Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health
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All students and alumni are invited to attend. Register Here. His work focuses on the use of cost-benefit analysis in administrative regulation, federalism and environmental regulation, design of liability regimes for environmental protection, and positive political economy analysis of environmental regulation. In , Revesz co-founded the Institute for Policy Integrity at NYU School of Law to advocate for regulatory reform before courts, legislatures, and agencies, and to contribute original scholarly research in the environmental and health-and-safety areas.
AOSIS is the negotiating group of the 44 small island developing states around the world. To focus only on one side of the secondary impacts of regulation is to stack the deck inappropriately against government action. Reducing greenhouse gas emissions, for instance, would also create enormous health and safety benefits through the ancillary reduction of other air pollutants.
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The failure to attend to ancillary benefits of regulation is symptomatic of the broader problem posed by league tables and other cost-benefit cousins. By seeking to distill what can be known and understood about the impact of regulations to simple tables or calculations, analysts inevitably misstate and distort.
As Heinzerling demonstrated, the leading league tables used in regulatory reform debates had been constructed in ways that were downright manipulative: Regulations were included that had never been adopted, authors adjusted scientific data in ways that were ad hoc and undefended, discount rates were applied to future values without adequate explanation, and so on.
Despite this devastating critique, the influence of league tables has not waned. One explanation for this persistence is that the promise of comprehensive rationality is deeply appealing.
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Perhaps the most important such alternative sees cost-benefit analysis and its cousins not merely as abstract decisionmaking techniques, but as techniques that are promoted and deployed in a specific political institutional context. In the United States, formal regulatory analysis of any stripe cannot be separated from the history of presidential power that such analysis has helped to consolidate.
Retaking Rationality – Institute for Policy Integrity
No matter which party occupies the White House, formal regulatory analysis of agency action helps to ensure that the President maintains a strong grip over the goals and accomplishments of the Environmental Protection Agency, the Occupational Health and Safety Administration, and other agencies charged with protecting public health and the environment.
In fact, the rationale behind league tables — that they help enable allocation of scarce public resources to the most cost-effective lifesaving opportunities available — seems to presume a unitary executive capable of shifting budgets and targeting investments across the full range of ways in which government can seek to enhance well-being.
Agencies cannot range in this way, nor would we necessarily want them to: Agencies are limited entities created and tasked by Congress to accomplish specific goals. Often, the impetus behind league tables and related regulatory reform efforts seems to be a desire to cut Congress out of the national conversation on how best to achieve a just, sustainable, and prosperous society.
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No one would suggest that agencies should ignore relevant empirical information regarding the impacts of proposed policies. Reluctance to endorse formalized regulatory impact analysis is not driven by an aversion to data, but by a belief that important moral and political issues often are buried in the construction of formal analytical methods. Within cost-benefit analysis, the choice of willingness-to-pay as a basic value metric serves to powerfully reinforce the status quo distribution of wealth and resources in society; similarly, the decision to discount future values at some nontrivial rate indirectly resolves questions of intergenerational justice in a way that, when surfaced for unprejudiced consideration, is at best dubious.
Within cost-effectiveness analysis and related cost-benefit cousins, the important conservative conceptual move is to present policy choices as if they only involve optimizing scarce resources in the face of inevitable tradeoffs.
Dig beneath these stylized decision frames, however, and one will find a host of vital questions: What outcomes should be used to determine comparative regulatory effectiveness? Serious economic studies have shown that when the costs of greenhouse gas controls are measured against the potentially catastrophic risks of inaction, the case is pretty clear.
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No one is saying this legislation will be free. In fact the point is to put a price on carbon. But, looking at a price tag is not useful if you don't know the value of what you are buying. Without an honest accounting of both sides of the balance sheet, the 12 or 14 Senate "deciders" who will make or break this bill are operating in a vacuum.
How can they determine whether this legislation makes sense without looking at both sides of the equation? Some responsible senator should request that EPA produce an analysis that better examines the benefits of the House climate bill as well as the costs of not controlling our greenhouse-gases.