Unequal Partners: Cost-Benefit Analysis and Executive Review of Regulations

Abstract

The Office of Information and Regulatory Affairs (OIRA) has oversight responsibilities for implementation of two of the most controversial and significant developments in administrative rulemaking over the past 30 years. OIRA both acts as the eyes and ears of the President for purposes of overseeing the regulatory process and serves as the guardian of economic analysis in the rulemaking process. While the role of cost-benefit analysis in determining regulatory outcomes remains controversial, support for presidential oversight over rulemaking has grown considerably.

This paper looks at the interaction between executive oversight and cost-benefit analysis in the rulemaking process. I argue that OIRA's mission in implementing executive oversight is often not compatible with its mission as an advocate for economic analysis. When such instances of incompatibility occur, the political preferences of the president dominate over analytical concerns. If executive oversight has overshadowed economic analysis, it would explain why requirements for economic analysis have not led to more cost effective regulations. Advocates of a greater role for economic analysis in regulatory decisionmaking need to examine whether alternative institutional designs for implementing such analysis would better serve their aims.

Keywords: Cost benefit analysis, regulation, OIRA, OMB

JEL Classification: K23, D61