Abstract
Safety strategies in the process and other industries depend ultimately on how much the owners and operators decide should be spent on protection systems to protect workers and the public from potential plant hazards. An important input to decisions of this sort is the value of life, which needs to be assessed in a valid manner so that safety decisions can be made properly. A key reference point for decisions on safety investment decisions in the UK is a 1999 study on the “value of a prevented fatality” (VPF), which employs a two-injury chained model that has been shown previously by the present authors to possess internal inconsistencies. The 1999 study made extensive use of utility functions to interpret survey data, and it is this feature that is explored in this paper. It will be explained here how different forms of utility function of the Exponential family can produce the same figure for an intermediate parameter in the calculation of the VPF from the two-injury chained model. Exponential utility functions are, however, unlikely to provide a realistic representation if their calculated risk-aversions need to be negative or zero in order to match survey data, which would imply an incautious attitude amongst those taking decisions on safety. The use of an incompletely specified wealth threshold in the utility modelling is explored in the light of a proposal by the authors of the 1999 study that a second utility function can be used to determine the individual's utility when his wealth lies below the threshold, which constitutes the lower limit of validity of the first utility function. The proposition is shown to be untenable. The results presented in this paper raise further concerns about the lack of validity of the 1999 study on which the UK VPF is based and hence on the safety decisions that have been made in consequence.
Highlights
Safety decisions in many industrial situations, in high-hazard industries such as nuclear, oil and gas and chemicals, depend on a consideration of how much should be spent on safety measures to protect workers and the public from potential hazards
It must be recognised that the value of a prevented fatality” (VPF) figure used in the UK since 1999 rests squarely on the value produced by the Carthy study
The average wealths are found for the Constrained Power utility function and are, the low values reported previously in Thomas and Vaughan (2015a)
Summary
Safety decisions in many industrial situations, in high-hazard industries such as nuclear, oil and gas and chemicals, depend on a consideration of how much should be spent on safety measures to protect workers and the public from potential hazards. In the UK the legal requirement is to do all that is reasonably practicable to ensure the health and safety of workers and the public. This requirement means that it is necessary to compare the sacrifice (cost, time and trouble) of implementing measures to improve safety with the reduction in risks to those that might suffer harm (HSE, 2014). In line with the Kaldor–Hicks compensation principle (Kaldor, 1939; Hicks, 1939), it is customary to assign the cost and a notional reduction in wealth to those being protected, even though they will rarely have to meet the bill in Process Safety and Environmental Protection 9 8 ( 2 0 1 5 ) 148–169 practice. Utility functions are used to characterise the fall in benefit these people experience as a result of their assumed reduction in wealth
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