Editor’s Note:  The following Opinion article by Cass R. Sunstein appeared in the Chicago Tribune.

Why regulations are good — again

In “Moneyball,” author Michael Lewis celebrates the success of Billy Beane, general manager of the Oakland Athletics, who worked with Paul DePodesta, his statistics-obsessed colleague, to bring the cash-starved Athletics into the top tier of baseball teams. His secret was to jettison the long-standing dogmas and intuitions of old baseball scouts and to use statistical data instead.

“Over and over the old scouts will say, ‘The guy has a great body,'” Lewis writes in “Moneyball,” “and every time they do, Billy will say, ‘We’re not selling jeans here,’ and deposit yet another highly touted player, beloved by the scouts, onto his (expletive) list.”

Those debating regulations have been a lot like old baseball scouts. There has been a pressing need for Billy Beanes and Paul DePodestas, focusing not on looks but on the actual effects of regulation (and occasionally depositing a highly touted regulation onto a not-to-do list).

For more than two decades, I was a professor of law, mostly at the University of Chicago Law School, on whose faculty Barack Obama also served. I was among a group of academics whose work stressed the need to ensure that regulations are based not on intuitions and anecdotes, but on careful analysis of the likely consequences. Along with many others, I emphasized the importance of ensuring that the benefits justify the costs, promoting flexibility for the private sector, using low-cost “nudges” and measuring the actual effects of regulatory requirements.

In 2009, President Obama asked me to serve as administrator of the White House Office of Information and Regulatory Affairs, which helps oversee the regulatory process. In the last three years, unprecedented steps have been taken to promote evidence-based regulation. Existing rules have been modernized, streamlined and sometimes eliminated. New rules are being examined to ensure that the benefits really justify the costs. Flexible approaches, protecting consumers and investors through disclosure requirements rather than bans, can be found in many domains.

A key development came 15 months ago, when Obama issued a historic executive order, requiring an unprecedented governmentwide review of rules on the books. In August, more than two dozen agencies produced reform plans, spanning more than 800 pages and including more than 500 initiatives. Just a small fraction of those initiatives, already finalized or formally proposed to the public, will save billions of dollars in the near future.

For example, the Department of Health and Human Services will soon finalize a rule to remove unnecessary paperwork and regulatory requirements now imposed on hospitals and other health care providers, with anticipated five-year savings of $5 billion. The Department of Agriculture has proposed to streamline antiquated poultry inspection requirements, allowing companies to choose a more flexible approach with five-year savings in excess of $1 billion. The Environmental Protection Agency has proposed to allow states to eliminate redundant air pollution requirements at local gas stations, saving more than $400 million over the next five years.

Emphasizing the importance of low-cost tools, Obama has directed agencies to increase public participation, demonstrate that the benefits of regulations justify the costs, select the least burdensome alternative and reduce burdens on small businesses.

Some aspects of our approach are time-honored. Ever since the Reagan administration, the central focus has been placed on “maximizing net benefits” — on ensuring that for every rule, agencies select the approach that has the highest net benefits (meaning benefits minus costs). Long-standing principles govern the calculation of benefits and costs, undertaken by technical specialists, generally career officials within the executive branch who serve under Republican and Democratic administrations.

Over the Obama administration’s first three years, the net benefits of regulations reviewed by OIRA and issued by executive agencies exceeded $91 billion — 25 times the corresponding number in the Bush administration and more than eight times the corresponding number in the Clinton administration

These benefits include billions of dollars in savings for consumers, achieved through historic rules increasing the fuel economy of cars and trucks. They include thousands of lives saved and tens of thousands of illnesses and accidents prevented. They include billions of dollars in economic savings for businesses.

If we are focusing on the effects of regulations, however, we need to give special attention to costs, especially in an economically difficult time. In the last three years, haven’t the costs of new regulations been unprecedentedly high?

Not at all. In the last 10 fiscal years, the highest costs were imposed in 2007. The last three years of the Bush administration saw higher regulatory costs than the first three years of the Obama administration. If you’re looking for the year with the highest regulatory costs on record, you’ll have to go all the way back to 1992, underPresident George H.W. Bush.

Contrary to a widespread misconception, and in part as a result of close attention to empirical evidence, there has been a decrease, not an increase, in federal rulemaking during this administration. During the first three years of the Obama administration, the number of final rules reviewed by OIRA and issued by executive agencies was actually lower than during the first three years of the Bush administration

In the recent past, dramatic improvements have been made to the regulatory process, requiring careful attention to costs and benefits, use of flexible tools and reconsideration of existing rules. We need to make far more progress in the future. We’re not selling jeans here.

Cass R. Sunstein administers the federal Office of Information and Regulatory Affairs.