Politics And Economic Analysis

by Stuart Shapiro

Another of my occasional academic blog posts.  To whet your appetite :

Debates over benefit-cost analysis tend to focus either on the morality of the entire enterprise or on specific aspects of the analysis, such as the correct discount rate to use or the treatment of uncertainty. While these debates are worthwhile, they ignore a central reality about benefit-cost analysis: it is conducted in a political context. As both the House and Senate consider regulatory reform bills and as states across the U.S. and countries around the world consider adding analytical requirements, academic and policy observers would be well served to keep this reality in mind. Just as politics influence the legislative process that directs agency action, so too do politics influence agencies’ policy choices—and their resulting benefit-cost analyses. In practical terms, we believe this conclusion requires making the process for generating and reviewing analyses as transparent as possible while insulating BCA from politics as much as is legally feasible.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.