Chapter 28: The Evolution of Cost–Benefit Analysis in US Regulatory Decisionmaking
Stuart Shapiro The possibility of bias in regulatory analysis threatens its viability as a decision making tool. (McGarity 1987) It is time for progressive groups as well as ordinary citizens to retake the high ground by embracing and reforming cost–benefit analysis. (Revesz and Livermore 2008) 28.1 INTRODUCTION The use of cost–benefit analysis (CBA) in United States regulatory policy is approaching its fourth decade. Over the past 30 years, CBA has been at the center of intense controversy. Supporters of regulation have blamed CBA for deregulation and for playing an important role in reducing environmental protections and American health and safety. Opponents of regulation have regularly called for greater use of CBA, citing the immense cost that regulation imposes upon American business. Through all of this fiery rhetoric, however, something remarkable is emerging. Cost– benefit analysis is now firmly entrenched in the regulatory process, and few predict that this will change in the decades ahead. Agencies that once fought having to conduct analyses now do so regularly. And the academic community, particularly legal scholars, has begun to focus on improving cost–benefit analysis rather than removing it from the regulatory process. While CBA still has its strident opponents, they are becoming increasingly marginalized in the debate over its use. Now the focus on CBA primarily concerns how to incorporate distributional concerns and insights from behavioral economics into its use. Supporters of regulation are now weighing in on these debates rather than merely arguing that CBA is inherently biased against...
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