Valuing Life Humanizing the Regulatory State
by Cass R. Sunstein
University of Chicago Press, 2014
Cloth: 978-0-226-78017-7 | Electronic: 978-0-226-12942-6
DOI: 10.7208/chicago/9780226129426.001.0001


The White House Office of Information and Regulatory Affairs (OIRA) is the United States’s regulatory overseer. In Valuing Life, Cass R. Sunstein draws on his firsthand experience as the Administrator of OIRA from 2009 to 2012 to argue that we can humanize regulation—and save lives in the process.

As OIRA Administrator, Sunstein helped oversee regulation in a broad variety of areas, including highway safety, health care, homeland security, immigration, energy, environmental protection, and education. This background allows him to describe OIRA and how it works—and how it can work better—from an on-the-ground perspective. Using real-world examples, many of them drawn from today’s headlines, Sunstein makes a compelling case for improving cost-benefit analysis, a longtime cornerstone of regulatory decision-making, and for taking account of variables that are hard to quantify, such as dignity and personal privacy. He also shows how regulatory decisions about health, safety, and life itself can benefit from taking into account behavioral and psychological research, including new findings about what scares us, and what does not. By better accounting for people’s fallibility, Sunstein argues, we can create regulation that is simultaneously more human and more likely to achieve its goals.

In this highly readable synthesis of insights from law, policy, economics, and psychology, Sunstein breaks down the intricacies of the regulatory system and offers a new way of thinking about regulation that incorporates human dignity– and an insistent focus on the consequences of our choices.


Cass R. Sunstein is the Robert Walmsley University Professor at Harvard University. His many books include Nudge: Improving Decisions about Health, Wealth, and Happiness and Why Nudge?: The Politics of Libertarian Paternalism.


“What happens when the world’s leading academic expert on regulation is plunked into the real world of government? Sunstein is that expert, and he was the regulatory boss of the US government from 2009 to 2012. Valuing Life describes both how Sunstein’s ideas about regulation influenced his tenure in government, and how his experiences in government have influenced his ideas about regulation. This immensely rewarding book, written in the humane, beautiful style that Sunstein is known for, should be read by everyone who cares about how our government works.”
— Eric Posner, University of Chicago

“Written with clarity and elegance, this book explains how White House oversight of the federal regulatory state is conducted—both the procedures and the analytics.  It is a must read for academics and practitioners interested in improving the quality of federal regulation.”
— John D. Graham, Indiana University and former Administrator of the Office of Information and Regulatory Affairs, OMB

“An immensely insightful look at one of the least understood and most influential agencies in the government and the complex factors that it considers in helping to determine what is and isn't subject to government regulation. “
— Carol Browner, distinguished senior fellow, Center for American Progress

“Sunstein, who served as Administrator of the Office of Information and Regulatory Affairs (OIRA) from 2009 to 2012, argues that government must always consider the impact of proposed regulation on human life. Sunstein describes how the OIRA actually works, explains the role of break-even analyses in government regulation, and explores how the government might account for risk to nonquantifiable goods, such as privacy. . . . overall this is a lucid book that sheds light on how the government reasons, and how it ought to reason, about the regulations that shape our everyday lives.”
— Publishers Weekly

“As an accessible introduction to regulation, the book benefits from Sunstein’s recent and significant experience, and his vision for new directions in public policy.”
— Library Journal

“There are many economists, philosophers, and legal scholars who write about the value of human life and how to incorporate it into policy, but few of them have actually put this into practice in a government position. The most prominent scholar to do so is Cass Sunstein, whose latest book, Valuing Life: Humanizing the Regulatory State, provides an invaluable perspective from someone who has experience in both the academic and policy realms. . . . In Valuing Life, Sunstein surveys a wide range of practical research and real-life policymaking in his characteristically lucid style, offering a candid and humble account of his administrative tenure in Washington. He performs an invaluable service in revealing how government regulators balance pragmatic concerns of resource scarcity with principled ideals of respect and dignity.”
— London School of Economics Review of Books

“Sunstein draws on his experience as administrator of the Office of Information and Regulatory Affairs (OIRA) to analyze the standards used for government regulations. . . . He provides both clear explanations and concrete examples of how the behavioral orientation in economics can contribute to the world of cost/benefit policy formulation. Recommended.”
— Choice

“It begins with an “insider” account of Sunstein’s time in the White House. Rather than a memoiristic tale about the personalities of the Obama administration, however, Sunstein focuses almost entirely on the OIRA’s day-to-day operations, laying out exactly how the office comes to approve regulations. He clearly invests government regulation with a great deal of importance, and while I wouldn’t necessarily call him passionate, he is certainly convinced that bureaucracy can do real good, specifically in the context of the regulatory state.”
— Los Angeles Review of Books


Introduction: Franklin’s Algebra

DOI: 10.7208/chicago/9780226129426.003.0001
[Office of Information and Regulatory Affairs, Cost-benefit, analysis, Administrative law, Regulation, Inter-agency coordination]
The Office of Information and Regulatory Affairs (OIRA), a part of the Office of Management and Budget (OMB), has become a well-established institution within the Executive Office of the President. This chapter attempts to correct some pervasive misunderstandings and to describe OIRA's actual role. Perhaps above all, OIRA operates as an information-aggregator. One of OIRA's chief functions is to collect widely dispersed information--information that is held by those within the Executive Office of the President, relevant agencies and departments, state and local governments, and the public as a whole. Costs and benefits are important, but for most rules, the analysis of costs and benefits is not the dominant issue in the OIRA process. Much of OIRA's day-to-day work is devoted to helping agencies to work through interagency concerns, promoting the receipt of public comments on a wide range of issues and options (for proposed rules), ensuring discussion and consideration of relevant alternatives, promoting consideration of public comments (for final rules), and helping to ensure resolution of questions of law, including questions of administrative procedure, by engaging relevant lawyers in the executive branch. (pages 11 - 46)

