These documents are the apex of the Center's academic research. Our working papers are authored with the intention of publishing them in peer-reviewed journals at a later date, and our journal articles are setting the standard in their academic disciplines.
February 26, 2020
By: Jerry Ellig & Michael Horney
This article documents the diverse degrees of discretionary authority Congress grants US executive branch agencies. It then presents a case study that systematically compares the quality of impact analysis that informed legislative and regulatory decisions on positive train control, a technology mandated by statute in 2008.
February 18, 2020
By: Christopher Carrigan, Mark Febrizio, & Stuart Shapiro
This working paper is part of a symposium hosted by the C. Boyden Gray Center for the Study of the Administrative State at George Mason University’s Antonin Scalia Law School titled Bureaucracy and Presidential Administration: Expertise and Accountability in Constitutional Government.
January 15, 2020
By: Susan E. Dudley
The Office of Information and Regulatory Affairs (OIRA) in the Executive Office of the President coordinates the federal government’s regulatory agenda, reviews executive branch agencies’ draft regulations, and oversees government-wide information quality, peer review, privacy, and statistical policies. Remarkably, its regulatory oversight functions, and the benefit-cost framework underlying them, have not changed significantly through six very different presidential administrations. This article examines the evolution of executive regulatory oversight and analysis from the 1970s to today, exploring the reasons for its durability and whether the current imposition of a regulatory budget challenges the bipartisan nature of regulatory practice.
Pursuing Consilience: Using Behavioral Public Administration to Connect Research on Bureaucratic Red Tape, Administrative Burden, and Regulation
December 30, 2019
By: Christopher Carrigan, Sanjay K. Pandey, & Gregg G. Van Ryzin
Behavioral public administration (BPA) research aspires not only to draw on developments in behavioral science but also, importantly, to address central themes in public administration. By focusing a symposium on bureaucratic red tape, administrative burden, and regulation, we encouraged BPA scholarship to engage with fundamental public administration topics that are also relevant for the broader literature on organizations and management. Indeed, the symposium contributions demonstrate how BPA can better meld the behavioral science and public administration literatures. They expand on existing conceptions of BPA, with respect to both methodology and topical focus, and provide a basis for demarcating what might and might not be usefully described as BPA. The symposium contributions provide a blueprint for how BPA research might usefully evolve and the introduction offers a philosophical reflection on the future development of BPA and behavioral science.
December 03, 2019
By: Susan E. Dudley & Zhoudan Xie
Recognizing that cognitive biases can also affect regulators themselves, this article attempts to undertand how the institutional environment in which regulators operate interacts with their cognitive biases. This article offers suggestions for improving the regulatory choice architecture at federal agencies by having public managers and policy makers factor in predictable biases when regulating individual behaviors or market transactions.
November 22, 2019
By Christopher Carrigan, Jerry Ellig, and Zhoudan Xie
This paper explores the role that the regulatory impact analyses (RIAs) that agencies are required to prepare for important proposed rules play in decisions by courts about whether these rules should be upheld when they are challenged after promulgation. The results suggest that better RIAs are associated with lower likelihoods that the associated rules are later invalidated by courts, provided that the associated agency explains how it used the RIA in its decision-making. When the agency does not describe how the RIA was utilized, there is no correlation between the quality of analysis and the likelihood the regulation will be invalidated. An explanation of the RIA’s role in the agency’s decision also appears to increase the likelihood that the regulation will be invalidated by inviting an increased level of court scrutiny, and as a result, the quality of the RIA must be sufficiently high to offset this effect.
