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Is Regulation Good For You?


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  • Hahn, Robert W.
  • Malik, Rohit


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 withseveral suggestions for improving the regulatory process.

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Bibliographic Info

Paper provided by Regulation2point0 in its series Working paper with number 344.

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Date of creation: May 2004
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Handle: RePEc:reg:wpaper:344

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Cited by:
  1. David Simpson, 2011. "Do Regulators Overestimate the Costs of Regulation?," NCEE Working Paper Series 201107, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Dec 2011.


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