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Has Economic Analysis Improved Regulatory Decisions?

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  • 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.

Suggested Citation

  • Robert W. Hahn & Paul C. Tetlock, 2008. "Has Economic Analysis Improved Regulatory Decisions?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 67-84, Winter.
  • 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 listed on IDEAS

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    Citations

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    Cited by:

    1. Dietz, Simon & Hepburn, Cameron, 2013. "Benefit–cost analysis of non-marginal climate and energy projects," Energy Economics, Elsevier, vol. 40(C), pages 61-71.
    2. Marette Stéphan & Roosen Jutta & Blanchemanche Sandrine, 2011. "The Combination of Lab and Field Experiments for Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-36, August.
    3. Nyborg, Karine, 2014. "Project evaluation with democratic decision-making: What does cost–benefit analysis really measure?," Ecological Economics, Elsevier, vol. 106(C), pages 124-131.
    4. Hahn Robert, 2010. "Designing Smarter Regulation with Improved Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 1(1), pages 1-19, July.
    5. Walter Buhr, 2009. "Infrastructure of the Market Economy," Volkswirtschaftliche Diskussionsbeiträge 132-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    6. 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.
    7. 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.
    8. Michael Reksulak, 2010. "Antitrust public choice(s)," Public Choice, Springer, vol. 142(3), pages 423-428, March.
    9. Fernando, Estrada, 2013. "Ronald Coase 1910-2013, In memoriam," MPRA Paper 49558, University Library of Munich, Germany.
    10. Tasic Slavisa, 2011. "Are Regulators Rational?," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 17(1), pages 1-21, April.
    11. Robert W. Hahn & Robert A. Ritz, 2015. "Does the Social Cost of Carbon Matter? Evidence from US Policy," The Journal of Legal Studies, University of Chicago Press, pages 229-248.
    12. 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.

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