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Has Economic Analysis Improved Regulatory Decisions?

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Author Info

  • Robert W. Hahn
  • Paul C. Tetlock

Abstract

In response to the increasing impact of regulation, several governments have introduced economic analysis as a way of trying to improve regulatory policy. This paper provides a comprehensive assessment of government-supported economic analysis of regulation. We find that there is growing interest in the use of economic tools, such as benefit-cost analysis; however, the quality of analysis in the U.S. and European Union frequently fails to meet widely accepted guidelines. Furthermore, the relationship between analysis and policy decisions is tenuous. To address this situation, we recommend pursuing an agenda in which economics plays a more central role in regulatory decision making. In addition, we suggest that prediction markets could help improve regulatory policy and improve measurement of the impact of regulation.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.67
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 22 (2008)
Issue (Month): 1 (Winter)
Pages: 67-84

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Handle: RePEc:aea:jecper:v:22:y:2008:i:1:p:67-84

Note: DOI: 10.1257/jep.22.1.67
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References

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  1. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 107-126, Spring.
  2. Morrison, Steven A & Winston, Clifford & Watson, Tara, 1999. "Fundamental Flaws of Social Regulation: The Case of Airplane Noise," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 723-43, October.
  3. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
  4. repec:reg:rpubli:259 is not listed on IDEAS
  5. Harrington, Winston, 2006. "Grading Estimates of the Benefits and Costs of Federal Regulation," Discussion Papers dp-06-39, Resources For the Future.
  6. Morgenstern, Richard & Harrington, Winston & Nelson, Per-Kristian, 1999. "On the Accuracy of Regulatory Cost Estimates," Discussion Papers dp-99-18, Resources For the Future.
  7. Andrei Shleifer, 2005. "Understanding Regulation," European Financial Management, European Financial Management Association, vol. 11(4), pages 439-451.
  8. Arrow, Kenneth J. & Cropper, Maureen L. & Eads, George C. & Hahn, Robert W. & Lave, Lester B. & Noll, Roger G. & Portney, Paul R. & Russell, Milton & Schmalensee, Richard L. & Smith, V. Kerry & Stavin, 1996. "Is There a Role for Benefit-Cost Analysis in Environmental, Health, and Safety Regulation?," Working paper 98, Regulation2point0.
  9. Morrall III, John F., 2003. "Saving Lives: A Review of the Record," Working paper 188, Regulation2point0.
  10. repec:reg:rpubli:98 is not listed on IDEAS
  11. Robert W. Hahn & Patrick M. Dudley, 2007. "How Well Does the U.S. Government Do Benefit-Cost Analysis?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 1(2), pages 192-211, Summer.
  12. Morrall, John F, III, 2003. " Saving Lives: A Review of the Record," Journal of Risk and Uncertainty, Springer, vol. 27(3), pages 221-37, December.
  13. repec:reg:rpubli:322 is not listed on IDEAS
  14. Farrow, Scott, 2001. "Improving Regulatory Performance: Does Executive Office Oversight Matter?," Working paper 77, Regulation2point0.
  15. Charles L. Schultze, 1996. "The CEA: An Inside Voice for Mainstream Economics," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 23-39, Summer.
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Citations

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Cited by:
  1. Juergen Jung & Michael Makowsky, 2014. "The determinants of federal and state enforcement of workplace safety regulations: OSHA inspections 1990–2010," Journal of Regulatory Economics, Springer, vol. 45(1), pages 1-33, February.
  2. Robert w. Hahn & Robert A. Ritz, 2013. "Does the social Cost of Carbon Matter?: An Assessment of U.S. Policy," Cambridge Working Papers in Economics 1346, Faculty of Economics, University of Cambridge.
  3. Stephan Marette & Jutta Roosen & Sandrine Blanchemanche, 2011. "The Combination of lab and field experiments for benefit-cost analysis," Working Papers 40757, Institut National de la Recherche Agronomique, France.
  4. Dietz, Simon & Hepburn, Cameron, 2013. "Benefit–cost analysis of non-marginal climate and energy projects," Energy Economics, Elsevier, vol. 40(C), pages 61-71.
  5. Walter Buhr, 2009. "Infrastructure of the Market Economy," Volkswirtschaftliche Diskussionsbeiträge 132-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  6. Michael Reksulak, 2010. "Antitrust public choice(s)," Public Choice, Springer, vol. 142(3), pages 423-428, March.
  7. Fernando, Estrada, 2013. "Ronald Coase 1910-2013, In memoriam," MPRA Paper 49558, University Library of Munich, Germany.
  8. Robert Hahn & Caroline Cecot, 2009. "The benefits and costs of ethanol: an evaluation of the government’s analysis," Journal of Regulatory Economics, Springer, vol. 35(3), pages 275-295, June.

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