Staying within the Guardrails

Abstract

Cost-benefit analysis has been central to the process of issuing new regulations since 1981. Today, it's under assault from both ends of the political spectrum. This essay offers some thoughts about how cost-benefit analysis can still play a useful but more restricted role in the future. Rather than serving as the controlling standard for regulatory agencies it can be more usefully seen as an important part of a multi-factor analysis of regulatory effects. In that role, it can serve as a reality check on regulations that, in the pursuit of other goals, impose costs that are grossly disproportionate to a regulation's positive effects.

Keywords: cost-benefit analysis, regulatory policy