CPSC Offers Bad Tidings of Holiday Season Regulations

Published November 24, 2014

Federal consumer safety regulators made the holiday season less festive for homeowners this year, as a wave of new product safety rules took effect in December.

Rules issued by the Consumer Product Safety Commission (CPSC) banned the sale of some types of decorative holiday lights, stating the action would reduce deaths from the products.

The new regulations classify “seasonal and decorative lighting products” with wire gauges smaller than 0.8 millimeters as “substantial product hazards,” citing as justification a fatality rate of just over one death per year associated with holiday lighting.

To compare, actuarial risk estimates suggest near-Earth-objects (NEOs) colliding with the planet are—on a long-term average—about 3.43 times more likely to kill an individual than Christmas lights.

Decorations such as “lighted decorative outfits, such as stars, wreathes, candles without shades, light sculptures, blow-molded plastic figures, and animated figures” are included in the new ban, which is to be applied to any “product painted in colors to suggest a holiday theme or a snow covering, a figure in a holiday costume, or any decoration associated with a holiday or particular season of the year.”

Scrooged by Regulations
According to the U.S. Department of Homeland Security’s Customs and Border Patrol (CBP), the rules would dry up nearly $500 million in economic activity, distributed across 550 companies located in China, Hong Kong, Taiwan, and the United States.

The CPSC’s filing notes less than 1 percent of the holiday lights affected by the rule were determined to  to contain dangerous or defective parts, as “voluntary conformance” with industry standards is nearly universal.

Walter Olson, a senior fellow at the Cato Institute’s Center for Constitutional Studies, criticized the new rules against cheery Christmas lights, explaining, “the CPSC—like other agencies—has an interest in justifying its own existence.

“Part of the politics of the CPSC is that, after decades, rulemaking kind of became an embarrassment for advocates at the agency,” Olson added. “Critics were saying, ‘look at you, you don’t have any rulemaking, you’re not an independent agency. We should throw you back into the Department of Commerce.’ You see, back then they could have recalls but no rulemaking.”

“They’ve become somewhat truculent from all the criticism,” he said, noting CPSC actions and regulations often seem to be intended to send a message of “see how much you laugh when we send our lawyers after you.”

“It’s interesting that the great majority of lights sold would be compliant with the rule they’re proposing—which raises a number of questions,” Olson said. “As we know from other CPSC regulations, it can be quite expensive to comply with a CPSC rule, even if your product is not in violation.”

In Search of a Problem
Although the CPSC was granted the authority to protect “the public from unreasonable risks of injury or death associated with the use of the thousands of types of consumer products,”  as its website states, academic studies suggest decades of regulations and rules have done little to reduce the incidence of accidents.

Publishing his research in the University of Chicago Law School’s Journal of Law and Economics, Duke University Professor of Economics W. Kip Viscusi reviewed more than 10 years of home accident data and CPSC regulations and concluded available data showed no “clearcut evidence of a significant beneficial effect on product safety from CPSC actions.”

Viscusi acknowledged the CPSC’s actions and existence may correlate with safer consumer product, but if so, he noted, the beneficial effect was “too small to estimate reliably.”

Viscusi also found evidence suggesting a causal link between CPSC regulations and an increase in some consumer accident rates.

In 1975, the CPSC issued new product standards for carpets, in hopes of reducing the risk of carpet fire accidents. More fire accidents involving carpets occurred after the institution of the new rules.

Perverse Effects
After eliminating other hypotheses for the increased incidence rates, Viscusi identified “a more disturbing possibility” in which “the nature of the carpet materials now in use may pose greater risks” than the materials banned by the CPSC.

Instead of allowing the market to self-regulate as businesses develop new products and technologies, CPSC interventions tend to suppress innovation, as “regulations aren’t updated at all,” Olson said.

“You have this rule sitting there on the books, and then technology changes,” he explained. “Someone comes up with better ways of developing holiday lights, which does not involve current technology and may not comply with the rules.” CPSC’s inflexible rules prevent such innovation, Olson said, because “they assume they know how people make Christmas lights.”

Hannah Yang ([email protected]) writes from Athens, Ohio.

Internet Info:

“Consumer Behavior and the Safety Effects of Product Safety Regulation,” W. Kip Viscusi, http://heartland.org/policy-documents/consumer-behavior-and-safety-effects-product-safety-regulation/