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«ABSTRACT Regulatory transparency—mandatory disclosure of information by private or public institutions with a regulatory intent—has become an ...»

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Workplace Hazards Disclosure Researchers have found contradictory evidence that OSHA workplace hazardous disclosure standard, which imposed substantial new reporting burdens on employers and manufacturers, has improved worker safety. Despite its compatibility with workers’ goals of limiting their own risks or seeking higher wages to compensate for them, new information about chemical hazards has not become embedded in most employees’ routine decision-making. Accessible only within the workplace and in disaggregated form, information is not available at a time, place, and format to inform job seekers’ decisions. For workers already on the job, data sheets are often too complex to be comprehensible. In addition, the quality of required safety training has varied widely from workplace to workplace, with small workplaces in particular often lacking the capacity to provide employees with sufficient risk information and training (General Accounting Office, 1992).

Exercising broad discretion permitted by regulators, employers have produced information sheets that vary widely in quality, detail, and technical vocabulary.

Research on the quality of data sheets has shown that only 51 percent of analyzed sheets were partially accurate in all their sections (Kolp, Williams, & Burtan, 1995).

Workers were generally able to understand only around 60% of the information on such sheets (Occupational Safety and Health Administration, 1997; Kolp, Sattler, Blayney, & Sherwood, 1993). The high cost of understanding information has discouraged workers from using it to change work habits. Even in cases were workers seemed to comprehend safety information, they used it only in limited fashion (Phillips, Wallace, Hamilton, Pursley, Petty, & Bayne, 1999). It should be noted that all of the documented cases of the impact of training and disclosure on information occurred within unionized establishments where unions can play a key third-party role as user intermediary (Weil, 2004; Fagotto & Fung, 2003). The absence of unions in more than 90 percent of private sector workplaces raises questions about the applicability of these results to nonunion workplaces.

Nonetheless, chemical hazard information has become embedded in some employers’ decision-making processes. Limited evidence suggests that the awareJournal of Policy Analysis and Management DOI: 10.1002/pam Published on behalf of the Association for Public Policy Analysis and Management The Effectiveness of Regulatory Disclosure Policies / 173 ness of risks associated with certain chemicals has led some employers to switch to safer substances. One early analysis of the standard found that 30% of surveyed employers had adopted safer chemicals (GAO, 1992). Concerns about potential liability claims brought against employers from customers and/or workers also may have fueled substitution (Arnett, 1992). In addition, material safety data sheets have become such a useful tool for the exchange of information between manufacturers and corporate users of hazardous chemicals that some have extended their use to non-hazardous chemicals. Overall, the hazard communication system functions more as a tool to exchange information among chemical producers and chemical users than as a device to help employees reduce their risk exposure.

Ineffective Transparency Systems Ineffective transparency systems lead to little or no change in the behavior of users or disclosers and so no advance of policy objectives. Two of the transparency systems—patient safety disclosure (Pennsylvania)6 and workers’ notification of plant closing—prove ineffective because the pre-existing decision processes of would-be information users resist the incorporation of new information, because those users face a very limited set of choices and so cannot act on new information, or because users’ goals differ from those of policy makers. They also are ineffective because disclosers respond to user demands in ways that actually exacerbate the public problem that the system seeks to address.

Patient Safety Disclosure Research results to date suggest that Pennsylvania’s Guide to Coronary Artery Bypass Graft Surgery may be ineffective while the New York’s Cardiac Surgery Reporting System may be moderately effective, although researchers remain divided about the specific effects and effectiveness findings of both state reporting systems. Metrics have proven particularly problematic. Patient safety report cards may have low predictive accuracy and may be based on data with internal inconsistencies (Green & Wintfeld, 1995). Their narrow focus on mortality rates, as well as the complexities of risk adjustment, may undermine their credibility.

In addition, hospital managers and physicians, focused on liability issues and often unaccustomed to aggregating patient safety data to address systemic problems, often resist information-sharing because of their own incentives and traditionally have had limited institutional mechanisms for learning from past mistakes (Graham, 2002). In Pennsylvania, one survey suggested that the state’s report card had little or no influence on the referrals of most (87 percent) cardiologists. Respondents expressed concern about the narrow focus of reporting on mortality, inadequate risk adjustment, and questionable reliability of data. More than half of cardiac surgeons also reported that they were less willing to operate on severely ill patients after the report card was introduced (Schneider & Epstein, 1996). Survey data also suggested that coronary bypass patients had limited knowledge of the state-mandated report card, both before and after surgery (Schneider & Epstein, 1998).





By contrast, early research in New York state found that the introduction of the state’s reporting system was associated with significant declines in risk-adjusted For reasons we describe, some studies suggest that New York is moderately effective.

