The Planner's Paradox

Abstract:     
The Bush Office of Management and Budget has released a new draft Circular containing guidelines to be used by regulatory agencies in preparing Regulatory Impact Analyses. The draft has surprised many observers because it appears to impose less discipline, not more, on the practices of regulatory agencies. For example, the guidelines place greater reliance on cost-benefit analysis to justify new rules. Cost-benefit analysis has a checkered history under federal usage, and also suffers from a serious theoretical flaw: It presumes that the analyst can make omniscient determinations and comparisons between the outcomes of both the status quo and various theoretical planned "solutions."

Number of Pages in PDF File: 2

Keywords: Regulatory impact analyses, Office of Management and Budget, regulatory agencies, guidelines, regulation, federal regulation, Bush administration, agency, cost-benefit analysis

JEL Classification: E61, H5, H1

Accepted Paper Series