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Federal Register / Vol. 86, No. 227 / Tuesday, November 30, 2021 / Rules and Regulations
68097

Total Impacts
Low
Primary
High
Benefits
$200,294,622

$247,964,991

$295,635,335

Costs
$83,299,721

$49,456,037

$15,612,352

Net Benefits
$116,994,900

$198,508,954

$280,022,983

An analytic issue not addressed in the assessment underlying these results is the question of how to interpret individuals hesitation or unwillingness, in the absence of regulation, to accept an intervention that achieves extensive health protection for themselves, with little or no out-of-pocket cost, and ever-lessening time or inconvenience cost; a simplistic revealedpreference monetization of the rules effect would be that it yields minimal or negative benefits for such staff members, even the ones for whom it prevents or reduces severity of COVID19 infection. Given the dynamic nature of the pandemicincluding scientific innovations and other human responsesit may be that long-run equilibrium for COVID
19 vaccines has not been reached, in which case the above use of VSL-related estimates for staff-member risk valuation may be appropriate at this time. On the other hand,
other valuation approaches may also be worth exploring.
Toward that end, we use Herzog and Schlottmann 1990 to estimate a cap on how much the benefits of an employment-based health or safety regulation could exceed its costs.139 Under this model, benefits accrue partially to workers in the form of health and longevity improvements net of lost wage premiums and partially to employers in the form of wage reductions, and the sum of worker and employer portions equals the monetized value of health and longevity improvements. Herzog and Schlottmann find that the wage reduction portion of total benefits is somewhere between 42.9%
=$4.29/$10.01 and 74.3% =$3.67/$4.94.
Put another way, the total benefits of a rule should be no more than 1.3 =$4.94/$3.67 to 2.3 =$10.01/$4.29 times the regulatory costs incurred by employers; otherwise, the wage reductions experienced by those employers
would make it profit-maximizing or surplusmaximizing, for non-profit entities for them to mandate vaccination or perform the other risk-abatement activities without a regulation forcing them to do so.
The first several rows of Table 24 show upper bounds on staff benefits estimated by applying the Herzog and Schlottmann ratios to the estimated costs of the IFR assuming for simplicity, as elsewhere in this analysis, that employers incur the costs.140 Unlike in Tables 22 and 23, and the analysis that feeds into them, the quantified staff benefits in Table 24 are not necessarily limited to individuals who are newly vaccinated.
Another, even more fundamental difference, is that Table 24 demonstrates an approach in which low costs are correlated with low staff benefits and high costs with high staff benefits.

139 Herzog, Henry W. and Alan M. Schlottmann.
Valuing Risk in the Workplace: Market Price, Willingness to Pay, and the Optimal Provision of
Safety, The Review of Economics and Statistics 723: August 1990, pp. 463470.
140 Herzog and Schlottmann use an old data set 19651970 and focus on work settings quite
different from child care centers. We request comment on whether more recent or better-tailored inputs are available.

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Table 23. Net Benefits, 7% Discount Rate, 2020 dollars