The good folks at RegBlog recently invited me to submit a post on a topic of my choice. Affiliated with the University of Pennsylvania Program on Regulation, RegBlog presents news, analysis, and opinion about regulations and regulatory agencies. It's a very useful blog, which I read regularly.
My contribution was posted this morning (here). In it, I argue that Cost-Benefit Analysis and the Precautionary Principle, which often are presented as alternative and mutually exclusive decision tools can, in fact, be reconciled via two elements of the "Ramsey equation," some form of which is often used to determined the social discount rate (under the pure-rate-of-time-preference approach to discounting). Specifically, slight adjustments to the product of the coefficient of relative risk aversion and expected growth rate of consumption can build a reasonable level of precaution into the CBA without undermining the chief virtues of that formal process, which are transparency and replicability.