Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation

Abstract

This white paper starts from the recognition that the value of the regulatory system cannot be captured in a single number or metric, such as the concept of net benefits often touted by conservative economists. Instead, one must look at a more complex mosaic of evidence. When compiled and evaluated holistically, this evidence demonstrates unequivocally that regulation has benefited the U.S. greatly, while the failure to regulate has cost us dearly.

The evidence considered in this paper includes: - Several studies that aggregate the costs and benefits of a defined group of regulations (e.g., OMB’s annual reports); - Several specific examples of regulatory successes; - Estimates of the costs of failing to regulate (including both day-to-day hazards as well as catastrophes); - Retrospective evaluations of individual regulations (specifically, the lookbacks conducted under Section 610 of the Regulatory Flexibility Act); and - Prospective cost-benefit analyses of individual regulations.

The white paper discusses the flaws of each type of evidence, and thus takes an appropriately critical look at what that evidence can say about the value of regulation.

With such limitations in mind, the white paper reviews the available evidence and finds that these benefits have been a bargain for the United States. Specifically, regulations have produced little or no economic disruption and have no clear negative impacts on employment.

Keywords: Regulation, Environment, Health, Safety, Government, Economics, Policy Analysis, Cost-Benefit Analysis

JEL Classification: D61, D62, D78, D81, H11, H42, K23, K32, L51