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Performance Based Codes: Economic Efficiency and Distribution Equity.

pdf icon Performance Based Codes: Economic Efficiency and Distribution Equity. (426 K)
Meeks, C. B.; Brannigan, V. M.

Interscience Communications Ltd.; National Institute of Standards and Technology; Building Research Establishment; and Society of Fire Protection Engineers; Swedish National Testing and Research Institute. Interflam '96. International Interflam Conference, 7th Proceedings. March 26-28, 1996, Cambridge, England, Interscience Communications Ltd., London, England, Franks, C. A.; Grayson, S., Editor(s)(s), 573-580 pp, 1996.


National Institute of Standards and Technology, Gaithersburg, MD


fire safety; codes; decision making; costs; failure; fire retardant treatments; plywood; risk analysis; performance based codes


Performance based codes are justified based on their economic efficiency. Economic efficiency can only be achieved if decision makers make the optimum trade off between cost of injuries and injury avoidance activities. Private decision makers may be tempted to achieve cost savings by shifting cost to other parties not involved in the decision process. These "externalities" represent a significant source of market failure. Market failures may be addressed by restructing the marketplace, regulating private behavior, or public provision of the service itself. All three of these responses have a place in performance based codes. Other market failures can exist and performance based codes must be implemented in a way to increase, not decrease the efficiency of the market. Efficiency is not the only social goal. Societies also concern themselves with the problem of distributional equity. Distributional equity describes who bears the burdens of specific social policy choices. Performance based codes may raise significant distributional equity problems, especially if the person bearing the burden of the fire risk is unable to participate in the regulatory decision process e.g. homeowners. A short case study of fire retardant treated plywood illustrates the economic problems involved in inadequate performance based analysis.