Is Regulation Good for You?

26 Pages Posted: 24 May 2005

See all articles by Robert W. Hahn

Robert W. Hahn

Technology Policy Institute; University of Oxford, Smith School

Rohit Malik

AEI-Brookings Joint Center for Regulatory Studies

Abstract

Will all federal regulations soon pass a benefit-cost test? If the OMB's 2003 report is any indicator, the answer may be yes - at least for some categories of regulations. Applying the midpoint of OMB's estimates for quantified costs and benefits of agency rules, we find that 100 percent of regulations studied would pass a benefit-cost test for several agencies, and about 80 percent would pass for all agencies considered. Moreover, these regulations would confer at least $100 billion annually in net benefits, again using OMB's numbers. Sound too good to be true? That's probably because it is.

We argue that OMB's numbers are plausible, given the methodology that OMB uses. Whether they are reasonable is less clear. Some work by economists on related sets of regulations suggests that the percentage could be lower. A survey of experts in the field also casts doubt on the estimates of the number of regulations that would pass a benefit-cost test derived from OMB's report. The experts also suggest, in line with academic research, that there is considerable room for improvement in regulations that pass a benefit-cost test. We conclude with several suggestions for improving the regulatory process.

Keywords: OMB, 2003 report, cost-benefit

Suggested Citation

Hahn, Robert W. and Malik, Rohit, Is Regulation Good for You?. Harvard Journal of Law and Public Policy, Vol. 27, No. 3, pp. 893-916, October 2004, AEI-Brookings Joint Center Working Paper No. 04-02, Available at SSRN: https://ssrn.com/abstract=728583

Robert W. Hahn (Contact Author)

Technology Policy Institute ( email )

1401 Eye St. NW
Suite 505
Washington, DC 20005
United States

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Rohit Malik

AEI-Brookings Joint Center for Regulatory Studies ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

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