

restriction even if the manufacturer’s name is not given.

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CPSC Has Established

Procedures for Verifying

and Clearing Information

for Release

Part of CPSC’s mission is to provide the public with information to help

individuals use consumer products safely. CPSC disseminates information

through its own initiatives and also in response to requests from the

public. For example, CPSC informs both consumers and businesses about

product hazards through product recall notices, provision of information

at trade shows and special events, and a telephone hot line and Internet

site. In addition, CPSC responds to thousands of telephone and written

requests for information each year.

CPSC’s mission and its responsibility under FOIA require the agency to

disseminate a great deal of information. However, because much of this

information is about specific products or manufacturers, CPSC’s

information disclosure is often restricted under section 6(b). In its

regulation implementing section 6(b), CPSC established several measures

designed to ensure compliance with the statutory requirements. These

measurers include obtaining written verification from consumers of the

information they report to the agency, notifying manufacturers by certified

mail when manufacturer-specific information is requested, and giving

manufacturers the option of having their comments published along with

any information being disclosed.

CPSC’s procedures outline several steps to verify all information before it is

released. For example, CPSC checks each report the agency receives from

consumers about incidents involving potentially hazardous products to

ensure that CPSC’s records accurately reflect the consumer’s version of the

incident. Agency procedures require staff to send a written description of

each incident back to the person who reported it with a request that he or

she review it and state if any information needs to be corrected or

supplemented.24 The commission staff review each of these incident

reports for discrepancies or any obvious inaccuracies. Once they have

been checked and confirmed with the consumer, incident reports are

made available to the public upon request. If the reports contain

information that would identify a specific manufacturer, they are subject

to 6(b) requirements regarding disclosure.

CPSC also investigates events surrounding selected product-related injuries

or incidents. Investigation reports provide details about incident sequence,

human behavior factors, and product involvement. The reports generally

contain the consumer’s version of what happened and the observations of

witnesses, fire and police investigators, and others. Investigations may

24The cover letter that accompanies the incident report also asks recipients if they would like to have

their names withheld if information about the incident is made public.

Page 28 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

also include follow-up inspections at retail stores or service centers.

However, neither investigations nor incident reports include the

manufacturer’s view of the incident. Its point of view may be expressed in

comments it submits before the report is released. Like incident reports,

investigation files are available to the public upon request and are subject

to 6(b) requirements.

CPSC has issued clearance procedures to cover situations in which

commissioners or staff initiate public disclosures—for example, when the

Commission publishes the results of agency research. These procedures

are intended to verify any information—oral or written—released by the

Commission, regardless of whether the information identifies a

manufacturer. Under CPSC’s guidelines, each assistant or associate

executive director whose area of responsibility is involved must review

the information and indicate approval for the release in writing.25 After all

other review has been completed, the Office of the General Counsel must

also review and approve the release. Press releases with respect to

product recalls are written and issued jointly by CPSC and the affected

manufacturer. In addition, CPSC’s clearance procedures for press releases

state that final clearance must be obtained from the Office of the

Chairman of the Commission.26 In addition, CPSC staff told us that the

current chairman’s policy of coordinating media inquiries through the

Office of Public Affairs is intended to ensure that information provided is

in compliance with section 6(b).

CPSC has also established procedures to implement the notification and

comment provisions of section 6(b). Before CPSC releases information in

response to an FOIA request, an information specialist determines whether

a manufacturer could be readily identified. CPSC staff said that agency

policy is to clearly and narrowly identify hazardous products (including by

manufacturer) whenever possible, in order to prevent the person receiving

the information from confusing safe products with unsafe products of the

same type. However, if an information request is broad, like “all bicycle

accidents,” names of manufacturers are removed before the information is

released, according to CPSC staff. If the requested information could

identify a manufacturer, then staff review the information for appropriate

exemptions (such as trade secrets), and delete portions as appropriate.

The manufacturer is given 20 calendar days in which to review and

25For a description of CPSC’s directorates, see app. II.

26An exception is made for those hazards considered by the Compliance staff as most serious, for

which clearance must be obtained from a majority of the commissioners.

Page 29 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

comment on a summary of the information CPSC plans to release.27

Because CPSC often receives multiple requests for the same information,

the agency informs manufacturers that it will not send them copies of

subsequent requests for the same information unless specifically requested

to do so. However, according to CPSC staff, more than 80 percent of the

manufacturers that submit 6(b) comments routinely request such

notification. In calendar year 1993 (the most recent year for which data

were available), CPSC sent out 487 notices to manufacturers and received

154 responses (32 percent). Twenty-five manufacturers (5 percent)

contested the accuracy of the information or claimed that the proposed

disclosure would be unfair.

If a manufacturer fails to comment, the information can be released 30

days from the date CPSC notified the manufacturer. After taking the

manufacturer’s comments into account, CPSC may decide to disclose

incident information despite the firm’s objection if, for example, the

comments lack specific information to support a claim of inaccuracy or a

request for confidentiality. If CPSC chooses to disclose information over a

manufacturer’s objection, it must release the manufacturer’s comments

along with the other information, unless the manufacturer requests

otherwise. In addition, if CPSC decides to release information and the

manufacturer objects, the manufacturer has 10 working days to go to court

and seek to enjoin CPSC from disclosing the information. Manufacturers

have sued CPSC to prohibit disclosure of records only 11 times since the

agency was founded, and CPSC was prohibited from releasing the

information in 2 of these cases.28

Evidence Suggests That

CPSC Complies With Legal

Requirements Regarding

the Release of Information

Information from three sources of evidence—industry, published legal

cases, and data on retractions—suggest that CPSC complies with its

statutory requirements concerning information release. Industry sources,

even those otherwise critical of the agency, told us that CPSC generally

does a good job of keeping proprietary information confidential as

required by law. Our review of published legal decisions found no rulings

that CPSC violated its statutory requirements concerning the release of

information. Retractions by CPSC are also rare. If CPSC finds that it has

disclosed inaccurate or misleading information that reflects adversely on

any consumer product or class of consumer products or on any

27Since small companies may lack the technical ability to comment, CPSC staff told us that they will

sometimes help small businesses to formulate their comments.

28Currently, Daisy Manufacturing, Inc. v. CPSC is on appeal, after a judge ruled in CPSC’s favor in U.S.

district court.

Page 30 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

manufacturer, it must publish a retraction. Any retraction must be made in

the same manner in which CPSC released the original information.

According to CPSC, it has published only three such retractions. Two of

these retractions, in 1984 and 1994, were made in response to requests

from firms. A third retraction, in 1990, was issued after CPSC discovered

that a report in its public reading room had mistakenly included inaccurate

information.

Industry Observers,

Consumer Groups, and

Others Suggested Changes

to 6(b) Requirements

Industry observers, CPSC staff, and consumer groups expressed a wide

range of opinions on the effectiveness of section 6(b). In response to our

inquiries, some CPSC commissioners and former commissioners said that

these restrictions serve a useful purpose and should not be changed.

However, CPSC’s current chairman, industry and advocacy group

representatives, and others expressed dissatisfaction with 6(b), and some

of these suggested possible changes. Although these individuals raised

issues about the extent of the protection afforded to manufacturers and

the resources necessary to ensure compliance, we did not assess whether

the specific suggestions were necessary or feasible.

CPSC’s chairman, other CPSC officials, former commissioners, and the

representative of a consumer advocacy group stated that compliance with

6(b) is costly for CPSC and delays the agency in getting information out to

the public. Although CPSC has not estimated the cost of complying with

6(b), agency staff told us that it takes much more staff time to respond to

FOIA requests that come under 6(b) than it does to respond to FOIA requests

that do not involve company names. To reduce the burden of complying

with these requirements, CPSC staff have suggested that the notification

requirement that gives manufacturers 20 days in which to comment should

apply only the first time an item is released. Some have suggested that

instead of requiring CPSC to verify information from consumer complaints,

the agency should be allowed to issue such information with an explicit

disclaimer that CPSC has not taken a position on the validity of the

consumer’s report.

Instead of reducing CPSC’s verification requirements, some industry

representatives suggested expanding them. These manufacturers stated

that before CPSC releases incident information, it should substantiate the

information rather than relying on a consumer’s testimony. Industry

representatives stated—and CPSC staff confirmed—that many of the

requests for CPSC information come from attorneys for plaintiffs in product

liability suits. As a result, some industry representatives expressed

Page 31 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

concern that unsubstantiated consumer complaints could be used against

them in product liability litigation. They suggested that 6(b) should require

CPSC to substantiate all incident reports by investigating them before they

can be disclosed instead of merely checking with the consumer as it does

now. However, CPSC officials told us that investigations—which are time

consuming and costly—can be conducted only on a small proportion of

specially selected cases because of limited resources.

Industry representatives also said that the current restrictions do not

provide sufficient protection when information is released on product

groups instead of on the products of an individual manufacturer. Several

industry representatives expressed concern that producers of safer

products may be unfairly maligned when CPSC releases information about a

group of products, only some of which may be associated with a safety

problem. According to some of these industry representatives, CPSC should

extend protection to product groups similar to the safeguards

manufacturers receive under 6(b).

Retailers’ representatives also suggested specific changes to CPSC’s

information release requirements. They said that retailers do not receive

timely notice of recalls because CPSC has interpreted the law to prohibit

advance notification of retailers. Consequently, the retailers said that they

sometimes receive notice of recalls at the same time as their customers

and have no time to prepare. For example, when consumers come in with

recalled products, the retailer may not yet know whether the manufacturer

has agreed to replace the product, refund the purchase price, or provide

some other remedy. Retailers’ representatives suggested amending 6(b) to

give 5 business days’ advance notice to retailers before the public

announcement of a recall. CPSC officials said that typically manufacturers

are and should be the ones to contact the retailers and make all

arrangements for a recall. Although they disagreed on the need for a

statutory change, both CPSC staff and a major retailers’ association said

that they were trying to work out a more satisfactory arrangement.

Conclusions CPSC’s current data provide insufficient information to monitor ongoing

projects and to determine whether potential projects adhere to the

agency’s selection criteria. Moreover, inadequate agency data often

prevent CPSC from conducting risk assessments on projects, potentially

limiting the agency’s ability to target resources to the hazards presenting

the greatest risks. The lack of sufficient data, combined with

methodological problems, also makes CPSC’s cost-benefit analyses less

Page 32 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

useful than they could be. With more detailed information on both internal

resources and external product hazards, CPSC would be better able to

assure the Congress and taxpayers that its resources are expended wisely.

We identified several key areas where CPSC management could improve its

collection and analysis of external data. For example, CPSC would be better

able to make informed decisions on potential agency projects if it had

additional statistically reliable and timely data in several areas, including

(1) injuries treated outside of hospital emergency rooms; (2) exposure to

consumer products and product-related hazards; (3) chronic illnesses

related to consumer products; and (4) hazards that disproportionately

affect certain vulnerable populations, such as low-income individuals and

consumers with disabilities.

In addition, project selection and implementation could be improved if

commissioners and staff had tracking information on CPSC projects, such

as starting and ending dates, project origin, project costs (including staff

days and contract costs), and agency actions taken to address the

potential hazard. Such information could assist the commissioners in

monitoring ongoing projects, targeting new efforts on the basis of previous

work, and assessing the allocation of resources across current projects

and among major hazard areas.

CPSC could also benefit from an improved methodology for cost-benefit

analysis. A stronger methodological base for CPSC’s cost-benefit analyses,

including more complete documentation, would promote sound regulatory

decision-making and could improve the quality of the input and comment

CPSC receives during the regulatory process.

Without these improved data, CPSC will remain unable to accurately apply

measurable criteria in choosing projects or to rigorously assess relative

risks among potential hazards. Some of this necessary information—the

need for more representative and complete injury and exposure data, for

example—may require a significant investment of resources, so CPSC may

need to prioritize these data needs. In doing so, is important for CPSC to

draw on the insight of individuals outside the agency to ensure that all

available alternatives for obtaining these data are explored. Some of the

other information CPSC needs, however, could be compiled internally at

relatively little additional cost and effort. For example, more detailed

information on individual projects could be collected within the agency.

Similarly, the methodological problems we identified in CPSC’s cost-benefit

analysis could be remedied without additional data.

Page 33 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

Recommendations We recommend that the Chairman of CPSC take the following actions:

• Improve the quality of CPSC’s injury, death, and exposure data by

consulting with experts both within and outside the agency to

(1) prioritize CPSC’s needs for additional statistically valid surveillance data

on injuries and deaths related to consumer products and on exposure to

consumer products and product-related hazards, (2) investigate the

feasibility and cost of alternative means of obtaining these data, and

(3) design data systems to collect and analyze this information.

• Direct agency staff to develop and implement a project management

tracking system to compile information on current agency projects. For

each project, such a system should include, at a minimum, a description of

the hazard addressed, start and end dates, project origin, and major

agency action resulting from it.

