ABSTRACT
An economic analysis of safety expenditure involves a consideration of the costs of various safety measures and the benefits which can be expected from adopting these measures. For economic justification of this expenditure the benefits should exceed the costs. In principle, the costs of fire safety devices are not too difficult to determine but some of the benefits due to them are difficult to quantify. Benefits such as tax allowances and savings on insurance premiums are realised by the property owners with ‘certainty’. But a reduction in fire damage due to a fire safety measure is an ‘uncertain’ benefit whose ‘expected value’ depends on the probabilities associated with the occurrence and spread of fire. Damage to a building and its contents can be fairly assessed but it is difficult to evaluate consequential losses due to loss of profits, production, exports and employment. Damage to life in terms of injuries and deaths is another important factor to be considered in fire safety problems. Insurance claims provide some data for the valuation of injury and an alternative method is to aggregate various components-treatment costs, the value of time lost, social costs, and the value of pain and suffering which is the most difficult to evaluate. The ultimate cost assessment which has to be made is the value of human life, which is the subject of this chapter.
