Beyond Cost-Benefit Analysis: A Pragmatic Reorientation

Abstract

The weaknesses of cost-benefit analysis (CBA) are apparent for all to see. The theoretical underpinnings of positivism and rational choice methodologies have been dealt a significant blow in the post-positivist literature in science, political science and policy studies. Likewise, the performance of CBA itself has been the subject of a significant and persuasive challenge in the legal literature. This article critiques specifically the current federal form of regulatory impact analysis (RIA), centered institutionally in OIRA and centered methodologically in CBA. One of reasons for the continuing dominance of a CBA-centered RIA is the success of its proponents in maintaining that there is no viable alternative. As a general matter, this argument has been discredited in a substantial policy science and post-positivist literature that is based on Harold Laswell's ideas and ambitions for a policy sciences of democracy. Until now, however, no specific proposal for an alternative to a CBA-centered RIA process has been put forward in the legal literature. Our preference for a Laswellian approach to regulatory analysis is pragmatic - it will work better in informing decision-makers and citizens about the actual issues that must be resolved. In our alternative to CBA, the RIA process is problem-oriented, normative, discursive, and transparent. This reorientation eschews the use of CBA, except where it is legally required, because it is unnecessary and irrelevant in other contexts, it lacks sufficient accuracy if relevant, and it pursues a normative vision of regulation that is inconsistent with the tilt towards protecting people and the environment that Congress adopted.

Keywords: cost-benefit analysis, regulatory impact analysis, pragmatism

JEL Classification: A12, A13, D61, K23, K32