Minimal Costs, Doubtful Benefits
Armed with these assorted injury data, the Economics Directorate attempted to analyze the costs and benefits of the proposed rule. As is so often the case, the costs of the rule were easier to estimate than the benefits. The staff concluded that the rule would cost approximately $2.80 per stove, or $3.6 million annually. The estimate is probably low. It was based on several optimistic, but questionable, assumptions. Although a higher estimate of costs would have been more realistic, the CPSC's estimates were not unreasonable. The same cannot be said about the estimated benefits.
CPSC's economic analysis did not seriously consider whether the benefits of the rule were likely to exceed the costs. Instead, the costs were presented alongside the national injury estimates with the assertion that "any reduction in these injuries and deaths would result in significant benefits to consumers." When the rule was published, the Federal Register notice included the statement that "the Commission is unable to estimate the degree to which the rule may reduce fire incidents, [but] a reduction of seven percent (or possibly less) … would offset the total yearly cost of the rule." The likelihood of this happening was never discussed, and although it would be very costly to conduct tests to ascertain the probable effects, there are two reasons to think that a reduction of 7 percent is extremely unlikely.
First, consumer information and education campaigns are notoriously unsuccessful. A former CPSC commissioner argues in a recent analysis of three such efforts that they frequently fail. A CPSC staff member in the Human Factors Directorate agrees that measured results "around 2 percent are about all you can expect." Second, the estimated impact must be adjusted to reflect the percentage of stoves already labeled. Since over 70 percent of the stoves on the market already bore labels substantially equivalent to those proposed by the CPSC, the marginal benefit of the CPSC rule would, at best, constitute 30 percent of the estimated potential of labeling. (As explained later, this figure is optimistic, since the CPSC has not even matched the performance of the private sector in achieving compliance.) Moreover, by the CPSC's own estimates, injuries did not decrease at all during the years in which product certification, and hence product labeling, increased significantly.