On Balance: So You want to Conduct a Benefit-Cost Analysis? Experts Share Their Stories

This blog series is a partnership of the Society for Benefit-Cost Analysis On Balance blog and Dr. Zoë Plakias’ Spring 2021 Benefit-Cost Analysis (AEDECON 5330) class at The Ohio State University. Students interviewed experts in benefit-cost analysis to learn about what they do and why they do it. All interviews have been edited for brevity and clarity with the help of Dr. Plakias and are shared with the approval of the interviewer and interviewee.

  • Expert: Dr. Sandra Hoffmann
  • Interviewer: Melissa Ferruso

Dr. Sandra Hoffmann is a Senior Economist with the Food Economics Division of the USDA Economic Research Service (ERS). She received her undergraduate education at Iowa State University and went on to earn a J.D. from the University of Michigan Law School. She holds a Ph.D. from the Department of Agricultural and Resource Economics, University of California, Berkeley and an M.A. in Agricultural Economics from the University of Wisconsin-Madison.  She worked on pesticide regulation as an attorney.  She also served on faculty at the University of Wisconsin-Madison and was a research fellow at Resources for the Future before joining USDA Economic Research Service. Most of her work with the USDA concentrates on food safety and on valuation of the health benefits related to public policies. I had the wonderful opportunity to meet with Dr. Hoffmann to discuss her work with the USDA, as well as the career and education paths that brought her to where she is today.

Q: What was your undergraduate degree in, and how did you end up going from there, to studying law, to studying agricultural economics?

A: I was a history major at Iowa State. When I started, I thought I wanted to work on historic preservation, which is still something I care a lot about. But I realized that I needed to be more in the present, literally. I kind of had my mid-life crisis at 20. I grew up in Iowa. I spent years in 4-H. You can’t look at Iowa’s green fields and not think about food production. As I looked around it seemed to me that helping assure that we could continue to feed people was worth spending a life working on.

As I talked with people about how I could do this, I was fortunate to discover agricultural economics. I was doubly fortunate to meet Prof. John Timmons, who worked on natural resource issues related to agriculture. He gave me an undergraduate research assistantship and was a wonderful mentor. Dr. Timmons was trained in Institutional Economics.

Prior to World War II, Institutional Economics was a major school of thought in Economics. It focused on the way markets and economic behavior are shaped and enabled by legal rules and social norms. Being a history major I thought having a better understanding of this relationship would make me a better economist. So I studied law as a background for work in economics.

I can see every day in my work at ERS that that background gives me a more fundamental understanding of how the whole system around me is operating, and how my research can help inform policy decisions. I’m not certain I would recommend this path because it’s such a huge investment, but it does help.

Q: Do you find that rules and laws regarding food safety in other areas of disciplines change? Does the value and priority of food safety seem to change when there is a change in administration?

A: Food safety is a major program for USDA regardless of administration. What I do find is that over time science and technology advances and the economics of food production changes.  Programs need to evolve with that. So part of my job at ERS is to understand those changes and be involved in discussions with people about how things are evolving and where research may be needed to help inform government response. This is a very fundamental idea in Institutional Economics; technology and knowledge change economic opportunities and incentives, legal institutions evolve in response to the resulting economic changes, and in time the economy is shaped by the evolving structure of legal rules.

Q: I see in the past you’ve done a fair amount of survey research on people’s willingness to pay (WTP) to reduce risk to their health. You’re currently working on a project estimating their willingness to pay to reduce risks of foodborne disease. Why are you doing this work and how will it improve cost-benefit analysis?

A: Cost-benefit analysis is intended to measure people’s WTP for the benefits they get from the program under consideration. We have a fair amount of research based on market behavior about people’s WTP to reduce risks of death, but we don’t have a lot on non-fatal outcomes of disease. As a result, agencies typically use cost-of-illness estimates (cost of treatment plus lost productivity) to measure the value of reducing the risk of non-fatal illnesses. From economic theory we know that cost-of-illness estimates usually underestimate people’s WTP to reduce health risks.

So one of the areas where research is needed is to develop estimates of WTP for morbidity. This hasn’t been done in the past because there really isn’t much market data that allows one to get at it and non-fatal health outcomes are so diverse that doing outcome-specific stated preference surveys is cost-prohibitive. A few years ago, the UK Food Standards Agency decided to develop a stated preference survey that uses a health index developed for clinical medicine to understand and measure how disease affects people’s life outcomes, it’s called the EQ5D. They developed a WTP survey that uses this index to value a range of health outcomes from foodborne illnesses. We’re adapting that survey for use in the US. The survey will allow us to have the value of each attribute in EQ5D scale which we can then use to characterize a wider range of diseases.  So it’s a more efficient way of getting at WTP estimates for morbidity.

Q: I know you’ve written about comparative food safety policy around the world, and you’ve just had a paper come out targeted for an audience wanting to learn about food safety policy here and abroad called Food Safety: A Policy History and Introduction to Avenues for Economic Research. Can you talk more about that?