Comparing a Rebated Carbon Tax with a Compensated Carbon Tax, And Revisiting the Distinction Between Economic and Social Regulation
November 19, 2019
By Brian F. Mannix
Part I of this paper compares and contrasts a simple carbon tax, a rebated carbon tax, and an output-compensated carbon tax, using the electric power industry to illustrate the differences. Part II of the paper explains the mathematical duality between those three price instruments and their corresponding quantity instruments: auctioned cap-and-trade and allocated cap-and-trade, both of which impose a constraint on the quantity of emissions, and emissions-rate-cap-and-trade (also called offset trading), which imposes a constraint on the emission-intensiveness of industrial output. Keeping in mind the properties of compensated demand curves, Part III of the paper argues that the mathematical form of their regulatory constraints can help explain many of the typical differences between economic and social regulation – including the tendency of economic regulatory agencies to be multi-headed “independent” agencies, their inclination to use more adjudication and formal rulemaking than is typical of social regulators, and their troubling susceptibility to agency capture.
Consultation as Policymaking Innovation: Comparing Government Transparency and Public Participation in China and the United States
November 01, 2019
By Steven J. Balla & Zhoudan Xie
This article compares government transparency and public participation in consultation—a prominent instrument of policymaking innovation—across China and the United States. The analysis specifically focuses on consultation at the Chinese Ministry of Commerce (MOC) and United States Environmental Protection Agency (EPA)—leading agencies in the implementation of consultation in policymaking in their respective countries—as a means of evaluating best practices in China relative to a corresponding benchmark in the United States. The analysis reveals both similarities and differences in transparency and participation at the MOC and EPA. The findings suggest that differences in the Chinese and American political systems, rather than issues of administrative capacity, are the primary limitations of consultation as a policymaking innovation in contemporary China.
October 02, 2019
By: Steven J. Balla, Alexander R. Beck, Elizabeth Meehan, and Aryamala Prasad
By assembling information about more than 1,000 mass comment campaigns that occurred during Environmental Protection Agency rulemakings between 2012 and 2016, the analysis addresses the manner in which the agency responds to campaigns and the association between campaigns and the substance of rules.
September 27, 2019
By: Steven J. Balla, Alexander R. Beck, William C. Cubbison, & Aryamala Prasad
Through an analysis of more than one thousand mass comment campaigns submitted on Environmental Protection Agency rulemakings between 2012 and 2016, this article's findings suggest that mass comment campaigns are not a phenomenon meriting unique explanation, but rather occur in a manner similar to lobbying in other policymaking venues, such as lawmaking in Congress. The research also confirms expectations that campaigns submitted by regulated entities (i.e., industries) are more substantive than campaigns generated by beneficiaries of stringent regulations (e.g., environmental advocacy groups).
September 17, 2019
By: Susan E. Dudley, Daniel R. Pérez, Brian F. Mannix, & Christopher Carrigan
Policymakers face demands to act today to protect against a wide range of future risks, and to do so without impeding economic growth. Yet traditional analytical tools may not be adequate to frame the relevant uncertainties and tradeoffs. Challenges such as climate change, nuclear war, and widespread natural disasters don't lend themselves to decision rules designed for discrete policy questions and marginal analyses. We refer to such issues as "uncertain futures."
September 17, 2019
By: Tony Cox
Building on Charles Lindblom's research on the limits of rational-comprehensive decisionmaking, Tony Cox provides insights on how machine learning can help individuals and institutions make better informed decisions - improving society's experience of 'muddling through' policymaking under uncertainty.
September 17, 2019
By: Fred S. Roberts
Reviewing risk assessment to scenarios of terrorist attacks on critical infrastructure including U.S. sporting venues and the international maritime transportation system. Fred Roberts notes that these assessments traditionally treat physical and cyber attacks separately and are inappropriate for considering the risk of combined attacks that include both a physical and cyber component. He proposes a framework informed by expert judgement to determine whether an attacker would likely prefer executing a combined or traditional physical attack on a given target.
September 17, 2019
By: James Scouras
James Scouras identifies nuclear war as a global catastrophic risk and suggests that multidisciplinary studies that combine insights from "historical case studies, expert elicitation, probabilistic risk assessment, complex systems theory, and other disciplines" can address many of the shortcomings of single analytic approaches. He suggests that experts can address current gaps in their assessments of the consequences of nuclear weapons by further investigating understudied phenomena (e.g., the effects of electromagnetic pulses, nuclear winter, the prolonged effects of radiation).
