The use of standards in achieving appropriate levels of tolerance.

Abstract

To an increasing extent the activities of an individual or organization have direct effects upon others. These effects, which the economist calls external economies or diseconomies, may be in the form of waste discharge to the atmosphere, land, or water; sound; structures with certain visible consequences for others than the owner; or chemicals and radiation that flow from the propagator to the property or body of someone else. Throughout the world, governmental institutions have been called upon to regulate in one way or another activities which cause such effects. In this paper, those effects of human activity which are unintended and which have an impact upon parties other than the producer or consumer of the goods or services resulting from the activity will be called external effects.1 Parallelling this increase in external effects has been a growth in the complexity of materials incorporated into foods, medicines, clothing, and structures of all kinds. These may have unintended, and at times harmful, effects upon the user. Because of the difficulty most individuals have in being informed about these effects and their possible consequences, government has intervened to require the disclosure of consequences, to preclude the use of the materials, or to establish levels of tolerance. To distinguish these impacts from external effects they will be referred to in this statement as side effects. One of the techniques that governments have used in dealing with both external effects and side effects is to establish standards of tolerance. In the United States we have a vast array of such standards including stream standards and effluent standards for water quality, standards governing the use of certain chemicals in food, structural specifications for automobiles to increase safety, and regulations which specify how certain lands may or may not be used. These various standards have one or more of three general objectives: 1. To limit external effects to a level that the net returns to society as a whole are acceptable.2 2. To achieve an equitable distribution of costs and returns among those involved in or affected by an activity having external effects. 3. To inform or protect the consumer from the adverse side effects associated with the use of certain materials. In the United States we have come to view the use of standards as the primary, if not the sole, means of dealing with external and side effects. It is my purpose in this paper to probe the nature of the problems with which a standards tech-