There are two aspects to the mitigation of earthquake effects: the expected reduction of property damage and economic loss due to earthquakes, and the reduction of the expected number of casualties. The reduction of property damage and economic loss is sufficient to compensate for the initial costs incurred, the corresponding measures are justified by financial gain alone. However, in the San Francisco Bay Area, the initial costs are higher than the expected financial benefit. In this case, expenditures are justified by the expected number of lives saved.
The consistency of public choices requires that measures be adopted in the order of increasing the cost per life saved. This means that the optimality of public expenditures depends upon the marginal return of each investment; measures which save more lives for the same investment should be taken first so that for a given public investment the total number of lives saved is maximized.
This study assumes that all lives have the same priority and that all other benefits have been taken into account by subtraction from the initial cost. Ultimately, the public must decide on a certain level of security. The decision varies among nations according to social and philosophical considerations, economic conditions, and political situation. There is a variable demand for safety investments as opposed to production investments.
Society’s willingness to pay for individual safety is reflected in political pressures on legislative bodies. Ideally, the level of seismic safety required should be consistent with choices made another public sector and should also reflect individual preferences as revealed by private choices in other areas. This means two things: first, the risks that an individual has to take independently of his will should be compatible with those which he willingly takes from other comparable hazards; second, the costs that society imposes on him for the reduction of these risks should be consistent with his private expenditures for the reduction of similar risks.
Determination of an “acceptable level of seismic risk” is difficult, since there is no collective utility function and global risk attitude for an entire population. The law can only impose a minimal safety level and leave to individuals the choice of adopting further improvements.
