University of California, Berkeley
The use of cost-benefit analysis in agency decisionmaking has been hailed as the cure for numerous dissatisfactions with governmental regulation. Using this form of economic analysis arguably promotes rational decisionmaking and prevents health, safety, and environmental regulations from having inflationary and other adverse economic impacts. Closer analysis, however, reveals that the cost-benefit approach to regulatory decisionmaking suffers from major methodological limitations and institutional abuses. In practice, regulatory uses of cost-benefit analysis stifle and obstruct the achievement of legislated health, safety, and environmental goals.
This Article critically reviews the methodological limitations of cost-benefit analysis, current agency uses of cost-benefit analysis under statutory requirements, the impact of recent Executive orders mandating economic balancing analyses for all major regulatory agency decisions, and agency efforts to structure their discretion in the use of costbenefit analysis. The Article concludes that if the health, safety, and environmental regulators continue to use cost-benefit analysis, procedural reforms are needed to promote greater accountability and public participation in the decisionmaking process. Further, to the extent that economic factors are permissible considerations under enabling statutes, agencies should conduct cost-effectiveness analysis, which aids in determining the least costly means to designated goals, rather than cost-benefit analysis, which improperly determines regulatory ends as well as means.
Michael S. Baram,
An Inadequate Basis for Health, Safety, and Environmental Regulatory Decisionmaking
Ecology Law Quarterly
Available at: https://scholarship.law.bu.edu/faculty_scholarship/1717