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Can Cost-Benefit Analysis Help Consumer Protection Laws? Or at Least Benefit Analysis?

University of California-Irvine Law Review, Forthcoming

St. John's Legal Studies Research Paper No. 13-0011

25 Pages Posted: 27 Sep 2013 Last revised: 22 Jul 2015

Jeff Sovern

St. John's University - School of Law

Date Written: September 25, 2013

Abstract

Cost-benefit analysis is often troubling to consumer advocates. But this article argues that in some circumstances it may help consumers. The article gives several examples of supposed consumer protections that have protected consumers poorly, if at all. It also argues that before adopting consumer protections, lawmakers should first attempt to determine whether the protections will work. The article suggests that because lawmakers are unlikely to adopt multiple solutions to the same problem, one cost of ineffective consumer protections is a kind of opportunity cost, in that ineffective consumer protections might appear to make unnecessary adoption of effective ones. Ironically, such an opportunity cost is unlikely to be taken account of in cost-benefit analysis. Among the protections that especially risk failing to benefit consumers are laws that require consumers to perform certain tasks, such as disclosure laws that presuppose consumers will pay attention to and act on the disclosures; if consumers instead generally ignore the disclosures, the consumer protection will be largely illusory. Accordingly, before adopting measures that depend on consumers to do something, lawmakers should try to verify that consumers will in fact undertake those actions. The article also makes some suggestions for ascertaining whether consumer protections will work — i.e., benefit consumers — and concludes with a brief critique of the proposed Independent Agency Regulatory Analysis Act. 

Suggested Citation

Sovern, Jeff, Can Cost-Benefit Analysis Help Consumer Protection Laws? Or at Least Benefit Analysis? (September 25, 2013). University of California-Irvine Law Review, Forthcoming; St. John's Legal Studies Research Paper No. 13-0011. Available at SSRN: https://ssrn.com/abstract=2330834

Jeff Sovern (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States
718-990-6429 (Phone)

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