Neither Congress nor the Court have called for a one-size-fits-all approach to regulatory analysis, yet CBA continues to loom large in environmental policymaking. Agencies should reach for other tools that better capture the advantages and disadvantages of regulatory alternatives.
Economists who insist that the “value of a statistical life” can be determined solely by looking at the preferences of individual economic agents in a market overstate their case and miss crucial alternatives. The pandemic has shown that democratic determinations of value for non-market goods (like human life) deserve greater consideration.
While treating economic growth as the summum bonum of public policy may reflect the preferences of economists, large majorities of voters across the political spectrum oppose using the aim of wealth maximization to guide regulatory decision-making. The time has come to abandon cost-benefit analysis and adopt a progressive approach to regulatory analysis.
Two examples from the experience of people living with disabilities demonstrate CBA’s shortcomings.
CBA’s reliance on a “partial equilibrium” falls apart under the weight of real-world complexity. Rather than attempting to reform cost-benefit analysis, OIRA should reject it outright.
Conservatives have used cost-benefit analysis much more strategically than liberals to advance underlying political goals. Rethinking CBA within an LPE framework will require not only critique of its technical assumptions, but a willingness to be similarly strategic in thinking about its deployment.
Standard cost-benefit analysis exacerbates inequality by assigning greater weight to benefits that accrue to the rich. But it need not. Here are three strategies for bringing concerns about distribution within the CBA framework.
Two entrenched features of cost-benefit analysis ensure that the benefits of regulatory measures addressing climate change and racial injustice will be diminished and deformed in the process of valuing them: discounting and monetary valuation.
Introducing an LPE symposium on the promise, the perils, and the possible future of cost-benefit analysis.