On Balance

October 9, 2019

By: Daniel R. Pérez

Policymakers are called to act in the present to protect the public against future risks while operating under the constraints of doing so in an economically efficient yet effective manner. Unfortunately, these risks tend to present the most difficulty for traditional analytical tools in support of policymaking. This post describes a recently published article, “Dynamic Benefit-Cost Analysis for Uncertain Futures,” co-authored with Susan E. Dudley, Brian F. Mannix, and Christopher Carrigan as part of the open access Symposium on Analysis for Uncertain Futures in the Journal of Benefit Cost Analysis. The article explores the challenges “uncertain futures” pose for analytical tools to satisfactorily support policymaking and proposes the use of “dynamic benefit-cost analysis” frameworks as a necessary approach to address these challenges.

 September 13, 2019

By: Bengt Kristrom

Professor Martin Weitzman passed away unexpectedly at the end of August 2019. A substantial number of accounts of his many contributions to economics in general and environmental economics in particular are available, and collectively provide a good overview of his contributions and influence on the profession (see links at the end of this post). In this short note, I want to highlight some aspects of his works that are relevant for applied welfare economics in general and cost-benefit analysis in particular. I single out two stellar contributions that opened up new vistas for research and enriched the literature on welfare measurement.

September 11, 2019

By: Jorge Luis Garcia & Grace Guthrie Griffith

The National Center for Children in Poverty reports that 21% of American children are living in poverty, including 46% of African American and 40% of Latino children. Compared to non-poor children, on average impoverished children are 15.6% less likely to graduate high school and 37% more likely to be unemployed as adults.

August 28, 2019

By: Clark Nardinelli

Over four decades ago I struggled through my first year of graduate school in economics, a struggle made palatable by the extraordinary professor who taught my first economics course. Deirdre McCloskey was (and is) smart, fun, and eccentric, and she enthusiastically led us through our first pass at economics. Part of that passage included learning to write, for McCloskey held – a notion considered eccentric – that economists should write well. Although good writing remains suspect among economists, Deirdre McCloskey taught me long ago that good writing makes for good economics.

August 14, 2019

By Thomas J. Kniesner

In the following interview I asked Richard Zeckhauser to recount what it was like to be part of the “Whiz Kids,” the name given to a group of experts with which Robert McNamara (then Secretary of Defense and later President of the World Bank) surrounded himself in order to turn around the management of the United States Department of Defense in the 1960s. The group sought to shape government decision making by bringing in economic analysis, operations research, game theory, and computing, as well as by implementing new methods, such as Planning Programming Budgeting System (PPBS). Their efforts did a lot to extend and solidify the influence of the principles of benefit cost analysis in U.S. Federal government decisions.

July 10, 2019

By: Deven Carlson

The field of benefit-cost analysis is replete with guidance on theoretical and empirical valuation of impacts. Many fewer resources, however, are available for analysts to consult when determining the set of policy impacts to value in the first place. This post describes a new article published with co-authors Joseph Ripberger, Wesley Wehde, Hank Jenkins-Smith, Carol Silva, Kuhika Gupta, Benjamin Jones, and Robert Berrens, in the Spring 2019 Issue of the Journal of Benefit-Cost Analysis. The article, entitled, ‘Benefit-Cost Analysis, Policy Impacts, and Congressional Hearings,’ proposes a method for identifying policy impacts that contributes a degree of systematism, transparency, and replicability to the process.

June 26, 2019

By: Ann Wolverton

Academic researchers and government institutions have both encouraged retrospective analysis of the costs and benefits of regulation to facilitate evidence-based review and possibly revision of the design and stringency of existing regulations (White House 2012; Morgenstern 2015). However, rigorous examples of these types of ex post analyses are relatively rare. This post describes a study comparing the retrospective costs (evaluated ex post) of a U.S. Environmental Protection Agency (EPA) regulation to the cost estimates reported during the regulatory process (calculated ex ante). These findings are reported in more detail in a recent article, “Retrospective Evaluation of the Costs of Complying with Light-Duty Vehicle Surface Coating Requirements,” published in the Spring Issue of the Journal of Benefit Cost Analysis, with co-authors Nathalie Simon and Ann E. Ferris.

June 12, 2019

By: Rob Moore

Since Ronald Reagan’s 1981 Executive Order 12291 established benefit-cost analysis as standard practice for major rule changes, benefit-cost analysis has been commonly used to assess the efficiency of proposed federal regulations. Because of this and subsequent executive orders, all federal regulations that are projected to have a total economic impact of over $100 million are subject to a full benefit-cost analysis. Despite this prevalence at the federal level, benefit-cost analysis is much less common at the state level. In 2013, the Pew-MacArthur Results First Initiative released a study of the use of benefit-cost analysis in the states (study results were subsequently reported in the Journal of Benefit Cost Analysis in 2015). The study found that, over the four years from 2008 to 2011 states conducted only 36 full cost benefit analyses and 312 partial cost-benefit analyses. This averaged out to 9 full analyses and 78 partial analyses per year across all 50 states.

May 29, 2019

By: Bethany Davis Noll

Administrative agencies, courts, and litigants are just coming off two years of intense debates over the legality of agency deregulation through delay. One fascinating development has been how significant cost-benefit analysis has been in these debates. Cost-benefit analysis has formed the basis for several important court losses suffered by the administration. (See Air Alliance 2018; California 2017.) Now agencies have proposed to repeal many big-ticket rules, including the Clean Power Plan, the Clean Water Rule, and vehicle emissions standards. A key question is what role cost-benefit analysis will play in the upcoming legal battles over repeals.

Keith Belton,Manufacturing Policy Initiative in the School of Public and Environmental Affairs (SPEA), Indiana University John Graham, Indiana University School of Public and Environmental Affairs

May 15, 2019

By: Keith B. Belton and John D. Graham

In his campaign for the US presidency, candidate Donald Trump advocated widespread deregulation of the US economy. Upon taking office, President Trump quickly issued policies to fulfill his campaign promises. Midway through his term, it is fair to ask: Is deregulation being accomplished?

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