The Regulatory Accountability Act, Or: How Progressives Learned to Stop Worrying and Love Cost-Benefit Analysis
Editor’s Note: A simple route to ensuring both cost-benefit analysis and accountability for the results is by establishing a regulatory budget.
From: Yale Notice & Comment | A Blog from the Yale Journal on Regulation and the ABA Section of Administrative Law & Regulatory Practice
by Jonathan Masur
In a recent paper, Eric Posner and I argue that cost-benefit analysis (CBA) should become a judicially-enforced legal requirement for regulatory agencies. That is, agencies that promulgate major rules should be required to perform CBA and regulate only if the benefits of the regulation would exceed the costs. Judges should enforce this requirement by scrutinizing agency CBAs and rejecting regulations that do not pass a cost-benefit test. We based our argument in part on the inherent merits of cost-benefit analysis: it is a rational, politically neutral, scientifically-based decision procedure that provides a great deal of information as to whether a project will increase or decrease social welfare. CBA is not perfect, but it is superior to nearly every alternative, and certainly superior to not performing any type of welfare analysis.