How Well Does the U.S. Government Do Benefit-Cost Analysis?

Posted: 27 Oct 2008

See all articles by Robert W. Hahn

Robert W. Hahn

Technology Policy Institute; University of Oxford, Smith School

Patrick M. Dudley

AEI-Brookings Joint Center for Regulatory Studies

Date Written: Summer 2007

Abstract

To make prudent recommendations for improving the use of benefit-cost analysis in policy settings, some measures of how well it is actually done are essential. This article develops new insights on the potential usefulness of government benefit-cost analysis by examining how it is actually performed in the United States. We assess the quality of a particularly rich sample of benefit-cost analyses of federal regulations. The data set we use for assessing the quality of regulatory analysis is the largest assembled to date for this purpose. The seventy-four analyses we examine span the Reagan administration, the George H. W. Bush administration, and the Clinton administrations. The article is the first to assess systematically how government benefit-cost analysis has changed over time. There are three key findings. First, a significant percentage of the analyses in all three administrations does not provide some very basic economic information, such as information on net benefits and policy alternatives. For example, over 70 percent of the analyses in the sample failed to provide any quantitative information on net benefits. Second, there is no clear trend in the quality of benefit-cost analysis across administrations. Third, there is a great deal of variation in the quality of individual benefit-cost analyses.

Suggested Citation

Hahn, Robert W. and Dudley, Patrick M., How Well Does the U.S. Government Do Benefit-Cost Analysis? (Summer 2007). Review of Environmental Economics and Policy, Vol. 1, Issue 2, pp. 192-211, 2007, Available at SSRN: https://ssrn.com/abstract=1289165 or http://dx.doi.org/10.1093/reep/rem012

Robert W. Hahn (Contact Author)

Technology Policy Institute ( email )

1401 Eye St. NW
Suite 505
Washington, DC 20005
United States

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Patrick M. Dudley

AEI-Brookings Joint Center for Regulatory Studies ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

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