September 17, 2019
By: W. Kip Viscusi, Joel Huber, & Jason Bell
Elaborating on best practices for decisionmakers facing low probability, high consequence hazards. Viscusi, Huber, and Bell point out that these uncertain risks create incentives to pursue suboptimal policy approaches that potentially over commit public resources to less consequential hazards.
September 12, 2019
By: Jerry Ellig & Richard Williams
For nearly four decades, U.S. presidents have issued executive orders requiring agencies to conduct comprehensive regulatory impact analysis (RIA) for significant regulations to ensure that regulatory decisions solve social problems in a cost-beneficial manner. Yet experience demonstrates that agency RIAs often fail to live up to the standards enunciated in executive orders and OMB guidance. We suggest four managerial changes that could increase OIRA’s leverage.
September 12, 2019
By: Brian F. Mannix & Bridget C.E. Dooling
In this article we focus on the executive’s authority to write a cross-government “rule-on-rules” to govern regulatory analysis, including benefit-cost analysis and the courts’ authority to enforce such a rule.
September 12, 2019
By: Susan E. Dudley
While some of the Office of Information and Regulatory Affair’s functions are statutorily granted, others—notably those related to regulatory policy—derive from presidential executive orders. This paper reflects on OIRA's evolution over the almost 40 years since the Paperwork Reduction Act created it in 1980 to understand what has made it so durable.
July 16, 2019
By: Susan E. Dudley & Zhoudan Xie
Recognizing that “bounded rationality” also occurs in the regulatory process and building on public choice insights that focus on how institutional incentives affect behavior, this article explores the interaction between the institutions in which regulators operate and their cognitive biases. It attempts to understand the extent to which the “choice architecture” regulators face reinforces or counteracts predictable biases. Just as behavioral insights can help design a choice architecture that frames individual decisions in ways that encourage welfare-enhancing choices, designing the institutions that counter regulators’ cognitive errors could lead to more public-welfare-enhancing policies.
May 17, 2019
By: Christopher Carrigan & Russell W. Mills
This article in the Public Administration Review journal examines the relationship between how agencies organize their rulemaking routines and the resulting rules.
June 3, 2019
By: Jerry Ellig
Thomas Lambert’s How to Regulate contains some simple but critical pieces of advice for regulators: (1) Diagnose the problem before settling on a solution, (2) Compare the merits (benefits and costs) of alternatives, and (3) Recognize that regulators, like the rest of us, respond to the incentives created by the organization in which they are embedded. The FCC’s Restoring Internet Freedom order presents an example of how to apply those principles in practice.
May 28, 2019
By: Bridget C.E. Dooling
Executive Order 12866 describes U.S. policy on regulatory planning and review. It directs agencies to identify the nature and significance of the problem they are trying to solve with regulation, to identify alternative solutions, to assess the quantifiable and non-quantifiable costs and benefits of each alternative, and then to choose the option that maximizes net benefits to society, taking into account distributional effects and other considerations. That policy, which has governed U.S. regulation for several decades, is managed by the Office of Information and Regulatory Affairs (OIRA). It is also subject to several exemptions. In April 2018, the U.S. Department of Treasury and the Office of Management and Budget signed a historic memorandum of agreement (MOA) narrowing one of those exemptions. The MOA expands the number of Internal Revenue Service (IRS) regulatory actions for which IRS must comply with EO 12866. This action moved tax rules out of the “presidential tax-policy blind spot” as described by Professor Clint Wallace. This working paper offers a close study of the MOA and reveals six striking features that not only affect tax regulation, but also offer intriguing possibilities for (1) scholarly understanding of OIRA as an institution and (1) the future of regulatory review of independent agencies, which is the largest remaining exemption from OIRA review.
March 4, 2019
By: Steven J. Balla & Zhoudan Xie
This article examines the institutionalization of online consultation, a prominent instrument of governance reform in China in which government officials provide interested parties with opportunities to comment on draft laws and regulations over the Internet. The analysis demonstrates that government consultation practices have institutionalized to a greater degree than the citizen feedback that occurs in response to draft laws and regulations. These results point to the conclusion that online consultation is a governance reform that has advanced transparency and (to a lesser degree) public participation, but has not eroded the Chinese Communist Party’s dominance over policymaking.