• Direct agency staff to develop and implement procedures to ensure that all

cost-benefit analyses performed on behalf of CPSC are comprehensive and

reported in sufficient detail, including providing measures of precision for

underlying data, incorporating information on all important costs and

benefits, and performing sensitivity analysis.

Agency Comments We received two separate sets of comments from CPSC’s

commissioners—one from Chairman Brown and Commissioner Moore and

one from Commissioner Gall. CPSC staff also submitted some technical

comments, which we incorporated in the report as appropriate.

Chairman Brown and Commissioner Moore stated that they are

considering our recommendations and that in some respects our

recommendations parallel efforts already under way at the Commission.

However, they disagreed with some of the specific findings of our report.

They stated that CPSC’s actions are based on solid injury and death

estimates and that CPSC (1) employs sound economic analyses that are

appropriate for the circumstances, (2) tracks projects to monitor the

progress of its work, and (3) has been successful in dramatically reducing

the threat to consumers from unsafe products. We concluded that CPSC’s

death and injury data are generally insufficient to support the agency’s

project selection process for two reasons: (1) CPSC has little or no data on

several project selection criteria and (2) CPSC’s data on its other project

selection criteria exhibit significant gaps. Similarly, our finding that CPSC’s

cost-benefit analyses were not comprehensive and not reported in

sufficient detail supports our conclusion that these analyses were less

useful than they could have been in the agency’s decision-making process.

Page 34 GAO/HEHS-97-147 Consumer Product Safety Commission
B-274042 

Because CPSC’s current management information system operates at a very

high level of generality and (according to CPSC staff) does not produce

consistent, reliable information, we recommend that the agency

implement an improved tracking system that would provide enough

information to monitor the projects selected and the resources spent for

each hazard. We did not review whether CPSC’s actions had been

successful in reducing the number of injuries and deaths associated with

consumer products. The full text of Chairman Brown and Commissioner

Moore’s detailed comments and our response are in appendix VI.

Commissioner Gall stated in her comments that she is looking forward to

implementing many of the reforms we recommended. She also stated that

she agrees with our conclusion that CPSC could improve the way it gathers

information, including reassessing the need for injury data gathered

outside of hospital emergency rooms. Commissioner Gall also agreed that

CPSC needs an improved system to track ongoing activities or projects and

that sensitivity analysis, measures of uncertainty, and risk-risk analysis

should be incorporated into CPSC analyses. However, she also commented

that additional GAO analysis of the implications of inadequate data could

have been helpful. Unfortunately, available information does not permit us

to determine the impact of better-quality data on the decisions made by

CPSC. In addition, Commissioner Gall said that she believes the Compliance

function of CPSC also warrants further review. Such a review is outside the

scope of this report. Commissioner Gall’s detailed comments and our

response are in appendix VII.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after its

issue date. At that time, we will send copies to the commissioners of the

Consumer Product Safety Commission and make copies available to

others upon request.

If you or your staff have any questions about this report, please contact me

at (202) 512-7014. Major contributors are listed in appendix VIII.

Carlotta C. Joyner

Director, Education

 and Employment Issues

Page 35 GAO/HEHS-97-147 Consumer Product Safety Commission
Contents

Letter 1

Appendix I 

Scope and

Methodology

40

Appendix II 

Agency Organization

and Structure

43

Appendix III 

CPSC Projects,

1990-96

47

Appendix IV 

A Review of the

Literature on

COST-BENEFIT

Analysis

59

Background 62

Conceptual, Analytical, and Technical Issues Arise When

Applying COST-BENEFIT Analysis

64

Appendix V 

Death, Injury, and

Incident Data Sources

Used by CPSC

76

CPSC Relies Heavily on Hospital Emergency Room Reports to

Obtain Estimates of Injuries

76

CPSC Obtains Most of Its Fatality Information From Selected

Death Certificates

79

CPSC Investigates Selected Incidents to Obtain Detailed

Information About the Causes of Deaths and Injuries

81

CPSC Uses Modeling Techniques and Special Surveys to Estimate

Exposure Information

82

CPSC Obtains Some Information Under Reporting Requirements

for Manufacturers and Other Businesses

83

Page 36 GAO/HEHS-97-147 Consumer Product Safety Commission
Contents

Appendix VI 

Comments From the

Chairman and

Commissioner Moore,

Consumer Product

Safety Commission,

and GAO’S Evaluation

85

GAO Comments 102

Appendix VII 

Comments From

Commissioner Gall,

Consumer Product

Safety Commission,

and GAO’S Evaluation

106

GAO Comments 110

Appendix VIII 

GAO Contacts and

Staff

Acknowledgments

111

Bibliography 112

Tables Table 1: CPSC Regulatory Priority-Setting Criteria and Systematic

Information Available

16

Table 2: Evaluation of CPSC Analyses Shows Inconsistencies

With Several Evaluation Elements

25

Table III.1: CPSC Projects, 1990-96 48

Table IV.1: Frequently Used Elements of Evaluation of

Cost-Benefit Analysis

60

Figures Figure 1: CPSC Funding, in Inflation-Adjusted Dollars, 1974-96 5

Figure 2: Origination of CPSC Projects, January 1,

1990-September 30, 1996

9

Page 37 GAO/HEHS-97-147 Consumer Product Safety Commission
Contents

Figure 3: Types of Death and Injury Data Covered by CPSC’s

Systematic Surveillance Information

15

Figure II.1: CPSC Organization Chart 46

Abbreviations

AAPCC American Association of Poison Control Centers

ANPR Advance Notice of Proposed Rulemaking

ATV all-terrain vehicle

CO carbon monoxide

CPSC Consumer Product Safety Commission

FOIA Freedon of Information Act

HMO health maintenance organization

IPII Injury or Potential Injury Incident

LP liquified petroleum

MECAP Medical Examiners’ and Coroners’ Alert Program

MIS management information system

NEISS National Electronic Injury Surveillance System

NFIRS National Fire Reporting System

NFPA National Fire Protection Association

OMB Office of Management and Budget

Page 38 GAO/HEHS-97-147 Consumer Product Safety Commission
Page 39 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix I 

Scope and Methodology

This report provides information on project selection, analytical research,

and information release procedures at the Consumer Product Safety

Commission (CPSC), which we gathered from a variety of sources inside

and outside the agency. For example, we interviewed current CPSC staff,

including analysts and line managers, to obtain information about CPSC’s

data and procedures. We also interviewed the three current CPSC

commissioners and four former commissioners. In addition, we

interviewed representatives of manufacturers, retailers, trade associations,

consumer groups, and academic and other experts to obtain their

perspectives on CPSC’s activities. We reviewed the legislation governing

CPSC’s activities and the associated regulations. We also reviewed

statements by public and private organizations and the academic research

literature dealing with consumer protection issues and the technical

literature on cost-benefit analysis and risk assessment.

We gathered extensive information from CPSC documents. We reviewed

every agency budget request, operating plan, mid-year review, and

regulatory agenda from 1990 to 1996. We reviewed all CPSC’s annual reports

from fiscal years 1986 to 1996. We also obtained all CPSC Federal Register

notices from January 1993 to May 1996 and selected Federal Register

notices from January 1990 to December 1992. We reviewed all CPSC press

releases from September 1992 to February 1996. We also reviewed 644

CPSC briefing packages prepared from January 1, 1990, to September 30,

1996, including all briefing packages that concerned a specific, identifiable

potential product hazard under consideration for regulatory, voluntary, or

information-gathering activities. We excluded matters exclusively related

to compliance with and enforcement of existing standards, civil penalties,

and internal management issues as well as other items not related to a

specific potential product hazard. In addition, we reviewed other agency

documents, including information-clearing procedures, documentation of

data systems, consumer education materials, internal memorandums and

correspondence, and selected documents downloaded from CPSC’s Internet

site.

In describing CPSC’s project selection, we drew on our interviews with

commissioners, former commissioners, and agency staff, and we reviewed

the project selection criteria in CPSC’s regulations. Although we described

the criteria used by the agency, we did not make judgments about the

merit of individual criteria or about whether any criterion was

appropriately applied in any specific case. We compiled a list of agency

projects on the basis of the documents we reviewed. We included not only

major regulatory efforts but also smaller-scale projects. We gathered

Page 40 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix I 

Scope and Methodology

information on the characteristics of these projects; for example, we

obtained information on how the projects originated, what action CPSC

took, and (for most) how many deaths and injuries were associated with

the hazard. CPSC officials examined our list and provided some information

that was not readily available in agency documents. However, because

CPSC’s internal data management system does not track agency projects,

neither we nor CPSC were able to verify the accuracy and

comprehensiveness of this information. We also reviewed agency

documentation and the technical literature and interviewed outside

experts to obtain information on CPSC’s data-gathering systems.

To examine CPSC’s cost benefit analysis, we reviewed the technical

literature and developed a set of objective evaluation questions to elicit

descriptions of and to evaluate the analytical work. These evaluation

questions were designed to indicate only whether CPSC’s cost benefit

analyses were consistent with elements that are commonly used to

evaluate whether cost-benefit analyses are comprehensive and reported in

sufficient detail. Our review did not assess whether CPSC’s analyses were

the best that could be done on any particular topic. We reviewed these

evaluation questions with two leading experts in the field of risk

assessment and cost-benefit analysis: Professor John Mendeloff of the

University of Pittsburgh and Professor John Graham of Harvard

University. Then we examined all CPSC’s cost-benefit analyses from

January 1990 through September 1996 to see how they measured up

against these evaluation questions. In making these assessments, we

reviewed all the information available to the commissioners in the written

record; that is, we did not confine our analysis to the portion of the

briefing packages that dealt explicitly with cost-benefit analysis or risk

assessment, and we examined all the briefing packages that pertained to

that particular project. Although we evaluated CPSC’s cost-benefit analyses

using a wide-ranging set of evaluation questions, we reported results of

our analysis only for those questions where: (1) the question was

applicable to the majority of the CPSC analyses we reviewed; and (2) we

were able to make a determination of whether the analyses were

consistent with the evaluation question in applicable cases.

To review CPSC’s information release process, we reviewed internal agency

procedures, discussed the information release requirements with agency

officials and industry representatives, and reviewed the relevant legal

cases. We provided information on CPSC’s information release procedures

but did not audit whether CPSC complied with these procedures in

releasing information. Instead, we relied on other sources—industry

Page 41 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix I 

Scope and Methodology

sources, published legal decisions, and retractions—to assess whether this

readily available evidence suggested that CPSC had violated its statutory

requirements in releasing manufacturer-specific information.

Our review was conducted between August 1996 and May 1997 in

accordance with generally accepted government auditing standards.

Page 42 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix II 

Agency Organization and Structure

The Consumer Product Safety Act (P.L. 92-573) provides for the

appointment of five commissioners by the President of the United States

for staggered 7-year terms. Not more than three of the commissioners may

be affiliated with the same political party. The President appoints the

commissioners, subject to Senate confirmation. However, the President

cannot directly overrule an agency decision or fire a commissioner for

making an unpopular decision. Since 1986, there have been no more than

three commissioners at one time. In fulfilling the provisions of the

government in the Sunshine Act (P.L. 94-409),29 in general, commissioners

must open to the public any meeting held for the purpose of disposing of

CPSC business—that is, if any two of the three commissioners want to

discuss agency business, generally public notice must first be given. On a

daily basis, communication among CPSC offices takes place at the staff

level.

The chairman, the principal executive officer of the Commission, directs

all executive and administrative functions of the agency. The chairman

oversees the appointment and supervision of all agency personnel except

those employed in the immediate offices of other commissioners. CPSC

annually elects a vice chairman to act in the absence or disability of the

chairman or in case of a vacancy in the office of chairman.

As figure II.1 shows, six offices report directly to the chairman:

• the Office of the Secretary manages the agency’s records, publishes CPSC’s

public meetings calendar, and administers the requirements of the

Freedom of Information Act;

• the Office of Congressional Relations serves as CPSC’s liaison with the

Congress;

• the Office of General Counsel provides advice and counsel to the agency

on legal matters;

• the Office of the Inspector General is an independent office that

undertakes activities to prevent and detect waste, fraud, and abuse; and

• the Office of Equal Opportunity and Minority Enterprise monitors

compliance with equal opportunity employment laws.

The agency’s executive director, who is appointed by and reports directly

to the chairman, is responsible for overseeing the day-to-day management

of the agency. The executive director’s office also houses the agency’s

small business ombudsman, who acts as a liaison to small businesses,

29The purpose of the Sunshine Act is to provide the public with information regarding the decision

making processes of the federal government while protecting both the rights of individuals and the

ability of the government to carry out its responsibilities.

Page 43 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix II 

Agency Organization and Structure

providing technical assistance concerning CPSC programs and regulations,

among other things.