DOI: 10.7208/chicago/9780226129426.003.0002
[Cost-benefit analysis, Office of Information and Regulatory Affairs, Nonquantifiable benefits, Discounting, Climate change]
Some of the most interesting discussions of cost-benefit analysis focus on exceptionally difficult problems, including catastrophic scenarios, "fat tails," extreme uncertainty, intergenerational equity, and discounting over long time horizons. As it operates in the actual world of government practice, however, cost-benefit analysis usually does not need to explore the hardest questions, and when it does so, it tends to enlist standardized methods and tools. It is useful to approach cost-benefit analysis not in the abstract but from the bottom up, that is, by anchoring the discussion in specific scenarios involving trade-offs and valuations. (pages 47 - 64)

DOI: 10.7208/chicago/9780226129426.003.0003
[Cost-benefit analysis, nonquantifiable benefits, human dignity, breakeven analysis]
Agencies are generally required to quantify both benefits and costs, and (to the extent permitted by law) to show that the former justify the latter. But when agencies lack relevant information, they cannot quantify certain benefits. If this is so, how should agencies decide whether and how to proceed? As a matter of actual practice, agencies often engage in "breakeven analysis," by which they explore how high the nonquantifiable benefits would have to be in order for the benefits to justify the costs. Breakeven analysis is most useful when the agency is able to identity lower or upper bounds, either through point estimates or through an assessment of expected value. If lower and upper bounds are not readily available, agencies might be able to make progress by exploring comparison cases in which relevant values have already been assigned (such as for a statistical life). An understanding of breakeven analysis in regulatory policy also has implications for how to approach nonquantifiable variables in many domains of public policy and ordinary life. (pages 65 - 84)

DOI: 10.7208/chicago/9780226129426.003.0004
[Value of Statistical Life, Inequality, Individualization, Regulation]
Each government agency uses a uniform figure to measure the value of a statistical life (VSL). This is a mistake. The very theory that underlies current practice calls for far more individuation of the relevant values. According to that theory, VSL should vary across risks. More controversially, VSL should vary across individuals -- even or especially if the result would be to produce a lower number for some people than for others. One implication is that a higher value should be given to programs that reduce cancer risks. Another is that government should use a higher VSL for programs that disproportionately benefit the wealthy -- and a lower VSL for programs that disproportionately benefit the poor. (pages 85 - 110)

DOI: 10.7208/chicago/9780226129426.003.0005
[Value of Statistical Life, Inequality, Individualization, Regulation]
There are serious complications with the implications of VSL. First, bounded rationality raises problems for the use of private willingness to pay, which underlies current calculations of VSL. Second, the beneficiaries of regulation sometimes pay only a fraction or even none of its cost; when this is so, the appropriate VSL for poor people might be higher, on distributional grounds, than market evidence suggests. An understanding of this point has implications for foundational issues about government regulation, including valuation of persons in poor and wealthy nations. While full individuation is not practicable, it is nonetheless important to see what the current theory counsels in principle, and to understand that the limitations are practical ones, some of which may be overcome as knowledge progresses. Even with the practical limitations, a uniform VSL is increasingly difficult to justify. (pages 111 - 136)

DOI: 10.7208/chicago/9780226129426.003.0006
[Risk, Morality, Heuristics, Regulation]
Much of everyday morality consists of simple, highly intuitive rules that generally make sense but that fail in certain cases. In this essay I will identify a set of heuristics that now influence factual and moral judgments in the domain of risk, and to try to make plausible the claim that some widely held practices and beliefs are a product of those heuristics. Often moral heuristics represent generalizations from a range of problems for which they are indeed well-suited, and hence most of the time, such heuristics work well. The problem comes when the generalizations are wrenched out of context and treated as freestanding or universal principles, applicable to situations in which their justifications no longer operate. There is nothing obtuse, or monstrous, about refusing to apply a generalization in contexts in which its rationale is absent. In the moral and political domains, it is hard to come up with unambiguous cases where the error is both highly intuitive and on reflection uncontroversial--where people can ultimately be embarrassed about their own intuitions. Nonetheless, I hope to show that whatever one's moral commitments, moral heuristics exist and indeed are omnipresent, adversely affecting our reactions to social risks. (pages 137 - 154)

DOI: 10.7208/chicago/9780226129426.003.0007
[Terrorism, Probability Neglect, Behavioral Economics, Risk Perception]
When strong emotions are involved, people tend to focus on the badness of the outcome, rather than on the probability that the outcome will occur. The resulting "probability neglect" helps to explain excessive reactions to low-probability risks of catastrophe. Terrorists show a working knowledge of probability neglect, producing public fear that might greatly exceed the discounted harm. As a result of probability neglect, people often are far more concerned about the risks of terrorism than about statistically larger risks that they confront in ordinary life. In the context of terrorism and analogous risks, the legal system frequently responds to probability neglect, resulting in regulation that might be unjustified or even counterproductive. But public fear is itself a cost, and it is associated with many other costs, in the form of "ripple effects" produced by fear. As a normative matter, government should reduce even unjustified fear, if the benefits of the response can be shown to outweigh the costs. (pages 155 - 172)

Epilogue: Four Ways to Humanize the Regulatory State

Appendix A: Executive Order 13563 of January 18, 2011

Appendix B: The Social Cost of Carbon

Appendix C: Estimated Benefits and Costs of Selected Federal Regulations

Appendix D: Selected Examples of Breakeven Analysis

Appendix E: Values for Mortality and Morbidity