Research: Reviving more than rationalitiy–using cost-benefit analysis to evaluate regulations

November 12, 2021

by Marcia Hannigan

In a blog post for the Yale Journal on Regulation titled “Reviving More Than Rationality,” Stuart Shapiro comments on Michael Livermore and Richard Revesz’s book Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health. The book offers observations regarding the use of cost-benefit analysis to evaluate the effects of regulations on the U.S. and its economy.

Cost-benefit analysis became particularly contentious during the Trump administration.  The idea that some government employees had the expertise and were neutral in their application of cost-benefit analysis was regarded by the Trump administration with antipathy.

The administration ignored cost-benefit analysis in favor of “cost analysis” of regulation.  Benefits of regulation or legislation were not considered. Additionally, much of the cost-benefit analyses done during this period were deeply flawed. Scientific knowledge and the idea of a neutral civil service were also deeply suspect during the Trump administration.  The response to the Covid-19 pandemic and the denial of human-caused climate change derailed attempts to address these crises. 

These views, coupled with the disdain for the expertise of civil servants, led to the attempt to reclassify civil servants as “Schedule F” employees, making them subject to easier dismissal and replacement. The Trump administration was so suspicious of civil service employees and “neutral” cost-benefit analysis that the first agency it looked to clear out was the Office of Management and Budget, the home to the very agency responsible for doing cost-benefit analysis, the Office of Information and Regulatory Affairs (OIRA).

Some economists argue that scientific experts are too quick to tout the benefits of laws and regulations but slow to acknowledge the costs.  While the Trump administration was not ultimately successful in its attempts to defenestrate OIRA, it did lead to political benefits for those seeking to strengthen the executive branch’s hold on policy.  It questions the idea of neutrality and expertise and has fostered a large political realignment in opposition to both. 

For more information about regulation, cost-benefit analysis and expertise, visit https://www.yalejreg.com/nc/symposium-reviving-rationality-part-05/ to read the full blog post.

Recent Posts

Report: Economic Challenges for Older New Jersey Residents

New Jersey State Policy Lab Report Release: Economic Challenges for Older New Jersey Residents   Read Report In February 2024, New Jersey Advocates for Aging Well (NJAAW) conducted a Statewide Survey of Older Adults. This survey gathered both quantitative and...

NJSPL: Electricity Bills and AI Data Centers

Considering the impact of AI on electricity bills, data centers in the Northeast could be part of the problem. Across the country, from Ohio to New Jersey, electricity prices are spiking [2, 3]. It’s a tangible financial pain, costing $122 more per month for the...

Andrea Hetling Appointed to APPAM Governing Board

Congratulations to Andrea Hetling, Ph.D., on her appointment to the Association for Public Policy Analysis & Management (APPAM) Policy Council, the organization’s governing board. In this role, Dr. Hetling will help shape APPAM’s strategic direction and policy...

Sommer & Soliman On BINJE’s Power Players List

Powerful Praise Those who are being honored share one characteristic: They are quick to credit their colleagues. Business in New Jersey Everyday (BINJE) honored CEOs and executive directors, managing partners and principals - those who are in charge in every sector in...

New CUPR Report: Modern Rate Design in the Northeast

Modern Rate Design in the Northeast: Unlocking Efficiency, Affordability, and Electrification Read the full report Executive Summary The Northeast and Mid-Atlantic regions face some of the highest energy costs and energy burdens in the country. Regionally, energy...