The executive director has line authority over nine operating directorates:

• The Office of Compliance is responsible for compliance with and

administrative enforcement of CPSC regulations, including product

standards. The office initiates investigations on safety hazards of products

already in the consumer marketplace or being offered for import. It

negotiates and subsequently monitors corrective action plans designed to

give public notice of hazards and recall defective or noncomplying

products.

• The Office of Hazard Identification and Reduction manages many of CPSC’s

activities that involve identifying, examining, and remedying new product

hazards. The office’s responsibilities include collecting and analyzing data

to identify hazards and hazard patterns, carrying out CPSC’s regulatory and

voluntary standards development projects, and coordinating international

activities related to consumer product safety. Serving in various groups

under the director of hazard identification and reduction are the

epidemiologists and statisticians, who provide information on particular

products; engineers and human factors specialists, who help develop

design remedies for product hazards; and economists, who provide market

information and perform cost-benefit analysis on commission projects.

• The Office of Information and Public Affairs is CPSC’s touchstone with

consumers and the media. It prepares and publishes brochures, booklets,

fact sheets, and safety alerts providing safety information to consumers on

products used in the home environment. The Office of Information and

Public Affairs also handles requests from the media for information and

access to CPSC staff and prepares press releases announcing CPSC actions

or decisions.

• The Office of Information Services manages the agency’s toll-free hot line,

Internet, and fax-on-demand services. Within the Office of Information

Services, CPSC’s Information Clearinghouse provides summary information

on product-related injuries in response to requests from the public.30

• The Office of the Budget is responsible for overseeing the development of

CPSC’s budget.

• The Office of Human Resources Management provides support to the

agency in recruitment and placement, position classification, training, and

other personnel areas.

30If such a request can not be filled without identifying the manufacturer, however, the request is sent

to the freedom of information officer for processing.

Page 44 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix II 

Agency Organization and Structure

• The Office of Planning and Evaluation assists with long-term planning

efforts and manages and ensures agency compliance with paperwork

reduction regulations. In addition, the Office of Planning and Evaluation is

currently preparing for the implementation of the Government

Performance and Results Act (the Results Act) and reviewing the

effectiveness of the agency’s outreach efforts.

• The Directorate for Field Operations coordinates the activities of CPSC’s

128 field staff located in 38 cities across the country. CPSC field staff carry

out a wide range of agency activities, including conducting investigations

of injury incidents; acting as liaisons with state and local organizations;

working with the local press to support consumer education campaigns;

and inspecting manufacturers, importers, distributors, and retailers to

ensure compliance with safety regulations and standards. To complement

the efforts of the field staff at the local level, CPSC contracts some product

safety work to state and local entities; commissions state and local

officials to function as officials of CPSC for the purpose of conducting

investigations, inspections, recalls, and sample collections; and transmits

information on CPSC programs and activities to states.

• The Directorate for Administration is responsible for executing general

administrative policies.

Page 45 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix II 

Agency Organization and Structure

Figure II.1: CPSC Organization Chart

Page 46 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

CPSC has addressed many different product hazards. We identified 115

projects the agency worked on between January 1, 1990, and

September 30, 1996. Because CPSC does not maintain a list of projects it

has worked on or any project characteristics, such as project origin or

result, we used various agency documents, such as budget requests,

annual operating plans, regulatory agendas, and project briefing

documents, to compile our list.

We attempted to determine how each project came to the attention of the

agency, for example, through a petition, congressional direction, or

internal initiation. This was not always clear. For example, in three cases,

a petition was submitted and subsequently denied, but the issue was later

mandated by the Congress as a project the agency must address. For

example, a petition concerning the safety of bicycle helmets submitted in

1990 was denied. In 1994, the Congress passed the Children’s Bicycle

Helmet Safety Act of 1994, which requires CPSC to establish a mandatory

standard. We counted such projects as originating through the Congress.

In other cases, we categorized projects on the basis of information in CPSC

documents.

We also attempted to identify the most significant action that resulted

from the agency’s efforts. Some projects were ongoing for several years

and involved more than one agency action, such as information campaigns

conducted in conjunction with voluntary standards efforts. For example,

agency work on carbon monoxide (CO) detectors resulted in a voluntary

standard in 1992, a “CO Awareness Week” information campaign in 1994,

and public hearings on the issue in 1996. In cases such as these, we

attempted to identify the activity with the greatest long-lasting impact;

usually this was a voluntary or mandatory standard. Also, projects

classified as “voluntary standard activity” include those for which a new

voluntary standard was created, an existing voluntary standard was

revised, or staff are currently participating in voluntary standard activities.

In addition, we identified whether a risk assessment or cost-benefit

analysis was completed for a given project, using CPSC briefing packages.

We defined a formal risk assessment to include only those cases for which

a numerical estimate of unit risk was calculated; we defined a complete

cost-benefit analysis to include those projects for which both economic

costs and benefits were explicitly compared, even if quantitative estimates

were not made for all economic factors considered. Some risk-related or

economic information was provided for many of the projects for which no

formal, complete risk assessment or cost-benefit analysis was performed.

Page 47 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Table III.1: CPSC Projects, 1990-96

Origin

Product

Initiated by the

Congress Petition

Initiated by

agency

Fire/gas codes and standards

Camping heaters x

Carbon monoxide

detectors x

Children’s sleep-wear

flammability x

Cigarette lighters x

Cigarette safety x

Elderly sleepwear

flammability x

Fire safety devices x

Fireworks, fuse-burn time xc

Fireworks, large and small

reloadable shell x

Fireworks, multiple tube

mine and shell x

Flexible gas connectors x

Floor furnaces x

Fuel gas detectors x

Gas control valves,

automatic x

Gas furnaces x

Gas grills, 20-lb. systems x

Gas systems,

over-pressurization x

Heaters, unvented gas

space heaters x

Liquified petroleum (LP)

gas odorant fade x

Mattress/bedding fires x

Multipurpose lighters x

Range/oven fires x

Smoke detectors x

Upholstered furniture x

Water heaters x

Sports and Recreation

All-terrain vehicles (ATV) x

Baseball injuriesg x

Baseball bases x

Page 48 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Agency action Analytical efforts

Ban

Mandatory

standard

Voluntary

standard activitya

Information and

education Otherb

Cost-benefit

analysis done

Risk assessment

done

x

x

x x

x x x

x

x

x

x x

x x x

x x

x

x x

x

x

x

x

x

x

x

x

xd x

x

x

xe

x x

xf x

x

x

(continued)

Page 49 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Origin

Product

Initiated by the

Congress Petition

Initiated by

agency

Baseball, chest protectors

for young batters x

Baseball, face-guards on

helmets x

Baseball, safety baseballs

(soft) x

Bicycles x

Bicycle reflectors x

Bicycle/recreation helmets xh

In-line skates x

Model rocket motors x

Pools, barriers for

swimming pools and spas x

Pools, diving injuries x

Pools, swimming pool

covers x

Saunas x

Soccer injuries x

Soccer goals x

Spas and hot tubs x

Electrical/power codes and standards

Garage door openers x

Go-carts x

Hair dryers x

Heaters, portable electric x

Heat tapes x

Holiday lights x

Home electrical system

fires x

Ladders, portable

aluminum x

Lamps, portable x

Microwave ovens x

Mowers, riding x

Mowers, walk-behind x

Receptacle outlets x

Shock protection devices

(GFCI) x

Page 50 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Agency action Analytical efforts

Ban

Mandatory

standard

Voluntary

standard activitya

Information and

education Otherb

Cost-benefit

analysis done

Risk assessment

done

x

x x x

x

x x

x

x x

x

x

x

x

x

x

x

x

x x

x xi

x

x

x

x x

x

x

x x x

x

x

x x x

x

x

x x

(continued)

Page 51 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Origin

Product

Initiated by the

Congress Petition

Initiated by

agency

Thermoplastics in

electrical products x

Children’s products

Baby bath seats x

Baby walkers x

Bean bag chairs x

Bunk beds x

Child restraints on grocery

carts x

Choking

hazards—balloons, balls,

marbles, x small figures,

pom-poms

Clacker balls x

Crib corner post

extensions x

Cribs, nonfull size x

Crib toys x

Drawstrings on children’s

clothing x

Electronic video games x

5-gallon buckets x

Furniture tipover x

High chairs x

Infant cushions x

Infant suffocation x

Lead in paint x

Playground equipment,

home x

Playground equipment,

public x

Playground equipment,

soft x

Playground surfacing x

Play yards x

Strollers x

Toddler beds x

Window blind cords x

Window guards x

Chemical/poison prevention

Page 52 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Agency action Analytical efforts

Ban

Mandatory

standard

Voluntary

standard activitya

Information and

education Otherb

Cost-benefit

analysis done

Risk assessment

done

x

x

xd x x

x

x

x x x

x x

x x

x x

x

x

x

x x

x x

x

x

x x

x

x

x x x

x xj

x

x

x

x

x

x

x

(continued)

Page 53 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Origin

Product

Initiated by the

Congress Petition

Initiated by

agency

Acetone in 1-gallon

containers xk

Architectural glazing x

Art materials x

Charcoal labeling x

Child-resistant,

adult-friendly packaging

of drugs x

Child-resistant packaging

of certain dietary products

with iron powders x

Child-resistant packaging

of dibucaine x

Child-resistant packaging

of ibuprofen x

Child-resistant packaging

of drugs with loperamide x

Child-resistant packaging

of glue removers with

acetonitrile xl

Child-resistant packaging

of hair wave neutralizers xl

Child-resistant packaging

of lidocaine x

Child-resistant packaging

of mouthwashes with

ethanol x

Child-resistant packaging

of naproxen x

Child-resistant packaging

of spot remover with

naptha xm

Coal- and woodburning

stove emissions x

Dichlorobenzene x

Dioxin in paper products x

Exemption to

child-resistant packaging

of mouthwashes with

ethanol x

Indoor air quality x

Indoor air quality—carpet

emissions x

Page 54 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Agency action Analytical efforts

Ban

Mandatory

standard

Voluntary

standard activitya

Information and

education Otherb

Cost-benefit

analysis done

Risk assessment

done

x

x x

x

x x x

x x

x

x x

x x

x x

x x

x x

x x

x x

x

x

x x

x x

x x

x

x

x x

(continued)

Page 55 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Origin

Product

Initiated by the

Congress Petition

Initiated by

agency

Indoor air

quality—formaldehyde in

pressed x wood products

Indoor air quality—glycol

ethers x

Indoor air

quality—heating,

ventilation, and x

air-conditioning systems

Indoor air

quality—kerosene heaters

x

Indoor air

quality—portable x room

humidifiers

Lead poisoning abatement x

Methylene chloride in

paint strippers x

Sulfuric acid drain cleaners x

Other

Waterbeds x

Total 115 13 34 68

Page 56 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

Agency action Analytical efforts

Ban

Mandatory

standard

Voluntary

standard activitya

Information and

education Otherb

Cost-benefit

analysis done

Risk assessment

done

x

x

x

x

x

x

x x

x

x x

2 21 55 5 32 29 24

Page 57 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix III 

CPSC Projects, 1990-96

a“Voluntary standard activity” includes efforts in which agency staff participated in the

development of a new voluntary standard or revision of an existing voluntary standard. This

participation included regularly attending meetings of a standards development group; taking an

active part in discussions; and providing research or other support, information and education

programs, and administrative assistance.

b“Other” includes projects that were completed with no agency action, terminated, currently in

process or pending, or completed with a study or report.

cTwo petitions were submitted for fuse-burn time. The first, submitted in 1991, was denied. The

second, submitted in 1996, resulted in a change to an existing mandatory standard.

dCPSC published an Advance Notice of Proposed Rulemaking (ANPR). This is the first step

toward enacting a mandatory standard.

eCPSC published an ANPR in 1994, which is the first step toward enacting a mandatory standard.

The ANPR also solicited offers to develop or modify a voluntary standard. During fiscal year 1996,

CPSC worked with an industry group on voluntary standards development.

f

CPSC has worked with states to develop state ATV legislation.

gThe baseball injuries project started in the 1980s and resulted in a special report on baseball

injuries and protective equipment. The projects—baseball bases, chest protectors, faceguards

on helmets, and safety baseballs—all grew out of this umbrella project and, as such, are counted

separately.

hA petition was also submitted in 1990. The Congress mandated this project in the Children’s

Bicycle Helmet Safety Act of 1994. Project origin is counted as congressionally initiated.

i

The cost-benefit analysis for garage door openers applied to the labeling and record-keeping

requirements only, not to the provisions of the safety standard.

j

The risk assessment for playground equipment examined the hazard associated with exposure to

arsenic from wooden equipment. The risk assessment concluded that the risk was small. Most of

CPSC’s efforts concerning playground equipment are related to injuries from falls or impacts of

equipment and are not related to chemical exposure.

k

Petition, submitted in 1995, was withdrawn.

l

One petition was submitted in 1988 by the American Association of Poison Control Centers

requesting CPSC to require child-resistant packaging both for household glue removers

containing acetonitrile and home cold wave permanent neutralizers containing sodium bromate or

potassium bromate.

mPetition, submitted in 1991, was withdrawn.

