Reviving Regulatory Reform: A Global Perspective

How Well Does the U.S. Government Do Benefit-Cost Analysis?

“…Over the last two decades, both Congress and the executive branch have initiated regulatory reforms in order to better assess the impacts of regulation on economic activity and to encourage the development of more effective and efficient regulations (Sunstein, 2002;Hahn, 2000;Renda, 2006). For example, Presidents Reagan, Bush, and Clinton directed all agencies to perform economic analyses of major regulations that show whether a regulation's benefits were likely to exceed its costs and whether alternatives to that regulation would be more effective or less costly.…”

“…All of the RIAs were from the EPA. The EPA was selected because it accounts for a majority of all available regulatory analyses and more than half of the total costs of regulation (Hahn, 2000;OMB, 2001). We chose to focus on a single agency to minimize variations in quality across agencies.…”

“…There are many possible paths for reform-too numerous to mention here (Breyer, 1993;Hahn, 2000;Noll, 1999). If the aim is to improve the quality and transparency of analysis, we would recommend two modest changes: the first is more vigilant oversight by the OMB; the second is to use a standardized ''Regulatory Impact Summary'' that would accompany each regulatory impact statement (Farrow, 2000;Hahn and Sunstein, 2002).…”

“…According to government estimates, the costs associated with such regulations are substantial-on the order of $200 billion (in 1996 dollars) annually (OMB 2001). The benefits, which are harder to pin down, may be even larger, although the net benefits (or costs) of individual regulations can vary significantly (OMB, 2001;Hahn, 2000;Freeman, 2002;Morrall, 2003). Thus, making even relatively modest changes in the regulatory apparatus could have significant implications for the public's health and welfare.…”

The Impact of Economics on Environmental Policy

“…By improving their understanding of the constraints imposed by the political system, economists can help design more efficient policies that have a higher probability of being implemented. 35 …”