Extract

It is an inescapable fact of life that virtually every activity that we undertake carries some risk of death or injury. It is also the case that in most situations risk can be reduced, but only at a cost. That is, safety can usually be improved, but only by using up scarce resources that could otherwise have been devoted to alternative beneficial uses. This means that if society’s resources are to be allocated efficiently and to greatest advantage, then in public sector decisions concerning the provision of safety in the form of a public good rather than a marketed product, some means must be found to place a value on safety improvement so that benefits can be compared directly with costs. But how is the value of safety to be defined and estimated in practice? Until 1988 monetary values for the prevention of fatal and non-fatal injuries used by the UK Department of Transport – which was the first UK public sector agency to employ explicit monetary values of safety in cost–benefit analysis – were derived on the basis of the so-called ‘gross output’ approach.