Controlling Agencies with Cost-Benefit Analysis: A Positive Political Theory Perspective

52 Pages Posted: 11 Apr 2001

See all articles by Eric A. Posner

Eric A. Posner

University of Chicago - Law School

Abstract

Cost-benefit analysis is analyzed using a model of agency delegation. In this model an agency observes the state of the world and issues a regulation, which the president may approve or reject. Cost-benefit analysis enables the president to observe the state of the world (in one version of the model), or is a signal that an agency may issue (in another version). The roles of the courts, Congress, and interest groups are also considered. It is argued that the introduction of cost-benefit analysis increases the amount of regulation, including the amount of regulation that fails cost-benefit analysis; that the president has no incentive to compel agencies to issue cost-benefit analysis, because agencies will do so when it is in the president's interest, and otherwise will not do so; that presidents benefit from cost-benefit analysis even when they do not seek efficient policies; that agencies and their supporters ought to endorse cost-benefit analysis, not resist it; and that cost-benefit analysis reduces the influence of interest groups. Evidence for these claims is discussed. Finally, it is argued that courts should force agencies to conduct cost-benefit analyses in ordinary conditions, but that they should not force agencies to comply with them.

Keywords: cost-benefit analysis, delegation

JEL Classification: H11, K23

Suggested Citation

Posner, Eric A., Controlling Agencies with Cost-Benefit Analysis: A Positive Political Theory Perspective. University of Chicago Law Review, Vol. 68. Available at SSRN: https://ssrn.com/abstract=265655 or http://dx.doi.org/10.2139/ssrn.265655

Eric A. Posner (Contact Author)

University of Chicago - Law School ( email )

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Chicago, IL 60637
United States
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773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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