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mortality rates in the first three years (Hannan, Kilburn, Racz, Shields, & Chassin, 1994), giving New York the lowest risk-adjusted bypass mortality rate of any state in 1992 (Peterson, DeLong, Jollis, Muhlbaier, & Mark, 1998). A later evaluation of the first 10 years of reporting found that both patient volume and mortality rates declined in relatively high-mortality hospitals (Cutler, Huckman, & Landrum, 2004). In both New York and Pennsylvania, analysis of Medicare claims data suggested that the introduction of report cards was associated with a decline in the illness severity of bypass surgery patients, suggesting a possible selection bias by doctors and/or hospitals (Dranove, Kessler, McClellan, & Satterthwaite, 2003). Another analysis of Medicare data suggested that more highly educated patients made greater use of reported information (Mukamel, Weimer, Zwanziger, & Mushlin, 2002). On the whole, these limited research findings underscore the need for more systematic evaluation of regulatory transparency systems aimed at reducing deaths and serious injuries from medical errors. Such evaluation would help lay the groundwork for design of more effective reporting systems.

Workers’ Notification of Plant Closing The Worker Adjustment and Retraining Notification Act (WARN) aims in part to enable workers to respond to economic dislocation by providing information about plant closings. However, evidence suggests that the advance notice generated by this transparency system has failed to materially affect the decision-making processes of workers who face layoffs. Advanced notice provides little assistance to affected workers in how to seek new employment, and certainly has no effect on the availability of other options. Further, the 60-day notice required by WARN starts running when workers are still employed, limiting the amount of time available for job search. Thus the capacity of the individual to engage in a full job search upon notification is highly constrained.

The required information may also come too late for unions, community groups, or other intermediaries to change the decision to close. Third parties often lack capacity and /or experience to facilitate job search (GAO, 2003). Finally, the objectives of users, third parties, and disclosers may prove quite diverse in the face of closures, leading them to pursue different strategies in the face of information about the imminent event. Not surprisingly, there are few documented cases of employers’ changing closure or mass layoff decisions in the wake of community- and/or union-notification of the impending closure (Gerhart, 1987; U.S. Department of Labor, 1986).

Studies of WARN’s impact on reemployment prospects of displaced workers consistently show limited effects. Several studies have found that WARN has only modest impact on the provision of advanced notice information beyond what had been voluntarily provided prior to the Act (Addison & Blackburn, 1994, 1997; LevinWaldman, 1998). In those cases where new information is provided, workers have done somewhat better in finding new employment in the immediate wake of displacement. However, for those who do not find jobs immediately following closures or layoffs, their spells of unemployment tend to be longer than workers who were not notified. Thus, if there are effects on reemployment, they are modest and restricted to a subset of workers.

IMPLICATIONS FOR POLICY MAKERS AND PUBLIC MANAGERS

Regulating by means of mandatory disclosure has gained prominence as policy makers have perceived the shortcomings of more conventional regulation, searched Journal of Policy Analysis and Management DOI: 10.1002/pam Published on behalf of the Association for Public Policy Analysis and Management The Effectiveness of Regulatory Disclosure Policies / 175 for approaches to problems that do not lend themselves to standardized rules, and recognized the potential of information technology to make complex data accessible to broad audiences. Accordingly, understanding when and how regulatory transparency can be effective is important because transparency will likely be applied more widely in the future. Its potential increases further as continuing advances in information technology make it easier for public managers or intermediaries to customize information, for disclosing organizations to understand and respond to users’ choices, and for users to specify the information they want. At best, transparency systems inform individual choice and organizational decision-making in ways that serve public goals. In short, the use of government authority to mandate the disclosure of information has taken a legitimate place beside the use of such authority to mandate minimum standards and to impose taxes, trading regimes, or other financial incentives.

However, unlike many proponents who view transparency as automatically producing public benefits, we suggest a more measured analysis. Conditions for effectiveness are quite demanding and therefore are not easily met. Regulatory transparency should be chosen as a remedy for only a subset of policy problems. Even where mandatory disclosure might prove useful, it must be carefully crafted with a clear understanding of user and discloser decision-making routines and cognitive processes. This suggests a three-tiered framework for understanding which kinds of policy problems are appropriate for regulation via mandatory information disclosure.

In the first category of policy problems, new information could be easily embedded into the routines of users and those users would be likely to act in ways that spurred reactions from information disclosers that, in turn, advanced public aims.

Such situations exhibit three characteristics. First, would-be information users systematically make sub-optimal choices from a social perspective because they lack certain salient information. Second, if they had this information, users would have the will and capacity to change their behavior accordingly. Third, their new choices would cause information disclosers to alter their behavior in ways that make it more congruent with policy intentions. These three conditions define situations that are ripe for intervention through transparency systems. Corporate financial disclosure and restaurant hygiene grading provide examples of such transparency systems. Despite the overall ineffectiveness to date, hospitals’ disclosure of medical mistakes or of broader quality measures may represent another promising area.



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