January 30, 2019
By: Joseph J. Cordes & Daniel R. Pérez
Co-director Joe Cordes and senior policy analyst Daniel Pérez's article published in The Journal of Law, Economics & Policy draws on the economics of privacy literature to summarize why the costs and benefits of privacy controls should be measured in principle, discusses previous attempts to do so, and generates useful estimates of consumers' valuation of privacy.
January 22, 2019
By: Susan E. Dudley & Brian F. Mannix
Across developed countries, benefit-cost analysis (BCA) is the principal public policy tool for laying out available information in a way that allows policy makers to make balanced, efficient regulatory decisions in the face of limited resources. However, BCA has limitations. This article examines the institutional and technical factors limiting the use of BCA as a tool for improving regulatory policy and offers some recommendations for reducing those barriers.
November 27, 2018
By Susan E. Dudley
Bruce Yandle conceived the theory of Bootleggers and Baptists after working in government as a young economist in the late 1970s and 1980s. Forty years later, his insights regarding the forces that converge to support government intervention continue to explain many regulatory observations. Applying the theory to her own experience, Dudley finds that while the B&B phenomenon is universal, the nature of winning Baptist arguments can vary depending on administration, and that regulatory institutions can reinforce or counteract B&B pressures.
August 06, 2018
By Brian F. Mannix
Benefit-cost analysis (BCA) continues to be the principal tool used by American presidents to guide the discretionary decisions of regulatory agencies under their supervision, and increasingly it is viewed by the courts as an important consideration for agencies to take into account in justifying their regulatory decisions. This paper argues that BCA is properly viewed, not simply as a technocratic planning tool, but as a solution to a principal-agent problem. Specifically, it is intended to test whether an agency can demonstrate that it is acting in the public interest. Viewed in this light, some common analytical practices used by regulatory agencies become questionable. A BCA should not, for example, use an assumption that consumers are irrational to support a claim that coercive regulation is making them better off. Consumer sovereignty is axiomatic in BCA, and an agency that uses BCA to justify its actions must accept individuals’ judgments about their own welfare.
August 02, 2018
By Susan E. Dudley & Marcus Peacock
This paper explores the motivations and institutional incentives of participants involved in the development of regulation aimed at reducing health risks, with a goal of understanding and identifying solutions to what the Bipartisan Policy Center has characterized as “a tendency to frame regulatory issues as debates solely about science, regardless of the actual subject in dispute, [that] is at the root of the stalemate and acrimony all too present in the regulatory system today.” We focus our analysis with a case study of the procedures for developing National Ambient Air Quality Standards under the Clean Air Act, and attempt to identify procedural approaches that bring greater diversity (in data, expertise, experience, and accountability) into the decision process.
February 22, 2018
By Marcus Peacock, Sofie E. Miller, & Daniel R. Pérez
Policymakers and scholars have given serious thought to how evidence-based approaches can improve policymaking, but using evidence to improve regulatory outcomes requires a separate framework than the one currently in use. This paper details how the regulatory process differs from other federal policymaking and establishes a framework for evidence-based regulation (EBR) to improve regulatory outcomes by planning for, collecting, and using evidence throughout the life a regulation. The authors discuss the main barriers that regulatory agencies face in implementing an EBR approach and advance concrete proposals for overcoming these barriers.
February 21, 2018
By Christopher Carrigan
Public administration scholars and practitioners uniformly agree that saddling agencies with multiple mandates breeds dysfunction and impedes performance. However, less is known about the mechanisms by which combining purposes has these effects. This study of a broad set of U.S. federal agencies finds support for the conventional wisdom by showing that agencies balancing greater numbers of programs perform worse. The analysis further suggests that such organizations struggle largely because they are more likely to be forced to simultaneously adopt conflicting stances toward program targets. Moreover, when programs force agencies into conflicts in which they are asked to both support and restrain the same target, the resulting uncertainty among personnel regarding agency priorities helps explain why operations are negatively impacted. Thus, it is not simply that accumulating missions impedes agency performance but rather how those competing mandates interact that can define whether an agency will struggle to achieve its objectives.
