“Externalized costs are negative impacts associated with economic transactions which concern people outside of those transactions, meaning that neither the buyer nor the seller bears the brunt of the costs.” — Mary McMahon
On December 29, 2008, a fire in a UCLA organic chemistry lab killed research assistant Sheharbano Sangji. In response, the University of California promulgated safety rules across the entire system. Many principal investigators saw, and still see, these safety rules as “a tax on scientific productivity.”
A recent working paper about lab safety and research productivity seeks to reassure principal investigators that safety rules don’t affect their productivity. That is, these safety rules do not have a statistically significant impact on the frequency at which they publish papers.
Essentially, the authors are making the business case for safety, as applied to academia.
The “Business Case for Safety”
Since 1968, in response to Joseph Spengler’s “The Economics of Safety”, various safety organizations have been trying to make the business case for safety. They talk about safety programs as “investments” and refer to “ROI”. The objective is to motivate business leaders to improve their organizations’ safety as a way to improve their bottom line.
In “The Business Case for Investment in Safety”, the National Safety Council notes that employers paid $51.1 billion in 2010 for direct worker’s compensation costs. What it doesn’t say is how much the safety programs to avoid worker’s compensation costs would be, assuming it was possible. If it were $5 trillion, that wouldn’t be a wise investment, but if it were $5 billion, that would.
The problem with most efforts to promote “the business case for safety” is that they focus on the potential benefits achieved, e.g., $37,000 each for avoiding lost time injuries and $1,390,000 each for avoiding occupational fatalities, with no helpful guidance on what it costs to avoid the injury or fatality. A “business case” must include a discussion of costs as well as benefits.
These efforts succeed in monetizing the benefits of avoiding injuries, illnesses, and fatalities, but they don’t make a business case.
The Cost of Science
Rather than focusing on the benefits of lab safety—reduced injuries and fatalities to lab workers—the recent working paper focused on the costs of lab safety. In other words, the loss of scientific productivity. They didn’t explain to principal investigators that “You’ll avoid this many injuries and fatalities to the workers in your labs when you follow these safety rules,” and so avoid the costs of poor safety. Instead, they explained that the benefits of following safety rules would come at no cost to their research effort. Unfortunately, this flies in the face of the real-world experience that safety training and hazard reviews take time.
Time that is not spent on “doing science.”
Since that time comes from somewhere, it’s hard to argue that there is no cost to implementing safety rules, to conducting safety training, and to performing hazard reviews. While scientific productivity may be unchanged, the cost of science still goes up. Whatever it was before the safety rules went into effect, the cost of science was higher after the rules went into effect, even if scientific productivity remained unchanged.
Externalized Costs
Activists frequently cite “externalized costs” when inveighing against certain practices. Manufacturers externalize the cost of pollution associated with their products when society is left to clean it up. Distant farmers externalize the cost of food production when society provides the transportation system that makes it cheaper to ship half-way around the world than from a nearby county. The fast fashion industry externalizes its costs by using slave labor to produce clothing. What these all have in common is that parties to the economic transaction get the benefit while others pay the costs.
A.C.Pigou first described the idea of externalized cost in 1920, in his book, The Economics of Welfare. He argued that the way to correct for externalized costs is to impose, from the outside, a tax that offsets the externalized costs. This has become known as a Pigouvian tax.
An economic transaction exists when a principal investigator accepts grants in exchange for the opportunity to achieve the recognition that comes with publication. Lab workers are not participants in that transaction. They are third parties, people outside of those transactions, who bear the brunt of poor lab safety. Poor lab safety is a cost that neither the buyer (granting institution) nor the seller (principal investigator) bears.
Safety rules don’t increase the cost of science. They simply shift the externalized costs of poor safety to internalized costs, so that the beneficiaries of the transaction also pay the costs. When principal investigators complain that safety rules are “a tax of scientific productivity,” they’re right. The point shouldn’t be to convince principal investigators that safety rules do not impose a Pigouvian tax, but that they are a reasonable tax.
Safety Rules to Level the Playing Field
What’s true in the lab is true throughout the chemical enterprise. If the efforts to make “the business case for safety” succeeded, every enterprise and every organization would be doing everything they knew to be safer, just to be more profitable. Providing a safer workplace would give a competitive advantage. To the extent that providing a safer workplace gives a competitive advantage, no safety regulations are required. The only issue is assuring that every enterprise and every organization knows what it needs to do to be safer.
Unfortunately, occupational safety is a cost that is easily externalized. The way to correct that externalization is to impose a Pigouvian tax in the form of enforceable safety rules. It’s great that a study has found that improved lab safety comes at a negligible cost in terms of publication rates, but let’s acknowledge that cost, arguably a negligible cost, for what it is: a tax on scientific productivity. It’s a tax that levels the playing field between those who want their labs to be safer and those who prefer the competitive advantage of ignoring safety.
Lab safety is a tax that the scientific community and the chemical enterprise should want every lab to pay.