Page 58 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

Cost-benefit analysis can be described as an analytical technique that

details the expected positive and negative effects of a given policy

proposal (expected benefits and costs). To construct this framework,

researchers approach a policy question needing considerable information

about the potential remedy. Because cost-benefit analysis requires an

inclusive approach to evaluating a proposal’s impact, the proposal itself

must be well defined, and some information must be known about its

impact. Once the expected benefits and costs of the proposal are

thoroughly identified and delineated, the next step is to place a value on

each benefit or cost. Frequently, these expected costs and benefits are

expressed in numerical or monetary terms to facilitate a comparison of the

aggregate costs and benefits. If all relevant factors can be translated into

monetary terms, the decision rule suggested by this proceeding is to

accept the proposal if its aggregate benefits exceed its aggregate costs.31

Although at first the concept behind cost-benefit analysis seems relatively

straightforward, the application of cost-benefit analysis is not. The

practical difficulties associated with measuring effects, quantifying results,

and accounting for uncertainty (to name only a few issues) can create a

gap between the way cost-benefit analysis is described in theory and the

way it is implemented in practice. For this reason, experts generally agree

that analysts should be comprehensive in including all important factors

and be explicit in their description of the underlying data, methodology,

and assumptions.

This appendix describes many of the major methodological issues that

often arise in cost-benefit analysis and outlines specific elements that are

frequently used to evaluate cost-benefit analyses. The methodology used

to conduct a cost-benefit analysis frequently varies depending on the

circumstances and the context of the analysis. For this reason, there is no

complete set of standards for evaluating the quality of an individual

cost-benefit analysis. However, the professional literature offers some

guidance for analysts, and certain specific elements are frequently used to

determine whether a given analysis meets a minimum threshold of

comprehensiveness and openness. These elements are necessary, but not

sufficient, for a quality analysis.

31Variations of cost-benefit analysis include cost-effectiveness analysis, which relates the costs and

outcomes of alternative methods to achieve the same desired goal. For example, one

cost-effectiveness analysis compared the cost per case detected for different methods of treating the

same medical condition. Because only cost-benefit analysis is relevant to CPSC’s activities, related

techniques are not considered here. For more information on these and other related analytical tools,

see Michael F. Drummond, Greg L. Stoddart, and George W. Torrance, Methods for the Economic

Evaluation of Health Care Programmes (New York: Oxford University Press, 1996).

Page 59 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

From the extensive cost-benefit literature, we developed objective

evaluation questions to evaluate cost-benefit analyses performed by CPSC.

These evaluation questions are summarized in table IV.1. Although these

evaluation questions are not a comprehensive measure of the quality of an

analysis, they were designed to reflect whether an analysis is

comprehensive and reported in sufficient detail. We applied these

questions to each of CPSC’s analyses, but not all evaluation questions were

applicable to each case. In addition, for some questions it was not always

possible to determine whether CPSC’s analysis complied with the particular

element reflected in the question. For these reasons, and to emphasize

those areas that we considered as most critical, we reported only the

evaluation results that related to key elements and that applied to the

majority of CPSC’s analyses; these eight are shown in bold in table IV.1.

Table IV.1: Frequently Used Elements

of Evaluation of Cost-Benefit Analysis Number Evaluation question

Evaluating potential courses of action

1 Was descriptive information given about well-defined alternative

courses of action?

2 Was more than one alternative course of action considered in the

analysis?

3 Was evidence given to support the degree to which the proposal was

assumed to mitigate the problem?

Considering all important factors for analysis

4 Were all important categories of potential costs and benefits

included in the analysis? (For example, did the analysis include [where

applicable] intangible benefits and costs, health and safety benefits,

costs of compliance, upfront costs, price changes, and changes in

consumer surplus?)

5 Were the effects of intangible costs and benefits detailed explicitly, even

if they could not be quantified? (For example, did the analysis include

[where applicable] consumer utility?)

6 Did the analysis show how the existence of intangible costs or benefits

could affect the conclusions?

7a Were possible indirect effects discussed? (For example, did the analysis

include [where applicable] price changes of related goods or likely

changes in market concentration?)

7b If indirect effects were measured quantitatively, were the calculations

and assumptions behind this measurement discussed in detail?

7c If indirect effects were measured qualitatively, did the analysis show how

the existence of these factors could affect the conclusions?

Considering interdependent factors

8 Were possible issues of standing identified?

9 Was an incremental (marginal) analysis of costs and benefits performed?

(continued)

Page 60 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

Number Evaluation question

10 Were major policy interdependencies identified? (For example, did the

analysis discuss the implications if another agency also had jurisdiction

over the product, or if the proposal could create a conflict with existing

government policy?)

Considering distribution issues

11 Did the analysis make clear the distribution of gains and losses? (For

example, who would pay the costs and who would get the benefits of the

proposal?)

12a Was the impact of distribution of gains and losses assessed? (For

example, would the proposal be likely to have a greater adverse impact

on small businesses, potentially leading to increased market

concentration?)

12b Were distributional weights employed in the analysis?

12c If weights were used, was information provided about the basis for those

weights?

13a Is the standard assumption that relative market prices are insensitive to

the policy change likely to hold in this case—that is, are there likely to be

few or no macroeconomic effects?

13b If no, was this impact discussed or considered in the analysis?

Considering risk-risk factors and potential offsetting behaviors

14 Were risk-risk or offsetting behavior concerns identified and

considered in the analysis?

Using the willingness-to-pay approach to value risk reduction

15 Were willingness-to-pay measures used to value reductions in the risk of

death or injury?

16 Is the numerical value of a statistical life used in this analysis consistent

with the literature?

17 Is the numerical value of a reduction in the chance of injury consistent

with the literature?

Discounting future costs and benefits

18a Are costs and benefits that occur at different points discounted for

differences in timing?

18b Does the discount rate or rates used include the suggested rate by the

Office of Management and Budget?

18c Does the discount rate or rates used include the Treasury bill rate for the

time horizon of the analysis?

18d Does the discount rate or rates used include a lower “social” discount

rate?

Considering data issues

19a Where applicable, were the implications of unverified or unverifiable data

provided by an interested party identified and discussed?

19b Where applicable, were the implications of uncertainty surrounding a

dose-response model identified and discussed?

19c Where applicable, were the implications of uncertainty surrounding

crossspecies extrapolation identified and discussed?

(continued)

Page 61 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

Number Evaluation question

19d Where applicable, were the implications of the use of data relying on

investigated or reported cases identified and discussed?

19e Where applicable, were the implications of survival bias in the underlying

data identified and discussed?

19f Where applicable, were the implications of small sample sizes

identified and discussed?

19g Where applicable, were the implications of other known biases in

the underlying data identified and discussed?

20 If the underlying data were derived from a statistical sample, were

appropriate measures of precision provided?

Performing sensitivity analysis

21a Was sensitivity analysis performed on any parameter in the

analysis?

21b Was sensitivity analysis performed on the value of a statistical life?

21c Was sensitivity analysis performed on the value of injury reduction?

21d Was sensitivity analysis performed on the discount rate?

21e Was sensitivity analysis performed on the precision of the underlying

data?

21f Was sensitivity analysis performed on other important parameters?

Note: We reported results for questions that are in bold. We viewed these measures as especially

important, and they applied to the majority of CPSC analyses and a determination could be made

for these questions in each case.

Background As an organizing framework, cost-benefit analysis can help a

decisionmaker to organize and aggregate all the relevant information in a

way that can clarify the nature of the trade-offs involved in a decision. At

the same time, by providing a framework to convert dissimilar effects to a

common measurement, cost-benefit analysis can allow this information to

be weighed and aggregated to help make a decision. A well-constructed

cost-benefit analysis can highlight crucial factors, expose possible biases,

and perhaps expand the openness of the decision-making process by

clarifying the factors on which the decision was based—whether these

factors are purely economic criteria or include other social factors. A key

advantage of carefully built cost-benefit analysis is that it promotes

explicit rather than implicit decision-making, even when it is impossible to

monetize or even quantify all the potential effects of a given regulatory

proposal.

Despite the value of this analytical tool, in some situations using

cost-benefit analysis as the sole basis for decision-making may be

Page 62 GAO/HEHS-97-147 Consumer Product Safety Commission
Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

inappropriate. For example, alternatives that would eliminate basic human

rights or dramatically increase income inequality may be viewed as

morally unacceptable. Similarly, when uncertainty about possible effects

is so pervasive that attempting to identify potential costs and benefits

would amount to nothing more than uninformed speculation, cost-benefit

analysis probably has little to offer.32 In addition, for minor decisions it

may not be necessary to employ a rigorous, time- and resource-consuming

decision-making process, and a less detailed cost-benefit analysis—or

none at all—may be more appropriate. Virtually all observers agree that

the appropriate role for cost-benefit analysis—sole decision-making rule,

input into decision-making, or not done at all—will depend on the context

in which the particular decision is being considered.

To some individuals, application of an abstract analytical technique such

as cost-benefit analysis is especially unpalatable in certain situations. For

example, the idea of applying a value to “saving life” may be distasteful,

because we regard our own lives as “priceless” or of infinite value.

However, although our lives may be priceless, avoiding risks often means

forgoing time, convenience, enjoyment, or other opportunities—all of

which do have a price. Thus, policy interventions that can affect life

expectancy pose an unavoidable problem—to refuse to consider the value

of potentially lifesaving interventions is to implicitly value them at zero,

and to consider any potentially lifesaving activity as infinitely valuable

implies that individuals would never take any action that involves risk

(driving a car, for example). The literature on cost-benefit analysis makes

a key distinction in this area. For ethical reasons, most practitioners

consider it inappropriate to use cost-benefit analysis to evaluate

alternatives that would (with certainty) affect the life expectancy of a

given, known individual. But government policy does not usually involve

making such decisions. Instead, policy questions typically center on

actions that may bring about small changes in the statistical life

expectancy of anonymous members of a large group. For example, when

CPSC considered imposing a mandatory regulation on large, multiple-tube

fireworks, the agency estimated that such a standard could reduce the

number of individuals that die in related accidents by one anonymous

32However, one should use caution in assuming that this situation applies. Sometimes the conclusions

of a cost-benefit analysis can be quite robust even in the face of substantial uncertainty. For example, a

recent analysis of the benefits and costs of reducing emissions of acrylonitrile concluded that

imposing strict standards on acrylonitrile emissions fails reasonable cost-benefit tests, despite as much

as a threefold factor of uncertainty in acrylonitrile emissions, additional uncertainty in the amount of

exposure to acrylonitrile, and a probable but unmeasurable upward bias in the estimate of cancer risk.

(See John A. Haigh, David Harrison, Jr., and Albert L. Nichols, “Benefit-Cost Analysis of Environmental

Regulation: Case Studies of Hazardous Air Pollution,” ch. 1 in The Moral Dimensions of Public Policy

Choice: Beyond the Market Paradigm, eds., John Martin Gilroy and Maurice Wade (Pittsburgh, Pa.:

University of Pittsburgh Press, 1992), pp. 15-57.

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Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

consumer over a 3-year period. On a daily basis, each of us makes such

trade-offs between perfect safety and other things we value, such as the

convenience of driving a car or the excitement of skiing down a mountain.

Such assessments, which place a value on reductions in risk, are viewed as

appropriate, whereas valuing a given person’s life may be viewed as less

reasonable.

Similarly, a decision to surrender basic rights—such as liberty—may be

unacceptable on moral grounds, and so cost-benefit analysis might not be

applicable in a situation involving such rights. In addition, some

individuals object to cost-benefit analysis in circumstances in which other

species may be affected adversely. For example, one individual objected

to a proposal that would allow increased pollution in a particular river

because the proposal would adversely affect the fish and other species in

the river. Cost-benefit analysis would probably be unable to address this

objection because there is no accepted method to place a value on the

losses suffered by the fish.

Conceptual,

Analytical, and

Technical Issues Arise

When Applying

COST-BENEFIT

Analysis

Over the past 3 decades, a substantial economic literature has explored

the conceptual, analytical, and technical issues posed by the application of

cost-benefit analysis. From this literature, generally accepted standards of

professional practice have emerged that cover a wide range of research

methods. As one experienced researcher has said, “Good studies follow

procedures that are in accord with economic theory for estimating

benefits and costs, provide a clear statement of all assumptions, point out

uncertainties where they exist, and suggest realistic margins of error.”33

Even when undertaken by careful and competent researchers, cost-benefit

analysis can sometimes be difficult to interpret, especially when

uncertainty is substantial and information is incomplete.

