How Well Does the U.S. Government Do Cost-Benefit Analysis?

To make prudent recommendations for improving the use of cost-benefit analysis in policy settings, some measures of how well it is actually done are essential. This paper develops new insights on the potential usefulness of government cost-benefit analysis by examining how it is actually performed in the U.S. We assess the quality of a particularly rich sample of cost-benefit analyses of federal regulations. The data set we use for assessing the quality of regulatory analysis is the largest assembled to date for this purpose. Theseventy-four analyses we examine span the Reagan administration, the first Bush and the Clinton administration. The paper is the first to assess systematically how government cost-benefit analysis has changed over time. There are three key findings. First, a significant percentage of the analyses in all three administrations do not provide some very basic economic information, such as information on net benefits and policy alternatives. For example, over 70% of the analyses in the sample failed to provide any quantitative information on net benefits. Second, there is no clear trend in the quality of cost-benefit analysis across administrations. Third, there is a great deal of variation in the quality of individual cost-benefit analyses.

Reviewing the Government's Numbers on Regulation

This paper has two objectives: first, to provide more information on the data used to construct a controversial economic analysis published by the Joint Center that makes use of over 100 government regulatory impact analyses; and second, to provide further sensitivity analysis of key variables in that study. A key finding of this paper is that the results of the earlier analysis of government regulatory impact analyses appear to be fairly robust within the data set that was constructed. We offer the following conclusions. First, aggregate net benefits for final regulations are positive under a wide variety of assumptions. Second, a substantial number of final regulations do not pass a benefit-cost test under a wide variety of assumptions. By rejecting at least some of these regulations, government could have increased aggregate net social benefits. Third, aggregate net benefits exhibit a wide range across regulations. And fourth, agencies should improve the quality of their regulatory impact analyses. Also of interest from the Joint Center: The Economic Analysis of Regulation: A Response to the Critics Robert W. Hahn

Affidavit of D. Riser

The sworn affidavit of Dudley W. Riser, Ph.D

Ex. 279-US-401

Curriculum Vitae of Dudley W. Reise