Fatal Tradeoffs: Public and Private Responsibilities for Risk.

• Author: Krauss, Michael I.

Life is replete with hazards to our physical and mental health. Eventually, one or a combination of them will kill each of us. Some of these risks (including the chance of getting beaned by a baseball, rocked in a roller coaster, or dumped by a date) are "goods": We "consume" them, and in important ways they help make life worth living. But other risks are "bads," in the sense that people are willing to incur costs to reduce the likelihood of their occurrence.

For everyone but anarcho-capitalists, it is proper that government attend to at least a few bad risks, like those posed by foreign invaders and domestic criminals. Handling these dangers is said to constitute a "public good," since Albert can't prevent Betty from free-riding on his defense of our borders or his maintenance of law and order. But reduction of most bad risks has until recently been seen as a private matter. Albert is best able to gauge the value of his using a chain saw; likewise, Betty internalizes much of the gain derived from living in an earthquake-proof building. Private goods are, for both economic and ethical reasons, properly allocated through private ordering, which employs property, contract, and, when costs are wrongfully imposed, tort law.

For some time government has been taking away the power of individuals to determine their own risks. The 1970s in particular saw a huge new wave of health, safety, and environmental regulation that in essence denied the existence of the public/private dichotomy sketched above. The public ostensibly was not making, or could not make, "correct" choices about the safety characteristics of their jobs, their cars, or their groceries. During the last 20 years Congress has created a series of agencies and directed them to guard our safety almost without compromise. Under each administration except that of Ronald Reagan, bureaucrats have been granted ever-increasing budgets and directed to protect us against ourselves.

Kip Viscusi's interesting book, Fatal Tradeoffs, addresses the question of whether these bad risks should have been moved from the private to the public sphere. He also asks how effectively the public sector has dealt with risk. His conclusions are unlikely to please the "reinventors of government" in the Clinton-Gore administration.

Viscusi, who teaches economics at Duke University and was deputy director of Jimmy Carter's Council on Wage and Price Stability, is a prolific author who has been concerned with the...