Government Analysis of the Benefits and Costs of Regulation

Abstract

Recently, Congress has shown a greater interest in assessing the economic impact of regulation. The interest is driven in part by estimates that federal regulation cost several hundred billion dollars annually. In 1996, Congress required the director of the Office of Management and Budget to provide estimates of the total annual benefits and costs of all federal regulatory programs and estimates of the benefits and costs of individual regulations. This essay reviews the increasing use of economic analysis in regulatory decision making, critically assesses the first OMB report, and considers how the use of economic analysis can help inform regulatory decision making. It argues that policy makers need to address a growing body of evidence that casts doubt on the effectiveness and efficiency of much regulation.Regulatory Reform