Putting a Price on Human Life: The Costs and Benefits of Cost-Benefit Analysis : Center For American Progress

Event Transcript

February 25, 2004

John Podesta: Welcome, I'm John Podesta, President of the Center for American Progress. We appreciate your all being here, quite a turnout for a very important book. This is the latest of our breakfast forums and we're here to discuss Lisa and Frank's book about putting a price on human life, the Costs and Benefits of Cost Benefit Analysis. I'm going to turn this panel over. We're going to get Frank up here I think and I'm going to turn the panel over to Sally Katzen in just a moment, but by way of introduction I'd just like to say that many of us that are on this panel and have been working on this issue for many years.

I guess I first met Jim Tozzi in the 1970s, and want to thank him for being here today. We probably go back to the day when Ralph Nader was still trying to make cars safer rather than taking a second run for President. Some things get better, some things get worse. The environment, work place safety get better, some things get worse. But it really is important to discuss this. We've got a long history of trying to improve the regulatory process.

I think by any measure of rough justice I think we can see that regulation does work in this country and around the world. We've got cleaner water, we've got cleaner air then we had back in those days when we first started working on these things. And I think by any fair analysis I think the benefits far accede the costs that have been imposed on the country. Yet I also think there is opportunity to learn, to try to improve, to try to use new technology, to try to improve our understanding and analysis of how we regulate, why regulate and the kinds of tools that we use to provide the most effective regulation for the American public.

This book, I think, is an extremely important contribution to that, so I'm not going to stand up here and speak for a long time. Lisa Heinzerling and I are colleagues on the Georgetown Law faculty so in that context I welcome her, but my duties are really to introduce Sally who again has been at the forefront of trying to make sensible policy and platform in this country, was the head of OIRA at the OMB and the Deputy Director of the Office of Management and Budget during the Clinton administration where we worked closely together. She now is a visiting professor at the University of Michigan Law School and has taught at Smith College and is probably one of the people in Washington who I think is respected on all sides of the debate on improving regulatory tools. So with that let me turn it over to Sally, Sally Katzen.

Sally Katzen: Good morning. Thank you all for coming this morning. I'd like to first thank John and the Center for convening this program on this subject. The fact that all of you were able to get out of bed this morning and get here is testament to its importance. In fact cost benefit analysis which is at the heart of what we're talking about today has clearly become increasingly more important in the field of public policy, but to be precise, the courts do not employ cost benefit analysis in reaching their decisions or justifying their decisions. And, the Congress rarely, if ever, considers, cost benefit analysis in enacting legislation or in even drafting legislation.

The cost benefit analysis has been playing an increasing role in the development of the regulations that implement that legislation at least by executive branch agencies. I have to put aside the independent regulatory agencies which play by their own rules sometimes. How has this come to be? Well, summarizing thirty odd years in three minutes, let me say that cost benefit analysis began to be used in a few rule making proceedings in the 70s under Nixon, Ford and Carter. There were a few scholars who wrote about the subject, a few fans of the approach in the agencies and most importantly in office of the President and a few critics, primarily among the public interest groups. A significant step occurred under Regan and his regulatory executive order, which constructed the agencies to maximize the net benefits and used other words to that effect, and a place where responsibility for reviewing the agencies work in the hands of the OMB. Under Clinton continued this general scheme all be it emphasizing that costs and benefits that could not be quantified none the less had to be considered and also worked to increase the transparency of the process so that there was greater understanding of what was happening in the review by OMB and greater accountability.

President Bush kept President Clinton's executive order yet revised the guidelines for agencies conducting regulatory analysis, what were once guidelines, are now requirements. He issued, this is John Graham, in the office of Information and Regulatory Affairs issued new standards for data quality and threatened to impose peer review on agencies analysis. Throughout this history there has been debate- sometimes polite and civil, sometimes not so polite, not so civil. Questions such as whether there is in fact a level playing field, whether both sides of the equation- costs, benefits- are equally and readily able to be quantified and monetized or whether there is an inevitable tilt- whether the product of all of this effort, the results, are informative or dispositive and whether it is all worth the effort in terms of staff time and resources because cost benefit analysis is not cost free. Do the costs of cost benefit analysis justify- I got it backwards, do the benefits justify, let alone outweigh, the costs of cost benefit analysis. In short, is this the silver bullet or is this a misguided, possibly immoral folly.

We are fortunate to have together today people who have worked extensively and thoughtfully in this field. I'm looking at the audience now before I even get to the panel. I thank you all for coming and we will be hearing from you shortly, but first we want to hear from our panelists who are well worth listening to. In order of appearance, I bring you Lisa Heinzerling, who is a professor of law at Georgetown Law Center as John had mentioned. She comes to us from Princeton and then the University of Chicago law school where she was editor in chief of the law review. She clerked for Judge Posner and then Justice Brennan and has worked in the field for over twenty years as an expert in administrative - She's the vice president at the Center for Progressive Regulation, where she is working extensively in the area. Our next big speaker will be her co-author of the book, Frank Ackerman who is an assistant professor in the Department of Urban and Environmental Policy at Tuffs University. He comes to us from Swathmore College and has a PhD in economics from Harvard and a BA in mathematics and economics, actually that was the Swathmore piece but I wanted to stress the mathematics because that always intimidates me. He is the author of many books including, Why do we Recycle?, Markets, Values and Public Policy and has worked extensively in this field from the perspective with emphasis on the environmental issues. Our third speaker is Jim Tozzi, a living legend in his own time. He did his undergraduate at Carnegie Tech, University of Pittsburgh and has a PhD in economics and business administration from the University of Florida. He spent over twenty years, twenty plus, in the federal government and in 1996 started the Center for Regulatory Effectiveness. Most significantly for present purpose he was instrumental in establishing the Office for Information and Regulatory Affairs at OMB in the Regan administration. Without further ado I'd like to turn it over to Lisa.

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