Editor’s Note: Read: The Evolution of Benefit Cost Analysis into Federal Rulemaking and The Iconic Executive Order 12291 which augment the material presented in the post below.
From: Financial Times
A valuable study of a quiet victory for technocrats
Review by Tim Harford
The book makes three valuable contributions: it relates the history of cost-benefit analysis in US policymaking ; it tackles the economist Friedrich Hayek’s argument that technocrats simply don’t know enough to weigh costs and benefits; and it makes a case that cost-benefit analysis could reduce political tribalism.
The history lesson is briskly delivered, and from a front-row seat — Sunstein worked in the Reagan White House as well as for President Obama. In 1981, Ronald Reagan signed Executive Order 12291, requiring administrative decisions to weigh the costs and benefits of action and maximise net benefits. This order, writes Sunstein, “placed the technocrats squarely in charge”, giving them the authority to reject pointless rules. Subsequent leaders, including Obama and Donald Trump, have taken a similar approach — although President Trump has added deregulatory flourishes that, Sunstein mildly comments, “are hard to defend”.
Editor’s Select Excerpts Sunstein Cost Benefit Revolution