Has Economic Analysis Improved Regulatory Decisions?

31 Pages Posted: 23 Apr 2007

See all articles by Robert W. Hahn

Robert W. Hahn

University of Oxford, Smith School; Georgetown University

Paul C. Tetlock

Columbia Business School - Finance

Date Written: April 2007

Abstract

In response to the increasing impact of regulation, several governments have introduced economic analysis as a way of trying to improve regulatory policy. This paper provides a comprehensive assessment of government-supported economic analysis of regulation. We find that there is growing interest in the use of economic tools, such as benefit-cost analysis; however, the quality of analysis in the U.S. and European Union frequently fails to meet widely accepted guidelines. Furthermore, the relationship between analysis and policy decisions is tenuous. To address this situation, we recommend pursuing an agenda that allows economics to play a more central role in regulatory decision making. In addition, we suggest that prediction markets could help improve regulatory policy and improve measurement of the impact of regulation.

Suggested Citation

Hahn, Robert W. and Tetlock, Paul C., Has Economic Analysis Improved Regulatory Decisions? (April 2007). AEI-Brookings Joint Center Working Paper No. 07-08. Available at SSRN: https://ssrn.com/abstract=982233 or http://dx.doi.org/10.2139/ssrn.982233

Robert W. Hahn (Contact Author)

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Georgetown University

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

Paul C. Tetlock

Columbia Business School - Finance ( email )

3022 Broadway
New York, NY 10027
United States

HOME PAGE: http://www0.gsb.columbia.edu/faculty/ptetlock/

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