The law and economics of administrative law: A statistical analysis of the Consumer Product Safety Commission's petition process

Thomas Boustead, Fordham University

Abstract

This study seeks to determine those factors influential in decision making at the Consumer Product Safety Commission, the primary federal agency charged with the regulation of unsafe consumer products. To make this determination, a statistical analysis was made of the Commission's petition process.^ Under the petition process, non-Commission personnel would request that the Commission promulgate a safety standard. The Commission could grant the petition and undertake a regulatory project. Alternatively, the Commission could deny the petition either because the product did not present an unreasonable hazard or because voluntary safety standards sufficed to regulate the hazard.^ A theoretical model was developed to examine what safety standard the Commission should mandate for a product given that consumer precaution, as well as the prevailing safety standard, lowers the likelihood of an accident. The analysis focused on the problem that consumers may respond to the regulatory mandate by reducing precaution (the "lulling effect"). The model shows that the importance of this lulling effect for Commission decision making depends upon the presence of consumer misperception of product risk.^ To analyze the Commission's decisions on petitions, a multinomial logit model was estimated using as the dependent variable the Commission's decision. As independent variables, the model included a measure of product value to consumers, a combined measure of product risk and risk misperception, a dummy variable for whether a consumer group brought the petition and a dummy variable to control for changes in applicable administrative procedures. The coefficients of the product value and product risk measures were utilized to obtain the monetary value of an accident implicit in Commission decision making.^ Other results of the model were that interest groups and the applicable procedural regime were significant in the Commission's decisions on mandatory standards. Conversely, for voluntary standards, the measures of product value and product risk were significant. ^

Subject Area

Law|Economics, General

Recommended Citation

Boustead, Thomas, "The law and economics of administrative law: A statistical analysis of the Consumer Product Safety Commission's petition process" (1995). ETD Collection for Fordham University. AAI9530020.
https://fordham.bepress.com/dissertations/AAI9530020

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