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Grading Estimates of the Benefits and Costs of Federal Regulation

Winston Harrington

Resources for the Future

September 1, 2006

RFF Discussion Paper No. 06-39

I review two recent estimates of the costs and, in one case, benefits of federal regulation. The first is found in the Office of Management and Budget's 2005 report to Congress on the benefits and costs of federal regulations (OMB 2005b). OMB estimates annual benefits in 2004 to be $70 to $277 billion and costs to be $34 to $39 billion, but these estimates omit a great deal; the cost estimate, in particular, is generally acknowledged to be an underestimate. The other estimate, written by Mark Crain (Crain 2005) and sponsored by the Small Business Administration, uses a different approach and generates an estimate of $1 trillion. Crain also finds that the burden on small firms is much greater than the burden on large firms. In the final section of the paper, I also review a recent comparison, presented in the 2005 report to Congress, of ex ante and ex post estimates of the benefits and costs of individual regulations. I find the Crain report to be deeply problematic and the OMB's ex ante/ex post comparison slightly less so.

Number of Pages in PDF File: 48

Keywords: regulation, benefits, costs, ex ante, ex post, OMB

JEL Classification: K29, Q58, I18

working papers series

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Date posted: October 15, 2006 ; Last revised: January 30, 2014

Suggested Citation

Harrington, Winston, Grading Estimates of the Benefits and Costs of Federal Regulation (September 1, 2006). RFF Discussion Paper No. 06-39. Available at SSRN: http://ssrn.com/abstract=937357 or http://dx.doi.org/10.2139/ssrn.937357

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Winston Harrington (Contact Author)
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
(202) 328-5112 (Phone)
(202) 939-3460 (Fax)
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