Conceptual Issues in

Cost-Benefit Analysis

Some of the issues underlying the application of cost-benefit analysis are

conceptual, and the researcher may make a different judgment in different

circumstances. With respect to these issues, being complete and explicit is

important—the consensus in the literature is that while there may be no

single method for dealing with these issues that is universally appropriate,

the researcher must be clear and direct in detailing how the issue was

addressed in the context of the analysis.

33See Eban Goodstein, “Benefit-Cost Analysis at the EPA,” The Journal of Socio-Economics, 24

(2) (1995), pp. 375-89.

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Appendix IV 

A Review of the Literature on

COST-BENEFIT Analysis

Intangible or Unquantifiable

Factors Can Pose Dilemmas for

Researchers

Ideally, a cost-benefit analysis involves translating each impact into a

common measurement (such as dollars) for comparison. However, some

effects may be difficult or impossible to measure or quantify. For example,

a researcher evaluating an alternative outpatient mental health treatment

program realized that the greater independence afforded by the outpatient

program could create increased anxiety—or, alternatively, higher

self-esteem—for some participants. However, these intangible effects

would be very difficult to measure and even more difficult to quantify.34

Some individuals have criticized certain individual practitioners of

cost-benefit analysis for ignoring or de-emphasizing aspects of proposed

changes that cannot be easily quantified. Although it is necessary for such

effects to be described and emphasized appropriately, the existence of

such intangibles does not necessarily limit the value of the analysis. For

example, in the discussion of mental health programs, the researchers

found that patients in the experimental program experienced higher

satisfaction and reported having a greater number of social relationships.

These qualitative benefits were important to the analysis even though they

could not be valued in dollars. In addition, if it can be shown explicitly that

the value of the intangibles would be unlikely to change the conclusion,

then cost-benefit analysis has played a valuable role by considering

intangible effects explicitly, even if it is not possible to consider them

quantitatively. (We addressed this issue in questions 5 and 6 of table IV.1.)

Measuring Indirect and

Secondary Costs and Benefits

Can Be Difficult

Researchers must also decide whether or not to include indirect or

secondary effects that may result from the proposal. For example, a

change in tax rules may not only have an initial, direct effect on

individuals’ income but may also create a secondary ripple (or

“multiplier”) effect on the economy as a whole. Similarly, a medical

treatment that prolongs life can be expected to have a secondary effect on

health care costs as individuals live longer.

A researcher who wants to include such secondary impacts will frequently

find a measurement challenge, because determining the magnitude (or

perhaps even the existence) of many secondary effects involves answering

a “what if?” type of question, and frequently without relevant historical

experience. For example, individuals who receive improved treatment for

hypertension may contract more prolonged or costly illnesses in the

future.35 Any attempt to measure the impact of these indirect future costs

34See Burton A. Weisbrod, “Benefit-Cost Analysis of a Controlled Experiment: Treating the Mentally

Ill,” Journal of Human Resources, 16 (4) (1981), pp. 523-48.

35For an example of such an analysis, see W.B. Stason and M.C. Weinstein, “Allocation of Resources to

Manage Hypertension,” The New England Journal of Medicine, 296 (13) (1977), pp. 732-39.

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A Review of the Literature on

COST-BENEFIT Analysis

would require the researcher to predict the future health status and health

care costs of the patient group in the event that the treatment had or had

not been available. In addition, the existence of some secondary effects is

dependent on one or more key assumptions. For example, an economic

multiplier effect is generally thought to take place only in an economy

operating below its productive capacity. A researcher who wants to

include such an effect must thus determine whether or not this

assumption holds, and then decide how large an effect should be included.

Secondary impacts may be considered part of the cost-benefit analysis or

extraneous to it. The proper choice in each circumstance probably

depends on the likelihood that the secondary effects in fact exist, their

probable importance, and the ability to measure them. However, like

intangible effects, potential secondary or indirect effects should be

detailed even if they are not included quantitatively. Furthermore, should

such effects be included, the assumptions underlying their existence and

measurement must be revealed explicitly to allow the reader to make an

informed judgment. (We addressed this issue in question 7 of table IV.1.)

Issues of “standing” May

Require Clarification of the

Scope of the Analysis

In some circumstances, it may be difficult to define the point of view from

which the cost-benefit analysis is calculated—that is, who has “standing,”

or whose costs and benefits should be included in the analysis. For most

cost-benefit calculations involving government policy, the analysis is

appropriately done at the level of “society” (rather than, for example,

considering only the impact on individuals in a particular state or locality),

so that a wide range of implications is considered. However, in some

circumstances, it is important to make the point of view explicit. For

example, when policy effects may cross national boundaries, “society”

may be best defined on a broader basis. If the cost-benefit analysis is

considering policies to reduce acid rain, for example, considering the

effects of acid rain and pollution reduction on the Canadians who share

U.S. weather patterns may be important. Similarly, analysts may wish to

consider the impact of product regulation on foreign producers as well as

on U.S. consumers.

Even when the unit of analysis is clear, occasionally some members of that

unit are not afforded standing under cost-benefit analysis. For example,

suppose that a particular policy proposal is likely to result in a decrease in

property crime. If a thief steals a television, and both the victim and the

thief are given standing, then the gain to the thief could offset the loss to

the victim in a cost-benefit accounting. “Society,” however, is clearly

worse off. Unless we try to measure the psychological and sociological

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costs of crime, it may make more sense not to afford the thief standing in

the cost-benefit analysis. Such issues arise infrequently but should be

made clear if they could affect the interpretation of the analysis. (We

addressed this issue in question 8 of table IV.1.)

Taking the Status Quo as

Baseline, Cost-Benefit Analysis

Should Account for Relevant

Factors and Constraints

Some cost-benefit analyses have been criticized for excluding relevant

factors on what appears to be an ad hoc basis. Without including such

factors, or providing an explicit justification for excluding them, a

researcher limits the value of the analysis. However, while it is important

to consider a variety of alternative actions, it is equally crucial to adopt a

realistic view of the possible alternatives. For example, political and

agency realities often place meaningful constraints on options available

for consideration. If these constraints are not incorporated into the

analysis, the results could be “pie in the sky” recommendations that

would be of little use of the decisionmaker. (We addressed these issues in

questions 1, 2, 4, and 10 of table IV.1.)

Similarly, it is important that cost-benefit analysis be conducted in a way

that evaluates the change in aggregate costs and benefits, with current

conditions serving as a baseline. For the properties of economic efficiency

to hold, cost-benefit analysis must take what economists call a marginal or

incremental approach—that is, it must consider only the changes that

would result from the proposed intervention. For example, a proposal to

renovate a museum should be evaluated, for cost-benefit purposes, on the

basis of the incremental cost of the renovation, not on the basis of the

original cost of constructing the entire museum. (We addressed this issue

in question 9 of table IV.1.)

Issues of Distribution May Be

Considered Within or Outside

the Cost-Benefit Context

By definition, cost-benefit analysis is a method for considering the

aggregate effects of a given proposal. If the aggregate expected benefits of

the proposal exceed the aggregate expected costs, the proposal is said to

pass the cost-benefit test. This does not necessarily mean that adopting the

proposal would improve the condition of each individual; instead, it

implies only that when the expected gains and losses to all individuals are

added up, the total expected gains exceed the total expected losses.36

36Economists make a distinction between events that lead to a “Pareto improvement” and those that

lead only to a “potential Pareto improvement.” If a change leads to a Pareto improvement, then as a

result of the change no individual will be worse off, and at least one individual will be better off.

However, if a change leads to a “potential Pareto improvement,” then the aggregate gains exceed the

aggregate losses, but some individuals will gain and others will lose. In this situation, it would be

theoretically possible for the “winners” to compensate the “losers” and leave no individual worse off

than before if redistribution itself is costless.

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By adding up individual gains and losses to determine the effect on society

as a whole, cost-benefit analysis implicitly assumes that each individual’s

gains or losses should be valued equally with any other individual’s gains

or losses. As a result, cost-benefit analysis is “neutral” with respect to the

distribution of gains and losses. To put it another way, the “fairness” of

how gains and losses are distributed is generally not included in the

calculations underlying a cost-benefit analysis.

Sometimes a decisionmaker might want to address such issues of fairness.

For example, if a proposal would involve redistributing income, the loss of

one dollar to a wealthy person may be viewed as less consequential than

the gain of one dollar to a poor person.37 In order to address such an issue,

the researcher or decisionmaker can consider issues of distribution inside

or outside the cost-benefit context. One method of examining such issues

might be to analyze the distributional impact of a proposal separately, and

consider fairness issues—along with the cost-benefit calculation—as

another factor in the decision-making process. Under these circumstances,

if the proposal is viewed as having negative distributional consequences,

and it would be costly or difficult to redistribute the gains and losses, then

the proposal might be rejected even though it would otherwise meet a

cost-benefit test.

Occasionally a researcher who wants to consider distributional issues

explicitly chooses to incorporate distributional consequences into the

mathematics of the cost-benefit calculation. Instead of simply adding up

the costs and benefits accruing to each individual, the researcher uses a

mathematical formula that applies different weights to different

individuals. These weights could be based on a number of factors,

depending on the characteristics of the “fairness” issues being addressed.

For example, if the proposal would affect income directly, weights could

be based on income (with greater weight being applied to gains in income

experienced by low-income individuals). Weights could also be based on

other circumstances; for example, greater weight could be placed on

vulnerable populations or on future generations. Similarly, if a change was

proposed in a given program, greater weight could be applied to the

37There is some limited ground in utilitarian economic theory for this assumption. Economic theory

states that individuals will generally, at some point, experience “diminishing marginal utility of

income”—that is, receiving one additional dollar of income brings less additional satisfaction (or

“utility”) as the individual becomes wealthier. However, the amount of satisfaction deriving from any

good or service, including income, cannot be compared across individuals. As a result, while economic

theory suggests that it is plausible that at some point giving one dollar to a rich person produces less

total “utility” than giving one dollar to a poor person, economic theory also tells us that it is generally

not possible to measure the circumstances under which this assumption might (or might not) be

correct.

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smaller number of program participants (who would be more significantly

affected) than the rest of society (who would be affected only indirectly).

A weighting scheme would be most helpful to decisionmakers and outside

observers, however, if the formula was detailed explicitly and the analysis

was accompanied by a sensitivity analysis, so the effect of the

distributional weights was clear to the reader. (We addressed these issues

in questions 11 and 12 of table IV.1.)

Implementation Issues in

Cost-Benefit Analysis

While a number of conceptual issues arise in cost-benefit analysis for

which the appropriate answer depends on circumstances, there are also a

number of methodological or implementation issues about which there is

widespread agreement. For example, years of debate on the appropriate

valuation method for risk reduction have largely been resolved in the favor

of “willingness to pay” measures, and the importance of sensitivity

analysis is generally recognized. While the choice of discount rate has long

been a subject of controversy, with some practitioners arguing for the use

of market rates and others advocating a lower “social” discount rate, the

literature generally recognizes the value of multiple rates. Finally, there is

virtually universal agreement on the importance of reliable data and

careful risk measurement to cost-benefit analysis.

Costs and Benefits Should Be

Adjusted for Differences in

Timing

Frequently, the various consequences of the proposal under discussion

will differ in when they occur. For example, changing the labeling

requirements on bags of charcoal could reduce carbon monoxide deaths

years later and also result in an immediate, one-time increase in industry

costs. As individuals and as a society, we generally prefer to have dollars

or resources now than at some time in the future because we can benefit

from them in the interim. In addition, if we acquire $1 next year instead of

today, we give up the opportunity to invest that dollar and earn interest on

our investment. As a result, it is generally agreed that future dollar cost

and benefit streams should be reduced or “discounted” to reflect

differences in timing.

The rate at which this adjustment is made is usually done on a

case-by-case basis. Many analysts choose to use the market rate of

interest—for example, the rate payable on government bonds with a time

horizon comparable to the analysis. Some researchers have argued that

the discount rate should be set somewhat higher because, presumably,

economic growth will leave future generations better off. Others have

advocated using a “social” discount rate, which is generally lower than the

market rate, on the grounds that society’s interest in the welfare of future

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generations implies that the discount rate for all of society should be

lower than the rates chosen by individuals. Experts on cost-benefit

analysis generally encourage researchers to use multiple rates—both to

assess the sensitivity of the results to the chosen discount rate and to

facilitate comparison across studies. (We addressed issues of discounting

in question 18 of table IV.1.)

