Consumer protection and the role of government: evaluating California's proposed fire barrier performance standard through benefit cost analysis

The State of California’s Bureau of Electronic and Appliance Repair, Home Furnishing and Thermal Insulation (BEARHFTI) is the only regulatory agency that has imposed smoldering safety standards for upholstered furniture. However, this does not address ignition from an open flame. In response to industry input, BEARHFTI is evaluating a fire barrier performance standard that requires a flame-resistant fire barrier to improve the resistance of upholstered furniture to an open flame. The desirability of mandating fire barriers in upholstered furniture for residential use depends upon whether the benefits from pursuing a regulatory requirement exceed the cost of imposing it. This thesis evaluates the efficiency of California’s currently proposed fire barrier performance standard. Through a Benefit-Cost Analysis, I account for the likely future benefits for Californians of the adoption of a fire barrier performance standard, and the likely future costs to furniture manufactures of implementing it for home furniture sold in the state. Using a unique Benefit-Cost framework, the estimated net present value over a 16-year time horizon is negative $836,539,890, suggesting the costs will far outweigh the benefits. Given an inherent level of uncertainty in the model assumptions and data used, a sensitivity analysis was performed to check the robustness of the initial findings to model changes. A range of sensitivity analyses of the benefit/cost inputs and model parameters indicate the initial negative findings are robust to changes in assumptions. Therefore, I conclude that directly imposing a fire barrier performance standard is not an efficient approach to protecting California consumers against upholstered furniture fire losses caused by an open flame. As a policy alternative, I propose BEARHFTI consider a product warning label requirement to reduce consumer harm from upholstered furniture flammability risk.