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Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
Decision-Making 101: Regulatory Impact Analysis
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Decision-Making 101: Regulatory Impact Analysis

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Decision-Making 101: Regulatory Impact Analysis

Decision-Making 101: Regulatory Impact Analysis

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  • 1. Decision-Making 101: Regulatory Impact Analysis Jerry Ellig Senior Research Fellow Mercatus Center at George Mason University Arlington, Virginia USA
  • 2. Key Steps in Regulatory Analysis 1. Assess evidence of market failure or other systemic problem 2. Identify regulatory and non-regulatory alternatives 3. Assess benefits of alternatives 4. Assess costs of alternatives
  • 3. In Plain English … 1. What’s the problem and what caused it? 2. What are the alternative solutions? 3. What will each solution accomplish? 4. What does each solution require us to give up?
  • 4. Why Does Analysis of the Problem Matter? USDA catfish reg. Vs. DOI bird hunting reg.
  • 5. Why Do Alternatives Matter?
  • 6. Why Does Good Benefit Analysis Matter? FDA proposed animal food rule: $13-17 million benefits, $87-129 million costs Apply to pet food only: $12-15 million benefits, $6-9 million costs
  • 7. Why Does Good Cost Analysis Matter? TSA Budget $4.3 billion (2005) Reduced air travel Increased waiting time Increased fatalities due to substitution from flying to driving $2.35 billion (2005) $2.76 billion (2005) 116 individuals (4th Quarter 2002)
  • 8. www.mercatus.org/reportcards Why Are We Doing This Project? 1) Agency accountability 2) Better analysis likely means better rules 3) Academic research 4) Stakeholder participation
  • 9. 1) Six criteria from E.O. 12866 and Circular A-4 2) Proposed “economically significant” regulations 3) Team of economists 4) Read RIA and entire Federal Register preamble 5) Qualitative evaluation with numerical scores 6) 2008 to present Project Description
  • 10. 1. Systemic Problem: How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve? 2. Alternatives: How well does the analysis identify and analyze alternative approaches? 3. Benefits (or Other Outcomes): How well does the analysis identify the benefits or other desired outcomes and demonstrate that the regulation will achieve them? Scoring Criteria
  • 11. Scoring Criteria (cont.) 4. Costs: How well does the analysis assess costs? 5. Use of Analysis: Does the proposed rule or the RIA present evidence that the agency used the Regulatory Impact Analysis in any decisions? 6. Cognizance of Net Benefits: Did the agency maximize net benefits (benefits-costs) or explain why it chose another alternative?
  • 12. Evaluation Scale 5 Complete analysis of all or almost all aspects, with one or more “best practices” 4 Reasonably thorough analysis of most aspects and/or shows at least one "best practice" 3 Reasonably thorough analysis of some aspects 2 Some relevant discussion with some documentation of analysis 1 Perfunctory statement with little explanation or documentation 0 Little or no relevant content 6 criteria 0-5 points each Total Score: 0-30 points
  • 13. Average 2008-12: 15.4 points (51%) Highest Possible Score = 30 points Best score ever: A 28/30 points (93%)
  • 14. Average scores
  • 15. Average Scores by criterion (2008-2012) Criteria Score* Systemic problem 2.1 Alternatives 2.8 Benefits (or other outcomes) 3.2 Costs 2.5 Use of analysis 2.2 Cognizance of net benefits 2.5 * Scores out of 5 possible points
  • 16. Use of analysis poorly explained
  • 17. Research findings • Little difference in average quality of analysis between administrations • Lower-quality analysis comes from agencies whose policy preferences (ideologies) are closer to the administration’s • “Midnight” regulations and regulations left for the next administration to finalize have worse analysis • Agencies are more likely to claim they used an analysis if its quality is higher
  • 18. Research findings (cont.) • Securities and Exchange Commission has worse analysis than executive branch agencies • Interim final rules that implement presidential priorities have worse analysis (early DHS and early ACA) • Longer OIRA review is associated with higher-quality analysis • Many proposed regulatory process reforms would likely generate better analysis
  • 19. Potential regulatory reforms • Require Regulatory Impact Analysis by law • Judicial review • Quality of analysis • Was use of analysis explained? • Require publication of analysis for comment before proposed regulation is written
  • 20. Why does it matter?

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