Successes, Failures and Directions for Reform
New Horizons in Public Policy series
Chapter 3: Cost-benefit analysis and the regulatory process
All of the types of analysis described in this book have their roots in the movement toward comprehensive rational analysis that flowered in the 1960s. But of all the branches of comprehensive-rational analysis that are employed at various stages of the regulatory process, cost-benefit analysis most clearly mirrors its progenitor. It also most clearly reflects the hopes of proponents of analysis and evokes the fears voiced by Lindblom and others about the dangers of too much analysis. Cost-benefit analysis finds its origins in welfare economics. While the early proponents of Program Planning and Budgetary Systems (PPBS) were trained in the new field of decision science, much of the impetus for an increased role for analysis in public policy-making came from economists. As PPBS faded from the budgetary process in the early 1970s, proponents of comprehensive-rational analysis found a new policy area that, in many ways, seemed more amenable to economic analysis. That new area – regulatory policy – was becoming increasingly prominent in political debates. Government regulation of the private sector had long been of interest to economists. Among the most prominent economists in the United States were those who argued that regulation would inevitably serve the needs of powerful organized interests (Stigler 1971; Peltzman 1976), and those who argued that government agencies could use regulation to pursue their own goals (Niskanen 1974).
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