A: I wrote this paper for people like you who might be interested in food safety and want an overview of how food safety policy is developed and where research can contribute to improving policy. The purpose of this article is to provide people who are new to the field with a quick introduction to the institutions that shape food safety policy and an overview of possible areas where research can contribute to food safety policy.

Food safety has an interesting institutional structure. Since the 1950s when we really started to see a lot of chemical additives in foods, the FAO [Food and Agriculture Organization] and WHO [World Health Organization] helped organize a forum for countries to discuss, ‘how do we know what’s safe’, and ‘how do we come to some agreement to know what’s safe enough to allow for international trade.’ If we don’t have some agreement about safety standards it makes it very difficult to have international trade in foods. The Codex Alimentarius Commission has served as a forum for discussion about the science of food safety and a place where—through negotiation—basic standards on food safety are agreed upon. That’s what allows us to have sourcing from so many places as we see today at the supermarket.

But CODEX meetings are also a place where people can talk about what’s working and what’s not working in terms of how we manage food safety both in government and in industry.

There are a number of lessons that have emerged from those discussions.  It’s not enough to just focus on the processing plants or on consumer education, it really is the whole production system. Rather than seeing food safety policy as only about setting and enforcing safety standards; it’s really about managing introduction and proliferation risk throughout the system. You’ll hear discussion about the need for farm-to-fork, science-based risk management to assure the safety of the food supply.  That came out of CODEX discussions.

Maintaining food safety in a world where we have globalized food markets is really a collaborative activity among countries around the world. A recent WHO study that I was involved in found food safety ranks just behind air pollution in terms of global health burden.  Most of that burden is in lower income countries. Improvement of food safety in low-and-middle-income countries has become recognized as an integral part of assuring global food security. It used to be its own separate thing. It’s interesting to see that kind of change in thinking in one’s lifetime. CODEX not only provides a forum for discussion among higher income countries, but also for lower income countries, and it provides a means for sharing knowledge about how to build more effective food safety systems. Influences flow back and forth in this collaborative process. The U.S. has certainly been a major contributor to discussions at CODEX, but the discussions at CODEX have also contributed to thinking about what is needed to assure food safety in the U.S. Those discussions certainly informed our 2010 Food Safety Modernization Act, the first major reform of US food safety law since the 1950s.   

Q: I understand you value the outcomes that are essential to the cost-benefit analysis process. Could you walk us through that—do you perform the analysis and then do they come to you looking for the information or do they commission you for the information and then you put that together?

A: It’s a bit looser than that. Regulatory agencies do cost-benefit analysis and that’s true across the Federal government. There are a few pockets of research across the Federal government.  It’s our job at ERS to be looking forward to see where research may be needed to help inform policy in the area we work in more broadly. Some of that research may be used in cost-benefit analysis. 

My valuation work is tightly connected to cost-benefit analysis, so I think a lot about what kind of research is needed to inform cost-benefit analysis. I’m on various committees across the government talking about how demand for analysis is changing, how technical standards for analysis are changing, etc. The discussions in those committees help me stay aware of what kind of research may be helpful. So, I wouldn’t say my research is commissioned but I am constantly talking with people to understand how things are changing and where new research would be helpful.

Q: Do you initiate some of that research yourself?

A: I initiate all of that research myself, but I always need to explain how it is going to be relevant to USDA’s mission and to food safety policy within the federal government more broadly. The motivations are similar to those I found as faculty in a land grant university and a researcher in a think tank.  Ultimately, most research is tied to funding and to get funding you need to understand the funder’s priorities and how you can develop research that addresses them.


Q: I see that you are affiliated with several organizations including the Society for Benefit-Cost Analysis. Could you speak a little bit on what your role is with SBCA and the importance of this professional association to you in your career? And also, what advice do you have for a college senior nearing graduation?

A: For me, professional societies like the Society for Benefit-Cost Analysis have been incredibly important in career and in professional development. They’ve been a place where you can learn about new research and policy developments, have discussions about the direction that the field is going or needs to go. It’s a place where I’ve been able to build professional relationships I can draw on. The societies help “keep me in the swim” of what’s going on in research and policy arenas I work in.  They also open up new avenues. So, it’s a way of having professional education updated all the time as well.

I have been involved in the board of several of these societies. I think that that’s important to do because they’re voluntary organizations, and that’s the way they keep functioning. Volunteers are the life blood of professional organizations. Every society I have been involved in has actively wanted to get new professionals involved at the committee level so they can learn about the society and get more engaged. Serving on committees is a great way to build your professional networks and it’s a real help to the society.

Advice to college seniors? I think the most valuable time investment that I may have made in my profession were the months that I spent as an undergraduate asking myself, “what do you want to do with your life?” You can prepare for what you think your life will be, but you don’t know what doors will open and available opportunities always shape your professional life.  Knowing what really matters to you helps you choose between opportunities and shape those opportunities into a meaningful body of work over the course of your lifetime.

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