Panel Paper: A Benefit Cost Analysis on the Use of Fire Barriers in Upholstered Furniture

Saturday, March 10, 2018
Room 16 (Burkle Family Building at Claremont Graduate University)

*Names in bold indicate Presenter

Nathan S Fesler and Robert Wassmer, Sacramento State University

From 2010 to 2014, the National Fire Protection Association estimates a national average of 440 civilian deaths, 700 civilian injuries, and $269 million (in 2015 dollars) in property losses occur annually from upholstered furniture fires in residential buildings. California with one of the largest upholstered furniture markets, and the only state to require upholstered flammability requirements for residential furniture, is proposing a flame-resistant fire barrier standard to improve the resistance of upholstered furniture to an open flame. Given diminishing marginal returns in approaching 100 percent consumer protection, the question arises of whether the benefits of additional regulation to consumer furniture safety will exceed the likely costs to upholstered furniture manufactures. This project provides the first benefit-cost analysis of California’s pending upholstered furniture regulation, using a modified benefit-cost model presented by the Consumer Protection Safety Commission. The benefits accrued are the incremental reduction in societal costs from residential upholstered furniture fire caused deaths, injuries, property, and content losses addressable by the fire safety standard under evaluation. Likewise, the costs incurred are the incremental increase in state enforcement costs, and furniture manufacturer’s testing, compliance, financing, and manufacturing costs from implementing the standard. A sensitivity analysis considered a range of estimates for the value of statistical life, injuries, discount rates, and cost factors. In all cases the benefits failed to exceed the costs of the proposed regulation. The findings illustrate the importance of comparing the full cost of regulation to the magnitude of the problem that is actually addressed by regulation.