Comparability With Other

Analyses Could Influence

Selection of Parameters

Ideally, proponents of extensive cost-benefit analysis would like to be able

to order and prioritize regulatory interventions across agencies. A

potential mechanism for this type of coordination is provided in Executive

Order 12866, which requires agencies to submit to the Office of

Management and Budget (OMB) cost-benefit analyses for regulations with

an estimated impact on the economy of $100 million or more.38 OMB has

suggested or prescribed certain rules (such as a presentation format

and/or a specific discount rate) to facilitate comparability across agencies

and to help promote quality analyses.39 While a common set of

assumptions or parameters may facilitate comparability by a central

government authority, so that priorities may be set across as well as within

agencies, some of these assumptions may fit the circumstances of the

given analyses less well. For example, a given discount rate may be more

appropriate for one project (for which the benefits and costs are spread

out over a long period) than another (with costs and benefits spread over a

shorter period). Therefore, there may be a tension between making an

analysis comparable to others and customizing it to fit a unique situation.

(We addressed these issues in questions 10 and 18 of table IV.1.)

Potential Future Price Changes

Can Add Uncertainty to

Analysis

Typically, cost-benefit analysis assumes that the intervention considered

has only a small or negligible effect on relative prices throughout the

economy. Generally, this assumption makes sense; however, for major

changes (such as a big change in tax law) the assumption is clearly

inappropriate. In these cases, it is much harder to put a value on the

potential impact of the proposed change. For example, a large cut in the

capital gains tax could affect a wide range of investment behavior, and

may even affect how much some individuals choose to work and how

much they are paid. A researcher trying to place a value on the potential

consequences of a capital gains tax cut might introduce an error by

valuing changes in productivity using the wage rates that prevailed before

the cut, because, in reality, once the new policy has been implemented,

wages rates might change. In such a situation, it is especially important for

38CPSC, as an independent agency, is not required to follow these procedures.

39The evaluation factors we examined parallel OMB’s suggestions; in some areas, we have

operationalized these concepts to create more specific and objective evaluation questions.

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the researcher to point out the potential mismeasurement, and (if feasible)

try to model its effect. (We addressed these issues in question 13 of table

IV.1.)

Researchers Recognize the

Importance of Sensitivity

Analysis to Inform the Reader

Every cost-benefit analysis will include some level of uncertainty or

imprecision, or reflect a methodological choice that not everyone will

necessarily agree with. Careful analysts will identify critical sources of

uncertainty or controversy, and revise or test the analysis quantitatively or

qualitatively to identify how or whether these areas affect the conclusions

reached. If large variations in measurement or assumption do not alter the

conclusions, then the researcher and the decisionmaker can have greater

confidence in the original results. However, if the conclusions of the

analysis can change depending on methodological choices or variable

measurement, then the researcher may want to try to improve the

measurement of the original variables. If this is not possible, then the

analysis may be of more limited value—an implication the decisionmaker

would need to know. (We addressed these issues in question 21 of table

IV.1.)

Reliable Underlying Data

Crucial to Reliable Cost-Benefit

Analysis

Despite the importance of sensitivity analysis, even the most careful and

elaborate sensitivity analysis often cannot sufficiently compensate for

poor underlying data. Obviously, if key variables are defined poorly or

measured imprecisely, the quality of the cost-benefit analysis will suffer.

Because many variables used in research are measured from surveys or

samples, sampling error may be unavoidable. The researcher can use a

sensitivity analysis to test the potential for sampling error to affect the

conclusions; however, if the survey instrument itself is flawed, the results

may be unreliable even beyond the degree indicated by sampling error.

Similarly, researchers may face a difficult problem when key data (such as

the cost of compliance) are provided for the analysis by an interested

party (such as the industry). If the interested party provides the data, that

party may have an incentive to provide biased, inaccurate, or misleading

information. In such cases, it is important to try to verify the data to the

extent possible; if not, the researcher needs to at least note the source of

the underlying information and allow the reader to make an informed

judgment about the reliability of the final analysis. (We addressed

potential data issues in questions 19 and 20 of table IV.1.)

Measuring and Valuing

Risk Reduction Under

Cost-Benefit Analysis

Frequently, the benefits of a particular proposal involve a reduction in risk

of injury or death. In these situations, the quality of the cost-benefit

analysis will also depend substantially on the estimates of the proposal’s

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impact on these risks. However, it is often difficult to accurately measure

and value risk reduction. A number of issues arise, including the effect of

the proposal on the level of risk (especially when individual behavior is a

factor in determining the size of the risk) and measuring individuals’

willingness to take risks in exchange for rewards.

Considerable Uncertainty Often

Surrounds Risk Measurement

and Risk Assessment

Measuring the effect of a proposal on the level of risk can be especially

difficult. Generally, it is not realistic to assume that any regulatory

intervention will reduce the risk level to zero—removing an environmental

carcinogen, for example, will probably reduce the number of cancer

deaths, but is unlikely to eliminate cancer entirely. Considerable

uncertainty may be inevitable when extrapolating a dose-response model.

Sometimes large doses of a potentially dangerous substance, given over a

short period of time, are used to predict the results of long-term exposure.

When the model moves across species—for example, predicting cases of

cancer in humans based on experiments with laboratory animals—another

source of uncertainty is introduced.

Measurement problems in the underlying data can make it hard to predict

future risk from epidemiological data as well. For example, when

longitudinal data are used, there may arise a “survival bias” in that the

analysis could be biased if it excludes individuals who die or otherwise

move out of the data set. Similarly, when some cases go unreported, the

data may understate the size and/or overstate the severity of the hazard.

For rare hazards, limited variation in the epidemiological data can make

measurement and prediction of risk more difficult. In addition, some data

may be known to produce biased estimates (because of exclusions or

potential double-counting, for example). Data problems such as these (and

the statistical or analytical methods used to deal with them) should be

pointed out to the reader to increase the opportunity for informed

judgment. (We addressed these issues in questions 3 and 19 of table IV.1.)

Risk-Risk Trade-Offs and

Individuals’ Behavioral

Responses to Policy Changes

Can Affect the Level of Risk

Sometimes actions taken to reduce one risk can have the unintended

effect of increasing that or another risk. For example, unforeseen

consequences arose in the 1970s when CPSC issued regulations requiring

children’s sleepwear to meet flammability standards. Manufacturers used

a chemical called Tris to meet these standards, but later it was discovered

that Tris posed a cancer risk. Changes in individual behavior can also

create uncertainty in predicting the level of risk because valuations of

costs and benefits of a proposed action are often based on historical

behavior. For example, valuations of a proposed new highway may be

based on the number of individuals currently traveling the route, their

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commuting times, and other factors. However, once the new highway is

built, some people may make extra trips in the area (shopping in different

stores, for example) than they did before. Some people who had driven at

off-hours to avoid congestion on the old road may now travel at peak

hours on the new one. Similarly, changes in public policy may cause

individuals or firms to change the technology they use, the amount of time

they spend at leisure or at work, or the amount they invest in innovation.

A special type of behavioral change—often referred to as “offsetting

behavior”—occurs when individuals change the amount of precautions

they take in response to a change in policy. For example, having an air bag

in the car or being required to wear a motorcycle helmet might make some

drivers feel safer, so they exercise less caution on the road. Sometimes

this offsetting behavior can result in an increase in the risk the

intervention was designed to mitigate. For example, because

child-resistant medicine bottles can be difficult to open, a grandparent

may leave the cap off the bottle, creating an even greater risk than would

be posed with a non-child-resistent cap. If such changes in consumer

behavior are foreseeable, the analysis will be improved if the researcher

points out such possibilities, and it will be even more useful if reasonable

attempts can be made to measure the impact. (We addressed these factors

in question 14 of table IV.1.)

Willingness-To-Pay Measures

Viewed as Appropriate for

Valuing Risk but Require

Careful Estimation

Measuring the benefit of risk reduction requires placing a value on

avoiding death and/or injury. Several approaches are available for this

task, but two have been used in cost-benefit analysis: (1) the “human

capital” approach, in which death or injury is valued at the market value

of the lost production it causes plus the medical costs expended and

(2) the “willingness-to-pay” approach, which attempts to measure directly

individuals’ willingness to pay for reducing the risk of death or injury.40 In

early cost-benefit analysis, the human capital approach was used, largely

because lost wages and medical costs were relatively easy to measure.

However, this approach is not preferred today because of a number of

shortcomings. First, if this approach were taken literally to apply to

individuals, then persons who do not produce output in the

marketplace—such as the elderly or homemakers—are not valued—an

assumption that is clearly ethically and economically inappropriate. In

addition, the human capital approach is unable to take into account costs

to the individual of death or injury such as pain and suffering. Also, it is

difficult to apply an “average” value based on human capital calculations

40This terminology has been borrowed from W.K. Viscusi in “The Valuation of Risks to Life and

Health,” in Benefits Assessment: The State of the Art, eds., Judith D. Bentkover, Vincent T. Covello,

and Jeryl Mumpower (Dordrecht, Holland: Reidel Publishing Company, 1986), pp. 193-210.

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to a statistically anonymous member of a large group. Finally, we are all

more valuable than the sum of what we produce, and these amounts could

not be included in a human-capital-based formulation. Thus, human capital

measurements are generally viewed as a lower boundary on the value of

avoiding death and injury, and are less preferred than the more recent

willingness-to-pay measures.

In part because of dissatisfaction with human capital measures as used in

cost-benefit analysis, and facilitated by newly available large micro-level

data sets, economists measure the benefits of reducing death or injury by

calculating the consumer’s willingness to pay for small reductions in the

probability of injury or death. These calculations have been done several

ways. Some approaches attempt to glean willingness-to-pay measures

from observed behavior in the marketplace. For example, one approach

examines pay differentials for jobs with different risks. Another approach

looks at the payoff to consumers who purchase safety devices, such as

smoke detectors and air bags in automobiles. These measures have the

advantage of being based on actual observed behavior in the marketplace

rather than on an artificial experimental situation. However, the validity of

such measures is based on the questionable assumption that workers and

consumers are sufficiently knowledgeable about the risks they face and

potential of different occupations or safety devices to alleviate those risks.

For many purposes, practitioners of cost-benefit analysis can select an

appropriate value from the range of research already done in this field

without performing the actual analysis themselves. However, for other

analyses, especially those involving unique risk-taking situations, it may be

wiser to gather new data to construct an estimate that is based on

circumstances as close as possible to those being studied.

Another common method for valuing risks is known as contingent

valuation, in which such values are elicited by observing responses or

behavior on a survey or in a controlled experiment. For example,

researchers surveyed individual shoppers on how much of a premium they

would be willing to pay for pesticide-free grapefruit.41 These methods have

the advantage of being able to provide information on areas that cannot be

addressed with market data. However, this characteristic could also be a

weakness—the very artificiality of the situation could make the consumer

make a less deliberate choice or could limit the usefulness of applying this

measure to other situations. This method does entail some technical

requirements—for example, it may be useful to perform statistical tests on

41Jean C. Buzzby, Richard C. Ready, and Jerry R. Skees, “Contingent Valuation in Food Policy Analysis:

A Case Study of a Pesticide-Residue Risk Reduction,” Journal of Agricultural and Applied Economics,

27 (2) (Dec. 1995), pp. 613-25.

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the distributional assumptions when constructing contingent valuation

measures. (We addressed these issues in questions 15 through 17 of table

IV.1.)

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Death, Injury, and Incident Data Sources

Used by CPSC

In order to target its resources and analyze the costs and benefits of

projects or potential projects, CPSC must obtain data on injuries and deaths

related to particular product hazards. CPSC relies on a patchwork of

independent data systems to address this need. However, not only does

each of these data sources have its own internal limitations, but together

CPSC’s data sources present an incomplete—and potentially

distorted—picture of consumer-product-related injuries and deaths. The

implications of this lack of data range from reducing CPSC’s ability to apply

regulatory project selection criteria to limiting the agency’s ability to

estimate the impact of its regulatory actions.

CPSC Relies Heavily

on Hospital

Emergency Room

Reports to Obtain

Estimates of Injuries

NEISS System CPSC obtains most of its injury information from its National Electronic

Injury Surveillance System (NEISS), which gathers information from

hospital emergency room records. NEISS provides national estimates about

the number and severity of emergency-room-treated injuries associated

with, although not necessarily caused by, consumer products in the United

States. To accomplish this, a stratified probability sample of hospitals is

drawn that is representative of all hospitals with emergency departments

in the United States and its territories.42 CPSC constructs national estimates

of the number of injuries associated with individual consumer products on

the basis of reports from this sample of 101 hospitals.

NEISS data result from information abstracted from hospital emergency

room records by coders trained by CPSC staff. The data are coded and

entered, at each site, into a personal computer programmed for this

purpose. The software checks the data entries for consistency. The data

collections are linked nightly to a CPSC permanent central database. Data

about product-related injuries are available to CPSC staff within 72 hours

after the accident for most of the injuries reported. These daily inputs are

reviewed by CPSC staff for quality and for identifying possible emerging

42The hospitals are sampled from a universe in which each hospital has at least six beds and provides

24-hour emergency service.

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Used by CPSC

hazards. The timeliness of the data also allows staff to observe seasonal or

episodic variations. For example, during a 30-day period surrounding the

Fourth of July in 1990, CPSC gathered extra data through NEISS for a special

study on injuries involving fireworks.

