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Grading Estimates of the Benefits and Costs of Federal Regulation

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  • Harrington, Winston

    () (Resources for the Future)

Abstract

I review two recent estimates of the costs and, in one case, benefits of federal regulation. The first is found in the Office of Management and Budget’s 2005 report to Congress on the benefits and costs of federal regulations (OMB 2005b). OMB estimates annual benefits in 2004 to be $70 to $277 billion and costs to be $34 to $39 billion, but these estimates omit a great deal; the cost estimate, in particular, is generally acknowledged to be an underestimate. The other estimate, written by Mark Crain (Crain 2005) and sponsored by the Small Business Administration, uses a different approach and generates an estimate of $1 trillion. Crain also finds that the burden on small firms is much greater than the burden on large firms. In the final section of the paper, I also review a recent comparison, presented in the 2005 report to Congress, of ex ante and ex post estimates of the benefits and costs of individual regulations. I find the Crain report to be deeply problematic and the OMB’s ex ante/ex post comparison slightly less so.

Suggested Citation

  • Harrington, Winston, 2006. "Grading Estimates of the Benefits and Costs of Federal Regulation," Discussion Papers dp-06-39, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-06-39
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-06-39.pdf
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    References listed on IDEAS

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    1. Morgenstern, Richard & Harrington, Winston & Nelson, Per-Kristian, 1999. "On the Accuracy of Regulatory Cost Estimates," Discussion Papers dp-99-18, Resources For the Future.
    2. Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
    3. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-827, August.
    4. Christainsen, Gregory B & Haveman, Robert H, 1981. "Public Regulations and the Slowdown in Productivity Growth," American Economic Review, American Economic Association, vol. 71(2), pages 320-325, May.
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    Cited by:

    1. Becker, Randy A. & Pasurka, Carl & Shadbegian, Ronald J., 2013. "Do environmental regulations disproportionately affect small businesses? Evidence from the Pollution Abatement Costs and Expenditures survey," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 523-538.
    2. 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.
    3. Lutter, Randall, 2013. "Regulatory policy: what role for retrospective analysis and review?," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 4(01), pages 17-38, March.

    More about this item

    Keywords

    regulation; benefits; costs; ex ante; ex post; OMB;

    JEL classification:

    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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