How can they be so wrong, so often, and yet still exert so much influence on government policy?
In 1984, a two-year-old named Joy Griffith climbed onto her grandfather’s reclining sofa chair to watch cartoons. At one point, she fell between the collapsible footrest and the seat. The footrest trapped her head, and she began to suffocate. When she was finally found, she was blue and lifeless. Police officers extracted her body from the chair and resuscitated her. They were successful, but she had been deprived of oxygen for too long. The toddler had permanent brain damage. From then on out, she lay in a vegetative state in a hospital.
In June of 1985, the Consumer Product Safety Commission issued a “national consumer alert” about the type of sofa chair that strangled Griffith. But the commission still needed to decide if they would require design changes. So Warren Prunella, the chief economist for the Commission, did some calculations. He figured that 40 million chairs were in use, each of which lasted ten years. Estimates said modifications likely would save about one life per year, and since the commission had decided in 1980 that the value of a life was one million dollars, the benefit of the requirement would be only ten million. This was far below the cost to the manufacturers. So in December, the commission decided that they didn’t need to require chair manufacturers to modify their products. If this seems odd today, it was then too—so odd, in fact, that the chair manufacturers voluntarily changed their designs.
Prunella’s calculations were the result of a growing reliance on cost-benefit analysis, something that the Reagan administration had recently made mandatory for all new government regulations. It signaled the rise of economists to the top of the federal regulatory apparatus. “Economists effectively were deciding whether armchairs should be allowed to crush children,” Binyamin Appelbaum writes in his new book The Economists’ Hour. “The government’s growing reliance on cost-benefit meant that economists like Prunella were exercising significant influence over life and death decisions.” Economics had become a primary language of politics.