I’m not sure the drug example is a safety problems per se, it looks more like an incentive problem to me.
If an FDA official approves a bad drug that kills 1000 people/year, he probably gets canned. If he rejects a good drug that would have saved 1000 lives/year...well, no one including him will actually know how many lives it would have saved, and he will take his paycheck home and sleep soundly at night.
Can you come up with an example that doesn’t involve government?
Additionally, solving the problem of getting people to take the right drugs may be more complicated than just putting out drugs that have a tiny positive expected value. The market is humans, after all, and humans themselves are loss-averse. There are also credibility problems—it’s easy to blame the regulators for failures, and so humans do. And so people demand that the regulators be very selective, and so they do. If regulators didn’t respond like this, people might behave differently, maybe avoiding new drugs or distrusting doctors.
[libertarian alert]
I’m not sure the drug example is a safety problems per se, it looks more like an incentive problem to me.
If an FDA official approves a bad drug that kills 1000 people/year, he probably gets canned. If he rejects a good drug that would have saved 1000 lives/year...well, no one including him will actually know how many lives it would have saved, and he will take his paycheck home and sleep soundly at night.
Can you come up with an example that doesn’t involve government?
Additionally, solving the problem of getting people to take the right drugs may be more complicated than just putting out drugs that have a tiny positive expected value. The market is humans, after all, and humans themselves are loss-averse. There are also credibility problems—it’s easy to blame the regulators for failures, and so humans do. And so people demand that the regulators be very selective, and so they do. If regulators didn’t respond like this, people might behave differently, maybe avoiding new drugs or distrusting doctors.