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A New Executive Order for Improving Federal Regulation? Deeper and Wider Cost-Benefit Analysis

67 Pages Posted: 2 May 2002  

Robert W. Hahn

University of Oxford, Smith School; Georgetown University

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Date Written: April 2002

Abstract

For over two decades, federal agencies have been required to analyze the benefits and costs of significant regulatory actions and to show that the benefits justify the costs. But the regulatory state continues to suffer from significant problems, including poor priority-setting, unintended adverse side-effects, and, on occasion, high costs for low benefits. In many cases, agencies do not offer an adequate account of either costs or benefits, and hence the commitment to cost-benefit balancing is not implemented in practice. A major current task is to ensure a deeper and wider commitment to cost-benefit analysis, properly understood. We explain how this task might be accomplished and offer a proposed executive order that would move regulation in better directions. In the course of the discussion, we explore a number of pertinent issues, including the defects of the record of the last two decades, the "precautionary principle," the value of "prompt letters," the role of distributional factors, and the need to incorporate independent agencies within the system of cost-benefit balancing.

Keywords: cost-benefit analysis, regulation, administrative law

Suggested Citation

Hahn, Robert W. and Sunstein, Cass R., A New Executive Order for Improving Federal Regulation? Deeper and Wider Cost-Benefit Analysis (April 2002). U Chicago Law & Economics, Olin Working Paper No. 150. Available at SSRN: https://ssrn.com/abstract=309754 or http://dx.doi.org/10.2139/ssrn.309754

Robert W. Hahn

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Georgetown University

Georgetown Center for Business and Public Policy
Washington, DC 20057
United States

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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