NHTSA CASE STUDY Analytical Approach

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NHTSA CASE STUDYAnalytical Approach

• Presentation for IOM
• APRIL 5, 2005

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General Approach to Injury

•  
• NHTSA countermeasures impact both mortality and
  morbidity. Therefore, any valuation approach we
  adopt must address both impacts (Nonfatal
  Injuries typically account for 56 of monetary
  harm from motor vehicle crashes).
• Injuries stratified by severity using Abbreviated
  Injury Scale. 
• For most NHTSA rulemakings, stratification by
  injury severity provides a sufficient basis for
  analysis.

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Analytical Approach

• Cost-effectiveness Analysis cost per equivalent
  fatality
• Requires way to express fatalities and non-fatal
  injuries in common terms (fatality equivalents)
  How many injuries correspond to a fatality?
• Value both mortality and morbidity to reflect
  societal impact.
• Individuals lost quality of life
• Economic impacts

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Basis for Quality of Life Estimates

• Functional Capacity Loss measures established by
  Hirsh and by Carston and Oday physician panel
  estimates of various dimensions of functionality
• Mobility
• Cognitive
• Pain
• Cosmetic
• Activities (bending, lifting)
• Sensory (vision, hearing)
•  
• Miller translated levels of functional capacity
  loss into utility loss based on studies by
  Torrance (1982), Carsten (1986), and Kaplan
  (1982). Added dimension for ability to work.
  Derived weights both within and across each
  dimension.
•  
• Estimate of quality of life lost to injury
  relative to whole life

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Economic Valuation

•  Weighted functional capacity losses for each
  injury category can be valued relative to
  selected value of statistical life.
• Economic impacts not included in value of life
  measurements are added to reflect overall
  societal loss at each injury level.
• Together these factors represent Comprehensive
  Values which are used to derive relative value
  factors for nonfatal injuries.

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Changes in Response to A-4

• Benefit/Cost Analysis added (3.5 million value
  of statistical life)
• Sensitivity analysis for value of fatality used
  in Benefit /Cost analysis (5.5 million)
• Both 3 and 7 discount rates examined
• Uncertainty analysis added for billion dollar
  rules (2 so far)
• Currently examining uncertainty around relative
  value of nonfatal injuries

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Key Issues

• Is one metric superior to all others, or do they
  have specific strengths and weaknesses that make
  more than one desirable in different
  circumstances?
• How would application of different injury
  valuation method impact results of regulatory
  analyses?
• Are differences significant enough to modify the
  outcome of a regulatory process?

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Key Issues, Cont.

• If differences are significant, what criteria
  should agencies use to determine best practice?
  Are there universal criteria, or would it be
  appropriate to apply different criteria across
  agencies or to different rulemakings?
• OMB has declined to establish a specific value
  of life for all regulating agencies to use. They
  allow agencies to select their own value so long
  as they can cite a justification for it. Value
  of life estimates can differ dramatically.
  (1-10 million). Allowing agencies the leeway
  to select their own criteria for the relative
  valuation of morbidity would be consistent with
  OMBs current policy towards valuing mortality.

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Results Across Indices
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Results Across Indices