The unit of analysis for NEISS is the injured person. Other key

characteristics coded include the date of treatment, age and gender of

patient, injury diagnosis, body part affected, disposition of case, product

involved, and accident location. In addition, important details about the

injury and the injured person are provided in NEISS. For example, the

address and phone number of the injured person is included, permitting

follow-up investigations about the nature and cause of the injury. There

are about 900 product codes, ranging from abrasive cleaners to youth

chairs, which the coders use to specify the product involved.43 Consumer

products are coded to allow for a great deal of specificity in the estimates.

For example, a “hand saw” would be differentiated from a “portable

circular power saw,” and a “bicycle-mounted baby carrier” would be

specified differently from a “backpack baby carrier.” However, NEISS’

coding system that describes the diagnosis of the primary injury and the

body part injured is not overly specific, and because it is unique it cannot

be directly compared with similar data from other databases.

Despite the extent of valuable information provided by NEISS, this system

also has significant limitations. One important consideration relates to the

nature and size of the NEISS sample design. NEISS, throughout its history,

has been designed so that only national—not state, local, or

regional—estimates can be made. Thus, NEISS cannot detect interregional

or interstate differences, and may also be limited in its ability to identify

emerging product hazard patterns that are focused in specific states or

regions.

A limitation in the NEISS data for which CPSC has received criticism is the

lack of information that would assist in assessing causality—that is,

information that would establish (or provide a starting point to

establishing) whether the product in question caused the accident or

merely was involved in the accident. NEISS contains neither “N”

codes—which describe the nature of the injury—nor “E” codes—which

help explain how the injury happened. E codes briefly describe the

circumstances of the accident that produced the injury. For example, E

codes could help distinguish among falls that occurred on stairs, from a

43Customarily excluded from NEISS are injury data involving automobiles and motorcycles, trains,

boats, planes, firearms, food, illegal drugs, pesticides, cosmetics, medical devices, assaults and suicide

attempts, and occupational injuries.

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Used by CPSC

ladder, or off a roof. NEISS’ short narrative section sometimes contains this

type of information, but NEISS does not generally provide much information

on the circumstances surrounding the product’s involvement.

Other Sources of Data on

Injuries

CPSC augments the NEISS injury reports with other sources of anecdotal

information. For example, CPSC maintains an Injury or Potential Injury

Incident (IPII) database of reports the agency receives about injuries or

incidents involving consumer products. These reports come from a variety

of sources, including news clips; consumer complaints, including calls to

CPSC’s hot line; and public reports of product liability suits. Although the

IPII can provide only anecdotal information, this database sometimes

contains more detailed information than can be found in NEISS. For

example, IPII records can contain specific information about the product

involved—such as the manufacturer and date of purchase—that are

generally not found in NEISS. The IPII also serves as a source for cases to

investigate. This is particularly important for hazards for which NEISS

provides relatively few cases.

CPSC has also purchased data on poisonings in the form of the American

Association of Poison Control Centers (AAPCC) database. This database is

composed of reports from approximately 65 poison control centers

throughout the country.44 Reports from the AAPCC database contain such

information as the number of phone calls received by participating centers

concerning possible ingestion of a product and the number of individuals

who reported experiencing symptoms related to the ingestion. But these

reports contain little other information—for example, they do not show

how much of the poison was ingested.

Although NEISS provides some information on fire-related injuries, CPSC

obtains additional data on fires from the National Fire Protection

Association (NFPA) and the U.S. Fire Administration. NFPA, a private

organization, conducts an annual survey of fire departments that is

designed to make statistically valid national estimates of the total number

of fires experienced nationally each year. However, the NFPA survey does

not collect much detailed information about the characteristics of

individual fires. To augment the NFPA information, CPSC relies on the more

detailed information provided in the National Fire Reporting System

44The number of poison control centers reporting cases to the AAPCC database varied over the years,

ranging from 47 centers in 1984 to 67 in 1996.

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Used by CPSC

(NFIRS), which is compiled by the U.S. Fire Administration.45 NFIRS data can

provide information on the ages of the victim or victims, and the type of

dwelling (apartment versus single-family home, for example). However,

these data are available only with a long lag; a CPSC official we interviewed

in October 1996 told us that the most recent data he had available at that

time was from 1993.

CPSC Obtains Most of

Its Fatality

Information From

Selected Death

Certificates

CPSC obtains the majority of its information on fatalities from purchasing

death certificates from the states and culling information from them to

determine which deaths were related to consumer products. (Like the

NEISS emergency room reports, the death certificates establish only

involvement—not causality—of a consumer product.) CPSC does not

purchase the complete annual set of death certificates from each state;

instead, the agency buys death certificates according to selected E codes.46

CPSC purchases about 8,000 death certificates annually; of these,

approximately 50 percent will be related to a consumer product. Over the

years, in response to declining budgets, CPSC has reduced even further the

number of E codes for which it purchases certificates. Death certificates

include the date, place, cause of death, age, gender, race, and residence of

the deceased.

Although death certificates cannot indicate whether the consumer product

was “at fault” in a death, they do provide some information on the

underlying circumstances. For example, the E code would specify that a

person was killed in an accident caused by electric current. Of course, the

quality of the data depends on the care with which causation is

determined and reported. It is likely that this differs from locality to

locality as well as among individual doctors. However, there are some

objective indications that the quality of reporting causes of death has been

improving; for example, the proportion of cases that are categorized under

45Although NFIRS is a large dataset, it does not capture data uniformly across states. CPSC generally

assumes that NFIRS data accurately depict the distribution of characteristics across fires, and then

applies the NFIRS proportions to the NFPA data to approximate these characteristics on a national

level.

46According to agency officials, the major categories of E codes the agency does not purchase involve

falls (which infrequently involve consumer products) and fires (for which the agency relies on other

sources). This means that fall-related deaths associated with consumer products—such as falls from

playground equipment—will be undercounted. In 1995, CPSC conducted a pilot in which it purchased

a complete set of E codes from one state to determine whether it should change its mix of E codes.

CPSC decided that the set it was buying was still the best choice given the budget for death certificate

data.

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Death, Injury, and Incident Data Sources

Used by CPSC

ill-defined conditions has been falling.47 Although death certificates do not

constitute a sample of known probability or a complete count of fatalities,

and thus statistically reliable estimates cannot be made, the geographic

information contained in death certificates may help to identify state and

regional patterns as well as those that are national in scope.

However, death certificate data also have substantial limitations. First,

there is an extensive lag—usually 2 years—before data become available.

Therefore, death certificates are not very useful in timely identifying

emerging hazards. Furthermore, a number of factors contribute to

obtaining rather sketchy causal information. For example, details are quite

limited, which inhibit determining the degree to which a consumer

product was involved in the death, let alone whether the product was

defective or hazardous. Certificates are frequently completed without the

benefit of autopsy information to establish the precise cause of death,

either because an autopsy was not performed or because the certificate

was filled out before the autopsy took place. There is substantial variation

in coding practices and the level of detail available from state to state.48

The information available about the injured individual is very limited, and

the number of cases for most categories is very small; such data therefore

limit the kinds and amount of analyses CPSC can perform and the

conclusions it can draw.

CPSC augments its death certificate data with other sources where possible.

For example, CPSC has instituted a Medical Examiners’ and Coroners’ Alert

Project (MECAP), to provide more timely fatality information that lends

itself to follow-up investigations. CPSC has engaged some 100 coroners and

medical examiners from across the country to report potential

product-related hazards. This project produces about 2,000 reports

annually, and CPSC staff credit the coroners’ reports with alerting them to a

suffocation hazard concerning infant cushions, which eventually led CPSC

to recall existing products and ban future production. In addition to the

MECAP data, CPSC also records some reports of fatalities in the IPII, NEISS,

and NFIRS databases.

47See National Center for Health Statistics, Advance Report of Final Mortality Statistics for 1994, 45

(3) (Sept. 30, 1996), p. 74.

48For more information on this variation, see New England Journal of Medicine, Vol. 313 (1985), pp.

1285-86, and U.S. Department of Health and Human Services, Morbidity and Mortality Weekly Report,

Vol. 37 (1988), pp. 191-4.

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Death, Injury, and Incident Data Sources

Used by CPSC

CPSC Investigates

Selected Incidents to

Obtain Detailed

Information About the

Causes of Deaths and

Injuries

In order to effectively target resources, identify hazard patterns, and

determine the appropriate remedy for particular product hazards, CPSC

needs detailed analyses of the causes of reported incidents. CPSC’s data

sets generally do not provide such information. The NEISS data do not

include E codes (standardized, if brief and incomplete, descriptions of

incident circumstances), nor do they include detailed information about

how the incident happened. Some information may be provided in the

short, free-text comment area of the NEISS report, but generally few such

details are recorded. Death certificates do include E codes, but product

involvement is often difficult to ascertain.

As a result, CPSC staff perform follow-up investigations on selected cases to

develop additional information about each incident. Some of these

investigations are conducted entirely by telephone, while others are

conducted at the accident site. These investigations may include detailed

interviews with victims and/or witnesses, police or fire reports,

photographs of the product and/or the accident site, laboratory testing of

the product involved, or re-creations of the incidents. For example, in 1996

CPSC staff investigated an incident in which a baby’s leg was scratched as it

was caught between the slats of her crib. As part of the on-site

investigation, the CPSC investigator interviewed the child’s mother,

examined the child, examined and photographed the crib, and interviewed

staff at the store where the crib was purchased.

The CPSC staff we interviewed told us that investigations, particularly

on-site investigations, were an important source of information on

established projects. The additional detail these investigations gathered

helps determine causality and identify hazard patterns, leading analysts to

the appropriate remedies. For example, investigations revealed that very

few bicycle accidents were related to mechanical problems, and as a

result, CPSC staff decided not to recommend any changes to existing

bicycle standards. In addition, investigations may provide key evidence to

help identify and correct compliance problems. For example, the

investigator who reviewed the crib incident found that the crib in question

appeared to violate several mandatory safety standards.

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Death, Injury, and Incident Data Sources

Used by CPSC

CPSC Uses Modeling

Techniques and

Special Surveys to

Estimate Exposure

Information

In order to produce a numerical risk assessment, CPSC must have some

information on the extent to which individuals are exposed to a particular

product hazard. Exposure information can take many different forms, and

the best measure of exposure will depend on the characteristics of the

particular product hazard. For example, one measure of exposure might

be the number of products in use, while another measure might be the

number of hours a person spends using the product, and another measure

might take into account the intensity with which a product is used. If a

product is for one-time use only and is usually used soon after it is sold

(such as fireworks), number of products sold might be a reasonable proxy

for exposure. However, when a product is more durable, and used for a

longer period, and often “handed down” to another user, such as a baby

high chair, it would probably be more reasonable to base estimates of

exposure on the number of products in use. In cases where the potential

hazard is especially ubiquitous (like air pollution, for example), population

measures (the number living near the source or the number of children

under 5, for example) may be reasonable. For some hazards, it may be

important to account for the intensity of use. For example, the probability

of developing cancer from exposure to a wood stove may depend on how

often the stove is used, how large a space it heats, and how many times the

stove door is opened to add wood. Similarly, bicycles could be used very

frequently and very intensely (every day in urban traffic) or infrequently

and not intensely (once a season on the bike path in the park); thus, a

good exposure measure would take such factors into account.

CPSC does not conduct a formal, numerical risk assessment for each

project it undertakes. Of the 115 CPSC projects we reviewed, only 24

included a numerical assessment of risk. CPSC most frequently relied on

estimates of products in use to provide the exposure information for its

risk assessments. In 65 percent of the cases where an epidemiological risk

assessment was performed, CPSC based its exposure measure on an

estimate of the number of products in use.49 In an additional 5 percent,

CPSC obtained information on the actual number of products in use. In

30 percent of cases, CPSC used a population-based measure, and in

10 percent of cases, CPSC used a sales measure.50 We did not evaluate

whether the exposure measure CPSC chose was appropriate for each case.

CPSC conducted special surveys on bicycles and on cigarette lighters and

matches, for instance, to develop exposure information. The survey

49About half of these estimates of products in use were derived from modeling and about half from

special surveys.

50Percentages do not total 100 because in two cases CPSC used more than one measure of exposure.

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Used by CPSC

questions were designed to obtain information on the number of products

in the home, the intensity of use, the characteristics of the households

using the product, and the usual patterns of use. For example, the bicycle

survey included questions on the number of hours spent biking, the ages,

education, and income of household members, whether riding was done

most often on streets, sidewalks, or bike paths, and whether riders used

helmets.

Where special surveys are not practical—because of time, resource, or

other limitations—CPSC sometimes uses mathematical modeling

techniques to estimate the number of products in use. These models can

take sales information and information on the life of the product to

estimate the number of units in use. For example, CPSC used such a model

to estimate how many of the portable heaters made before a 1991 revision

to a voluntary standard were still in use.

