Modernizing Regulatory Review Beyond Cost-Benefit Analysis
This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.
Cost-benefit analysis (CBA) is inherently classist, racist, and ableist. Since these are foundational problems with CBA, and are not simply issues with its implementation, they can never be fixed by mere methodological improvements. Instead, the ongoing modernization of centralized regulatory analyses must focus on "moving beyond" CBA, and not on fixing it or improving it. Thus, in implementing President Biden's memorandum on Modernizing Regulatory Review (the Biden Memorandum), the Office of Management and Budget (OMB) should make explicit that regulatory review no longer requires CBA, even—as will be true in the typical case—when regulatory review does demand economic analysis as part of a holistic, multi-factor regulatory impact analysis.
The Biden memorandum endorses a series of goals that are not premised in the narrow pursuit of Kaldor-Hicks "efficiency," the warped type of efficiency promoted by CBA. Such goals include using the regulatory review process to promote "racial justice, environmental stewardship, human dignity, equity, and the interests of future generations." However, the Biden Memorandum also reaffirms the "basic principles" expressed in executive orders 12,866 …
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