Introduction

In a recent program on television, it was reported that the infant mortality rate in the United States declined in the year 1990. Much of the discussion, however, centered on the fact that, despite the decline for the population as a whole, the gap between infant mortality rates for blacks and whites is still large. The commentators on that program agreed that steps (e.g., increasing the availability of prenatal care) must be taken to reduce relatively high infant mortality rates among blacks. Similarly, a Los Angeles Times frontpage headline November 15, 1991 read: “Black Infant Death Rate 2½ Times That of Whites”, with a subhead, “Health: State committee calls for increased spending and reallocation of resources to help close the gap”.

Now consider the case of a small town in the Northwest. An industrial plant that provided employment to a significant proportion of the population was also suspected of contributing to the higher cancer rate. The people in the town faced a choice between closing the plant and thus losing the jobs or allowing its continued operation and thus suffering higher incidences of cancer among their population. The town was clearly burdened with a higher risk, but it also received benefits in terms of employment and associated economic activity. In this case both risks and benefits must simultaneously be considered in evaluating alternative policy options with regard to the industrial plant.

In this chapter I discuss models that may be useful in evaluating distributional aspects of risk in a public policy evaluation.