CPSC Obtains Some

Information Under

Reporting

Requirements for

Manufacturers and

Other Businesses

CPSC may also receive information about potential product hazards

through industry reporting requirements. Although this information is used

mostly for identifying and addressing compliance problems, it may also

help identify new hazards. Companies are legally obligated to report to

CPSC information they receive that indicates a consumer product they

distribute is potentially hazardous. Under section 15 of the Consumer

Product Safety Act, manufacturers (including importers), distributors, and

retailers of consumer products must notify CPSC if they obtain information

that a product (1) fails to comply with a consumer product safety

regulation or a voluntary consumer product safety standard, (2) contains a

defect that could create a substantial product hazard, or (3) creates an

unreasonable risk of serious injury or death.

In addition to these reporting requirements, manufacturers and importers

of a consumer product must report to CPSC if (1) a particular model of a

consumer product is the subject of at least three civil actions that have

been filed in federal or state court, (2) each suit alleges the involvement of

that model in death or grievous bodily injury, and (3) within a specified

2-year period at least three of the actions resulted in a final settlement

involving the manufacturer or importer or in a judgment for the plaintiff.

Manufacturers must file a report within 30 days after the settlement or

judgment in the third such civil action.

CPSC may receive requests for information that firms have reported to it

under section 15 requirements. The law limits CPSC’s disclosure of any

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Death, Injury, and Incident Data Sources

Used by CPSC

information identifying a manufacturer and further limits CPSC’s release of

information that firms have provided under these requirements. Reports

on civil lawsuits may not be publicly disclosed by CPSC or subpoenaed or

otherwise obtained from CPSC through discovery in any civil action or

administrative procedure.

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Comments From the Chairman and

Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

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Commissioner Moore, Consumer Product

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Commissioner Moore, Consumer Product

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See comment 1.

See comment 2.

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Commissioner Moore, Consumer Product

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See comment 3.

See comment 4.

See comment 5.

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

See comment 6.

See comment 7.

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

See comment 8.

See comment 3.

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Commissioner Moore, Consumer Product

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Commissioner Moore, Consumer Product

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See comment 9.

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

See comment 10.

See comment 11.

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Commissioner Moore, Consumer Product

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

See comment 12.

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Commissioner Moore, Consumer Product

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Commissioner Moore, Consumer Product

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Commissioner Moore, Consumer Product

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Comments From the Chairman and

Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

The following are GAO’s comments on Chairman Brown and Commissioner

Moore’s letter dated July 24, 1997.

GAO Comments 1. As we discuss in the report, CPSC relies on a number of different sources

for injury incident data. (Descriptive information on all CPSC’s data sources

is provided in app. V.) However, only one source—the NEISS system—is

capable of providing statistically reliable, representative information, and

the NEISS system covers only those injuries treated in hospital emergency

rooms. Although CPSC obtains information from other sources, these data

are anecdotal and thus their usefulness is very limited in estimating injury

prevalence. As a result, we have recommended that CPSC consult with

experts both inside and outside the agency to prioritize its additional data

needs and to explore the feasibility of options for obtaining these data.

Changes over the past decade in the health care market, including the

growth of ambulatory care, changes in reimbursement procedures, and

improved health services research have the potential to make such

additional data collection more feasible and less costly than it was a

decade ago when some of these assessments were last made.

2. Figure 3 correctly states that CPSC does not obtain systematic

surveillance data on injuries treated outside the emergency room. In the

text of the report, we state that the number of injuries treated in each

setting is unknown. We added a similar statement to the figure to

emphasize this point.

3. In several places in their comments, Chairman Brown and

Commissioner Moore refer to CPSC’s investigations of selected incidents to

obtain more information. We discussed these investigations in our report.

We believe that these investigations provide valuable information on

causation, characteristics of accident victims, and hazard patterns, and we

agree that some information gleaned from investigations is not obtainable

from surveillance data. However, according to CPSC staff, this information

is available to the agency only after a project is well under way, not at the

initial stage of project selection. As a result, CPSC has little information on

these important factors to assist in project selection, and evaluation of

these criteria at the project selection stage is thus unavoidably speculative.

4. Descriptive information on this source of information was provided on

in appendix V.

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

5. For reasons we discussed in the report, relying on aggregate data (data

not specific to a particular consumer product) to address the limitations of

CPSC’s surveillance data is problematic. In addition, in the briefing

packages we reviewed, the estimates of injury incidents usually referred

only to NEISS cases and were not extended with modeling techniques;

because these techniques were used so infrequently for this purpose, we

did not assess their application in this report.

6. In referring to the agency’s monitoring of other aggregated sources of

injury data, Chairman Brown and Commissioner Moore state that

“Tracking of this type is sufficient to assure the adequacy of our data, as

we use it.” We disagree. Examining trend information from other sources

(without a rigorous application to CPSC’s own specific needs) is not

sufficient to compensate for (or even measure the magnitude of) the

limitations of CPSC’s injury surveillance data.

7. We believe this comment may reflect a misunderstanding of our point.

We do not mean to suggest that CPSC incorrectly relies on NEISS to provide

information on chronic illnesses. Rather, we are pointing out that CPSC has

virtually no systematic data on chronic illnesses. As we stated in the

report, on page 20, we agree with Chairman Brown and Commissioner

Moore (and with the CPSC staff we interviewed) that such data are often

difficult to obtain. However, chronic illness is listed as a criterion for CPSC

project selection, and CPSC has little information to assist in applying this

criterion. Accordingly, we are pleased with the statement by Brown and

Moore that CPSC will consider additional surveillance methods to obtain

more information on chronic illnesses.

8. We acknowledge in the report that CPSC uses other sources to

supplement its death certificate data. However, our interviews with CPSC

staff and our review of agency documents confirmed that death

certificates are the most important source of death data for CPSC. In the

briefing packages we reviewed, 80 percent of the calculations for numbers

of deaths were based in whole or in large part on death certificate data,

and death certificates were the sole source of death information in

36 percent of all CPSC briefing packages (a far greater percentage than for

any other single source). Death data were usually reported in CPSC briefing

packages with a lag of 2 or more years, especially when death certificates

were the sole source of data.

9. We agree with Chairman Brown and Commissioner Moore that there is

no single mold or perfect set of criteria for evaluating a cost-benefit

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Commissioner Moore, Consumer Product

Safety Commission, and GAO’S Evaluation

analysis, and we have revised the report to further emphasize this point.

We believe that Chairman Brown and Commissioner Moore may have

misunderstood the purpose of our evaluation questions. We did not “derive

a particular methodology” for cost-benefit analysis, nor do we mean to

suggest that CPSC should follow some “formula” for conducting analyses

that does not leave room for competent professional judgment. However,

to say that there is no perfect “formula” for cost-benefit analysis does not

imply that all methodological choices are equally consistent with rigorous

and comprehensive professional work. Although no litmus test exists for a

“good” analysis, the professional literature offers some basic, minimum

elements that are commonly used in evaluating cost-benefit analyses.

These elements, which are based on the principles of transparency and

completeness, are generally considered necessary, although not sufficient,

for a good analysis. Although flexibility may be sometimes necessary in

the assumptions or models underlying a cost-benefit analysis, the elements

we used—including full disclosure of data limitations, sensitivity analysis,

and incorporating all important costs and benefits—are appropriate to a

wide range of situations.

10. Chairman Brown and Commissioner Moore are correct in stating that

we evaluated 29 CPSC cost-benefit analyses that were completed between

January 1, 1990, and September 30, 1996. We identified these 29 analyses

as complete on the basis of CPSC’s statements—specifically, we considered

a cost-benefit analysis to be complete only if an explicit comparison was

made between aggregate costs and benefits. In addition, although the

analyses may have been prepared at different stages of the project, we

based our review on all available documentation on the project, and we

reported results only for the evaluation questions that applied to the

majority of cases and for which a clear determination could be made. We

did not report results separately for the eight regulatory analyses that were

required by law, because there were relatively few of these. However, we

found no substantial differences between these 8 and the remaining 21 in

terms of how they performed, compared with commonly used elements of

evaluation of cost-benefit analysis. Therefore, we are confident that our

results present an accurate assessment of CPSC’s cost-benefit analyses, and

we recommend that the agency implement changes to ensure that its

analyses are comprehensive and reported in sufficient detail.

11. We believe that, as now constructed, CPSC’s method for tracking

projects operates at too high a level of generality and provides too little

information to give a comprehensive, accurate picture of the agency’s

activities either at a given point or over a longer period. CPSC staff told us,

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Safety Commission, and GAO’S Evaluation

and our review of agency documentation confirmed, that the Management

Information System (MIS) usually tracks most agency activities only at a

very general level. For example, CPSC’s 1996 year-end MIS report lists some

specific projects such as “upholstered furniture” and “range fires,” but

most projects are accounted for under either broad umbrella codes such

as “sports and recreation” or “children’s projects,” or under activity codes

such as “investigations,” “product safety assessment,” or “emerging

problems.” In addition, CPSC staff told us that reliable inferences on

resources spent cannot be drawn from MIS data because of limitations in

the computer system and because no consistent rule exists about how

staff time in different directorates is recorded to project codes. As a result,

CPSC staff were unable to generate a comprehensive list of projects or to

provide accurate information about resources allocated to those projects.

We recommend an improved tracking system that would provide enough

information to monitor the projects selected and resources spent for each

specific consumer product hazard. We believe that as CPSC develops its

planned accounting system, it should attempt to make it as compatible as

practicable with the recommended tracking system. Nevertheless, we

believe that whether or not it implements its planned accounting system,

CPSC can and should improve its ability to track projects.

12. Our interviews with present and former commissioners revealed a

pattern by which certain of CPSC’s regulatory criteria have historically been

given greater emphasis in CPSC’s project selection process. Our objective

was to describe the process as it was related to us; we have not taken a

position on whether this process is appropriate. We have added a

statement to our methodology section to emphasize this point.

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Comments From Commissioner Gall,

Consumer Product Safety Commission, and

GAO’S Evaluation

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

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Consumer Product Safety Commission, and

GAO’S Evaluation

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GAO’S Evaluation

See comment 2.

See comment 3.

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GAO’S Evaluation

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Consumer Product Safety Commission, and

GAO’S Evaluation

The following are GAO’s comments on Commissioner Gall’s letter dated

July 23, 1997.

GAO Comments 1. Our interviews with present and former commissioners revealed a

pattern by which certain of CPSC’s regulatory criteria have historically been

given greater emphasis in CPSC’s project selection process. Our objective

was to describe the process as it was related to us; we have not taken a

position on whether this process is appropriate. We have added a

statement to our methodology section to emphasize this point.

2. Commissioner Gall states that we did not analyze the relative

importance of the deficiencies we found in CPSC’s data and methodology.

However, as we stated in the report, available information does not permit

us to determine the impact of better-quality data on the decisions CPSC

made. The limitations we found in CPSC’s data have a variety of potentially

conflicting impacts, precluding us from determining exactly how the

results of the analysis might change if improved data were available. For

example, because CPSC’s injury estimates are often confined to injuries

treated in hospital emergency rooms, CPSC’s estimates will generally

understate the actual number of injuries associated with a consumer

product. However, CPSC’s systematic injury and death data can generally

tell only whether a product was involved in an accident—not whether the

product caused or contributed to the accident. As a result, this can make

the risks assessed by CPSC appear larger than they might actually be.

Similarly, we cannot determine how improved exposure data would

change the relative importance of the risks assessed by CPSC. We agree

with Commissioner Gall that not all projects will merit the same level of

data or analysis. However, our review of CPSC raises questions about the

agency’s ability to obtain and analyze data necessary to support rigorous

analysis of important agency projects.

3. We agree with Commissioner Gall that resource considerations should

enter into CPSC’s decisions to undertake new data collection. For this

reason, we recommended an overall feasibility study for CPSC to prioritize

among its data needs and investigate new options for obtaining additional

information.

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Appendix VIII 

GAO Contacts and Staff Acknowledgments

GAO Contacts Lawrence J. Horinko, Assistant Director, (202) 512-7001

Sarah L. Glavin, Project Manager, (202) 512-7180

Staff

Acknowledgments

In addition to those named above, the following individuals made

important contributions to this report: Sheila A. Nicholson, Analyst,

gathered and analyzed data on CPSC’s information release procedures;

Nancy K. Kintner-Meyer, Senior Evaluator, compiled and analyzed

information on CPSC projects; George Bogart, Senior Attorney, provided

legal assistance; Harold Wallach, Senior Analyst, assisted in the analysis of

CPSC’s data systems; and Charles Jeszeck served as Assistant Director for

the project in its early stages.

Page 111 GAO/HEHS-97-147 Consumer Product Safety Commission
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