Paper: Regulatory Cost-Benefit Analysis Best Done Out of Spotlight

Posted 04 April 2012 | By

A paper published in the journal Regulation and Governance claims an integral part of the regulatory process is done best when insulated from significant amounts of public scrutiny.

The March 2012 peer-reviewed paper, The triumph of regulatory politics: Benefit-cost analysis and political salience, looked at 109 "economically significant" regulations issued by US regulatory agencies between 2000 and 2009.

The authors, Stuart Shapiro and John Morrall, hoped "to examine whether the amount of information provided in the benefit-cost analysis or political factors surrounding the regulation better correlate with the net benefits of the regulation."

Writing on their blog, the authors write, "disappointingly to us-as both former Office of Information and Regulatory Affairs (OIRA) employees and supporters of benefit-cost analysis-agencies do not appear to make better decisions, at least from an economic perspective, when they perform more extensive benefit-cost analyses. [We] found no relationship between the amount of information considered in the agency's benefit-cost analysis and the net benefits in the rule."

"Rules that were issued out of the political spotlight had higher net benefits than other rules," the authors explained. "The contrast was sharpest when the number of comments and timing variables were combined."

Read more:

RegBlog - Appreciating the Politics Inside Benefit-Cost Analysis

Regulation and Governance - The triumph of regulatory politics: Benefit-cost analysis and political salience


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