The Bottom Line: (1) An analysis conducted pursuant to OMB Circular A-4 should include a disclosure of the “conventional ” B/C ratio and (2) A demonstration of positive net benefits, however defined, should be a necessary but not a sufficient condition for the adoption of a proposed rule until which time the said rule is included in a regulatory budget. A regulatory budget compels the disclosure of the opportunity cost of a decision rule. See the Opportunity Cost of Neglect in Public Policy and here. In addition there is ample evidence to suggest that decisions made pursuant to bounded institutions, such as the regulatory budget, yield superior results relative to unbounded institutions. [ Jim Tozzi, Office of Information and Regulatory Affairs: Past, Present, and Future, 11 J. BENEFIT COST-ANALYSIS 1, 24–37 (2020); Yair Listokin, Bounded Institutions, 124 YALE L.J. 336, 367 (2014) ] Vintage OIRA
Serious consideration should be given to making sequential revisions to OMB Circular A-4, beginning with one limited to income distribution.[08 22 2023]
A Related Link: Opportunity Cost Neglect in Public Policy
Out of Sight, out of Mind: How Opportunity Cost Neglect Undermines Democracy
Opportunity Cost of Neglect in Public Policy
Request to the Council of Economic Advisers Rouse
A Discussion Held at the Society for Benefit-Cost Analysis (Video)
June 26, 2014 Reuters Allow the Wonks to Have a Say on OMB Review of Regulations
March 25, 2021 A Response to the Presidential Executive Order on Modernizing Centralized Regulatory Review
March 17, 2021 An In-Process Recommendation to the Biden Administration
A Request to the Society for Benefit Cost Analysis to Restore an Informative Link on the OIRA Review Process
The following post is in response to a missing post on the SBCA website and it was forwarded to SBCA management.
This action is being taken to emphasize that if the decision of the SBCA membership not to make public, on a permanent basis, the proceedings of their annual conferences, it could serve as prima facie evidence that two PhD economists–indeed a laudable goal– will probably not occupy simultaneously the two leadership positions within OIRA in the long run. However it should be noted that such a consequence reflects the current state of affairs because only once (at its founding) in its history was OIRA lead by an Administrator and Deputy Administrator both of whom were practicing economists with a PhD. Over the years policy officials were not made aware of the fact that OIRA was located in OMB not because of its legal expertise but instead because of its economic expertise. One might characterize the totality of this enigma as running with the hare and hunting with the hounds.
CRE Submission to the SBCA
Subsequent to the SBCA 2021 Annual Conference Program, the Center for Regulatory Effectiveness posted a link to a session chaired by Professor Kniesner, then Editor of the Journal for Benefit-Cost Analysis, on its website; see the fourth link in the following list:
CRE Statements on Income Distribution in Rulemaking
Request to the Council of Economic Advisers Rouse
A Discussion Held at the Society for Benefit-Cost Analysis (Video)
June 26, 2014 Reuters Allow the Wonks to Have a Say on OMB Review of Regulations
March 25, 2021 A Response to the Presidential Executive Order on Modernizing Centralized Regulatory Review
March 17, 2021 An In-Process Recommendation to the Biden Administration
Please click on the fourth link in the list above to our post on your website and this is what appears:
This Recording Does Not Exist
Here is the Conference description of the aforementioned panel:
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Opportunity for the JBCA Editors to report on the journal and offer their perspectives on publishing in the broad area of benefit-cost analysis.
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Thomas Kniesner, Claremont Graduate University
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- For additional links see “Sleepers” at the end of this page.
In view of the current OIRA activities a number of our readers are very interested in revisiting the aforementioned post. I would appreciate your advising me of its whereabouts.
Respectfully,
Center for Regulatory Effectiveness
[SBCA notified CRE that its membership had no problems with making the contents of its annual conferences available to the public for a period of approximately 30 days- but not permanently.]
We emphasize the importance of the aforementioned link to the SBCA panel discussion because it provides an answer to the question raised in this post: Where Has The Economic Profession Been For The Past Fifty Years On Measuring Income Distribution In Rulemaking?
The presentations at the SBCA annual meetings are an invaluable treasure of the work of experts in the field and should not be discarded particularly in view of the fact that the participants spent countless hours in the their preparation. The presentations can be used by scholars in the field for many years to come; see for example both the depth and breadth of the articles in the volume noted above.
Indeed there is a unique opportunity in that for the first time in a half-century the US government is according a dedicated priority to assessing income distribution in the conduct of benefit-cost analyses and it is doing so in the presence of a world renowned organization dedicated to benefit-cost analyses. Therefore the efforts of the two organizations should be united. It should be noted that “united” is a two-way street, both parties must be willing to submit their proposals to an intense scrutiny by the other party recognizing that the final decisions are those of the US government.
The SBCA Presentations at its 2022 Conference are an invaluable resource to assist OIRA in the formulation of procedures to quantify the income distribution effects of rules, see MasterCopy_SBCA_Conference, unfortunately they are no longer available for use by either the public or the regulators.
More specifically:
Friday, March 18, 2022, 5:00 pm-6:30 pm
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Opportunity for the JBCA Editors to report on the journal and offer their perspectives on publishing in the broad area of benefit-cost analysis.
