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Danger ! Consumer Protection Ahead !

par Xavier Méra
jeudi 30 mars 2006.

Article published on TCS Daily on February 22, 2006.

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Despite all their talk of "better" regulations, European Commission civil servants are certainly keeping themselves busy coming up with new ones. The latest project about to be adopted : lighter manufacturers will soon be obliged to equip their products with a child-safety device. The EU’s health and consumer protection commissioner, Markos Kyprianou, is enthusiastic. "This represents considerable progress in consumer protection against fires caused by children who play with lighters, accidents causing death, injury and property damages," he announced. But in reality, the obligatory standardization will not help consumers, as it disregards their preferences.

How could the obligation to produce safer lighters go against consumer well-being ? After all, one can certainly assume that no parent wishes to see his children set his apartment on fire. A safety device requiring two simultaneous pressures to light the lighter would thus be welcome. However, safety is a more complex business than the Commission suggests. It is not at all obvious that the use of such an object would be more secure, in general.

The Commission reports that 34 to 40 people would die each year in the 25 Union countries following fires caused by young children playing with lighters. If lighters equipped with child-safety catches can reduce the occurrence of such accidents, they can just as easily increase those of other accidents. In the car, the "safety device" of a lighter could well lead the driver to let go of the steering wheel to light a cigarette, but there are obviously no statistics to estimate the number of deaths avoided on the road thanks to the use of convenient lighters. From its uniform character, a regulation cannot take into account in advance all the particular circumstances which make the use of an object secure or risky.

In addition, safety is not the only important consideration for consumers. Obtaining more safety often requires the deprivation of certain satisfactions. Obviously, if speed were limited to 20 km/h on the road, the risk of serious accidents would be limited. However, no driver supports such a measure. In other words, the majority of people consider that the anticipated gains of faster travel are well worth the trouble of bearing the corresponding risks. To force them to do otherwise would improve their road safety but would undoubtedly not improve their well-being.

Let us return to our lighters. Suppose that their producers have already organized themselves so as to minimize their costs. That means that any improvement of the product in terms of safety must use additional resources, that is to say require higher costs. The question is : would proposing safer lighters be useful to consumers ? The answer is yes for those who value this improvement, those who are ready to pay for them by buying slightly more expensive lighters. Not to offer safer lighters under these conditions amounts to letting an opportunity for profit to pass by. To offer these lighters to consumers who do not see any added value in the safety device amounts to inflicting losses to oneself.

Businessmen are certainly not equipped with divine attributes allowing them to automatically respond to various consumer demands, but they have every interest in being concerned about them and their profits or losses indicate the adequacy of their productive choices to consumers’ priorities. In other words, while failing to offer a miracle solution, the prospects for losses and profits in the open market serve as a compass to harmonize the interests of consumers and producers.

The European Commission chose another way : compulsory standardization. Under these conditions, consumers can no longer choose between different types of lighters. They no longer have the means to express their preferences and businessmen can no longer adjust their production. By throwing the compass overboard, the regulator sacrifices consumers’ interests in the name of their protection.

The writer is an associate researcher at the Molinari Economic Institute.




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