Precautionary Regulation in Europe and the United States: A Quantitative Comparison

Abstract

Much attention has been addressed to the question of whether Europe or the UnitedStates adopts a more precautionary stance to the regulation of potential environmental, health, and safety risks. Some commentators suggest that Europe is more risk-averse and precautionary, whereas the US is seen as more risk-taking and optimistic about the prospects for new technology. Others suggest that the US is more precautionary because its regulatory process is more legalistic and adversarial, while Europe is more lax and corporatist in its regulations. The flip-flop hypothesis claims that the US was more precautionary than Europe in the 1970s and early 1980s, and that Europe has become more precautionary since then. We examine the levels and trends in regulation of environmental, health, and safety risks since 1970. Unlike previous research, which has studied only a small set of prominent cases selected non-randomly, we develop a comprehensive list of almost 3,000 risks and code the relative stringency of regulation in Europe and the US for each of 100 risks randomly selected from that list for each year from 1970 through 2004.Our results suggest that: (a) averaging over risks, there is no significant difference in relative precaution over the period, (b) weakly consistent with the flip-flop hypothesis, there is some evidence of a modest shift toward greater relative precaution of European regulation since about 1990, although (c) there is a diversity of trends across risks, of which the most common is no change in relative precaution (including cases where Europe and the US are equally precautionary and where Europe or the US has been consistently more precautionary). The overall finding is of a mixed and diverse pattern of relative transatlantic precaution over the period.

How does the stock market respond to chemical disasters?

“…On average, in the first two days, the loss associated with the 14 pollution accidents is equal to À1:27%, while the average dollar value loss is about $180 million. 16 However, their estimates are not significantly different from zero. It is worth noting that these studies investigate accidents that occurred in the US and mainly focused on the 1970s and 1980s.…”

“…15 The author does not provide any dollar-value estimation. 16 They only provide results for the entire sample. To make our analysis comparable to theirs, we compute average abnormal returns only considering pollution accidents.…”

“…North-America). 7 We expect structural differences between countries to be relevant due to differences in environmental liability rules, in the stringency of regulation [16] or legal origin [30].…”

Globalization and legal change: The “Americanization” of European law?

“…14-15). 12 Overall, according to a systematic comparative study of 100 risk regulations in the USA andEurope, 1970-2004, there is no significant difference in relative ''precaution'' or stringency, although there has been modest shift toward greater relative precaution in Europe since 1990 (Hamitt et al 2005). 13 For a summary of striking constitutional changes in the UK, see McDonald and Hazell (2006) and Malleson (2006).…”

Using the boundaries of science to do boundary-work among scientists: pollution and purity claims

“…8. For a framework within which to pursue case studies allowing an assessment of the generality of scientific boundary-work relying on pollution and purity claims, see Hammitt et al (2005) and Swedlow (2006b). While the universe and sample of cases in this ongoing comparative study are particularly wellsuited to studying regulatory science, not all of the risks have been regulated, and not all of the risks have been regulated for the entire period under study.…”