New Foundations of Cost-Benefit Analysis, by Matthew Adler and Eric Posner, represents the most ambitious and credible effort to date to build a solid theoretical defense of the use of cost-benefit analysis (CBA) in evaluating government regulation. In this review, three cost-benefit "skeptics" offer their reactions to this ambitious and important book. We note its virtues -its humility, its scrupulousness, its open-mindedness. We also explore its vices. If preferences are to be "laundered," is it intellectually defensible to remove the bad but not consider adding the good? Does Adler's and Posner's welfarism really play the limited role they suppose, or does it risk "crowding out" other important deontological and distributional values? If CBA is merely a decision procedure that provides an imperfect proxy of welfare -the moral criterion we really care about -how do we know that the proxy it provides in practice will actually be accurate enough to be useful? Isn't this at bottom an empirical question that cannot be answered by this thoroughly theoretical book? If CBA is no more than an imperfect proxy for welfare, then alternative imperfect decision procedures may perform better in the real world.
Cost-benefit analysis (CBA) owes much of its appeal to its image as a neutral principle for deciding upon the appropriate stringency of environmental, health, and safety regulation. This article examines whether CBA is neutral in effect, i.e. whether it sometimes makes regulations more stringent or regularly leads to weaker health, safety and environmental protection. It also addresses the question of whether CBA offers either an objective value-neutral method or procedural neutrality. This Article shows that CBA has almost always proven antienvironmental in practice and that, in many ways, it is anti-environmental in theory. It examines the practice of the Bush Administration using a representative data set and shows that Office of Management and Budget review produced numerous anti-environmental, health, and safety changes and no pro-protection changes in the rules in the data set. It also reviews "prompt letters," which CBA proponents cite as examples of CBA producing more regulation, rather than less. These letters have never prompted any fresh regulatory action and rarely have any basis in CBA. Finally, this article shows that the anecdotal information relied upon to show that CBA sometimes has strengthened rules prior to the Bush Administration provides little or no support for the view that CBA has a neutral effect. The most common legal formulation of a cost-benefit test, that the costs should not exceed the benefits of regulation, acts a one-way ratchet, demanding that some regulations become less stringent, but never demanding greater protection of health, safety, or the environment. Nevertheless, one can discern some reasons why some analysts look at CBA as neutral in the apparent even-handedness of the optimality criterion, which has more influence in the academy than in practice. Even this criterion, however, does not act neutrally relative to all existing alternative criteria. Furthermore, the value choices in choosing methods for quantifying benefits make objective value neutral CBA a theoretical impossibility.
This article offers a normative theory justifying the feasibility principle found in many environmental statutes. It then uses this theory to shine light on the regulatory reform debate. The feasibility principle avoids widespread plant shutdowns while maximizing the stringency of regulation that does not have this outcome.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.