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Thomas Kniesner, Claremont Graduate University
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Monday, March 21, 2022, 3:00 pm-4:30 pm
Recent Developments in Equity in BCA [Full Panel of Research Presentations] View Recording>>
- Incorporating Equity Concerns in Regulation
- Caroline Cecot, George Mason University; Robert Hahn, University of Oxford
- Equitable Mortality Risk Benefits
- Thomas Kniesner, Claremont Graduate University; W. Kip Viscusi, Vanderbilt University
- Investigating Whether Agencies Consider Distributional Effects and Equity in Regulatory Analysis
- Mark Febrizio, George Washington University
- The Military VSL
- Ryan Sullivan, Naval Postgraduate School
Thursday, March 17, 2022, 11:00 am-12:30 pm
Distribution and Disputation: Net Benefits, Equity, and the Place of Benefit-Cost Analysis in Public Decision Making [Plenary] View Recording
Organizer: Glenn Blomquist, University of Kentucky
Chair: Maureen Cropper, Resources for the Future
Discussant: Caroline Cecot, George Mason University
Presenter: Spencer Banzhaf, Georgia State University
·
Abstract: As its practitioners know well, benefit-cost analysis walks a fine line between the positive and normative, between the science of economics and the art of political economy. Missteps threaten to undermine its credibility as a value-free science, while overcaution risks irrelevance to the pressing questions of the day. As BCA adapts to give more weight to distributional concerns, while operating in a
more highly charged political environment than ever before, these tensions will only grow. For perspective, I re-examine three prominent episodes in the history of economics where these issues were vigorously debated: (i) The founding of the NBER by Wesley Clair Mitchell, who insisted that the organization eschew all policy recommendations; (ii) the introduction of the modern definition of
economics as the study of tradeoffs by Lionel Robbins, who insisted welfare effects could never be aggregated; and (iii) the origins of benefit-cost analysis as a measure of income, which to first generation practitioners seemed to foreclose the possibility of measuring “intangible” benefits like recreation opportunism, mortality risks, and equity. These episodes, together with critiques of economics from philosophers of science, suggest we are best served by being as transparent as possible
about the ways values influence BCA reasoning, without arraigning politcal decisions into it.
Thursday, March 17, 2022, 1:00 pm-2:30 pm
Distribution and Equity [Full Panel of Research Presentatons] View Recording
Chair: Maddalena Ferranna, Harvard University
· Evaluative reasoning: window to a wider view of benefits, costs, and equity
Julian King, Julian King & Associates; Alex Hurrell, Oxford Policy Management
· Distributional policy impacts, willingness to pay versus accept, and the Kaldor-Hicks tests in benefit-cost analysis
Zachary Brown, North Carolina State University
· Benefit-Cost Analysis and Consideration of Distributional Effects and Social Equity
Nanese Nelson, University of Montana; Andrea Bohmholdt, MITRE
· Use of Distributional Weights in Benefit-Cost Analysis Revisited
Robert Brent, Fordham University
What VSL Should we Use? Options for Developing National and Global Defaults [Innovative Session] View Recording
Thursday, March 17, 2022, 3:00 pm-4:30 pm
Equity and Benefit-Cost Analysis [Full Panel of Research Presentations] View Recording>>
Chair: David Greenberg, University of Maryland, Baltimore County
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To Whomsoever They May Accrue: The Importance of Inclusion, Equity, and Justice in Public Benefit-Cost Analysis
Julie Suhr Pierce, USDA Natural Resources Conservation Service
· Towards principles and practices for distributional weighting
Daniel Acland, University of California at Berkeley; David Greenberg, University of
Maryland, Baltimore County
· Distributional Consequences and Regulatory Analysis
o Richard Revesz, NYU Law School; Samantha Yi, NYU Law School
· Efficiency and Equity in Regulation
o Caroline Cecot, George Mason University
Monday, March 21, 2022, 11:00 am-12:30 am
Equity and Equality in Public Projects [Full Panel of Research PresentaTons] – Limited Recording Coming Soon!
Chair: Don Pickrell, Volpe Center, U.S. Department of Transportation
· Economics of Equity in Infrastructure Investments
o Chris Behr, HDR
· Investigating distributional weighting in UK transport appraisal
o Iven Stead, Department for Transport, United Kingdom; Christopher Cheyney, UK
Department for Transport
· Do planners’ preferences for distribution in the context of a national transport plan differ from those of the public?
o Anders Bondemark, Swedish national road, and transport research institute; Henrik
Andersson, Toulouse School of Economics; Karin Brundell-Freij, Lund University
· The Inequality Aversion in Europe: The Absolute Equal-Sacrifice Approach
o Milan Ščasný, Charles University; Matěj Opatrný, Charles University
Please note the relevance of the aforementioned posts to the Modernization Program of the Biden Administration. Since there are scores of pacesetting articles it would be presumptive to identify the key articles. Nonetheless to accentuate the import of the above research we have chosen one representative article from each of the above data sets in the chronological order of their presentation.
Investigating Whether Agencies Consider Distributional Effects and Equity in Regulatory Analysis
Incorporating Equity Concerns in Regulation
These episodes, together with critiques of economics from philosophers of science, suggest we are best served by being as transparent as possible the ways values influence BCA reasoning, without arraigning political decisions into it.
Benefit-Cost Analysis and Consideration of Distributional Effects and Social Equity
Efficiency and Equity in Regulation
The Inequality Aversion in Europe: The Absolute Equal-Sacrifice Approach
The Biden Administration has a huge challenge before it and we believe access to the views of career researchers would be of immense value.
Sleepers at the SBCA 2021 Conference
The following sessions are door openers for the issues presently being addressed by the Biden Administration.
Monday, Mar 22: Session 18, 4:00-5:30 pm (6:00*)
18a. Meet the Author: Matthew D. Adler, “Measuring Social Welfare
Wednesday, Mar 24: Session 28, 4:00-5:30 pm (6:00*)
28b. Informal Discussion: Social Welfare Functions, sponsored by Jim Tozzi
28c. Informal Discussion: hosted by SBCA Board Members
Fluency in CBA should be as normative for OIRA leaders as fluency in Latin is for the Roman Curia.