Operational Safety Economics

Chapter 8Making State-of-the-Art Economic Thinking Part of Safety Decision-making

8.1 The Decision-making Process for an Economic Analysis

The aim of economic analyses applied in an operational safety context is to support safety investment decision-making, and not to produce numbers, figures, or tables. However, even taking opportunity costs and benefits into consideration, in most decision-making situations with respect to operational safety, there is no simple scale of preference and the outcomes are not easily observable. Moreover, in the case of operational safety, using outcomes as a basis for evaluating the “goodness” of a safety investment decision is problematic. If accidents occur despite the safety investment, does this mean that the investment was a wrong decision, or, on the contrary, that it avoided even more accidents? Or, if no incidents or accidents occur, does this mean that the safety investment was a good decision, or is the absence of accidents the result of pure coincidence, or is there yet another safety measure that prevented all incidents? Hence, the validation of the goodness of a safety investment is not easy.

Yet, as Aven [1] also indicates, outcome-centered thinking is important and helps to give a clear view on objectives and preferences. The problem is, however, that such thinking usually leads to making decisions without contemplating and calculating a variety of alternatives. In economic thinking, the concept/principle of “opportunity costs ...