Book Review of Andrew W. Lo's "Review of Adaptive Markets: Financial Evolution at the Speed of Thought"
February 8, 2018
By Susan E. Dudley
What drives our responses to risk and uncertainty, and how can we improve them? In his 2017 book, Adaptive Markets: Financial Evolution at the Speed of Thought, MIT Sloan finance professor Andrew Lo answers that question using evolutionary concepts and insights, including competition, innovation, reproduction, and adaptation.
November 26, 2017
By Christopher Carrigan
Following the Gulf oil spill and US housing meltdown, policy-makers revamped the associated administrative infrastructure in an effort to sharpen each agency’s focus, based on the perspective that asking an organization to fulfill competing missions undermines performance. Using a formal model, I demonstrate that priority goal ambiguity introduced when an agency balances multiple roles does have detrimental effects. Yet, assigning competing missions to one organization can be better than separating them, as the underlying tasks supporting the goals may require coordination. In fact, it is precisely when ambiguity becomes more debilitating that the importance of coordination intensifies. Moreover, if the bureau is misinformed about which goals are more valued politically, fostering uncertainty in agencies charged with multiple goals can even be beneficial. The article thus describes how such organizations function and why these arrangements persist, demonstrating that structural choices impact behavior even when agencies and overseers agree on policy objectives.
August 2, 2017
By S. Dudley, R. Belzer, G. Blomquist, T. Brennan, C. Carrigan, J. Cordes, L. Cox, A. Fraas, J. Graham, G. Gray, J. Hammitt, K. Krutilla, P. Linquiti, R. Lutter, B. Mannix, S. Shapiro, A. Smith, W. .Viscusi & R. Zerbe in the Journal of Benefit-Cost Analysis
Regulatory impact analyses (RIAs) weigh the benefits of regulations against the burdens they impose and are invaluable tools for informing decision makers. We offer 10 tips for nonspecialist policymakers and interested stakeholders who will be reading RIAs as consumers.
June 27, 2017
By Sofie E. Miller
The Energy Policy Conservation Act of 1975 (EPCA) grants the Department of Energy the authority to regulate the energy efficiency of everyday consumer appliances like dishwashers and refrigerators. Because these standards affect almost all households and incur such large potential benefits and costs, the underlying statute merits close inspection. This working paper provides seven recommendations for reforming EPCA to ensure that consumers do not bear disproportionate burdens as a result of energy efficiency rules.
Structure and Process: Examining the Interaction between Bureaucratic Organization and Analytical Requirements
March 11, 2017
By Stuart Shapiro
Attempts by politicians to control bureaucratic decisions include both structural and procedural approaches. But how do these two modes of influence interact? This article examines the interaction between bureaucratic structure and one procedural control, the requirement that agencies conduct an analysis of their decisions prior to their issuance. Shapiro looks at this interaction in the context of two types of analysis, cost-benefit analysis and environmental impact assessment and finds that the conduct of analysis is affected by where analysts are placed in agencies. In particular, independence of analysts has a trade-off.
March 29, 2017
By Steven J. Balla
This article examines the operation of notice-and-comment-style policymaking in China. What kinds of government organizations have embraced consultation? What kind of information is disclosed during consultation? The article assembles original data on online consultation from more than one hundred central government ministries and provincial governments. The analysis shows that consultation is more commonly used by organizations that are well-resourced and that do not make policy in areas characterized by fundamental political sensitivities. Consultation holds promise as a Party-led, incremental administrative response to the governance challenges faced by contemporary China.
March 20, 2017
By Susan E. Dudley, OECD Environment Working Papers, No. 118
Governments generally conduct rigorous analysis of regulations aimed at reducing chemical risk before they are issued; however, due to both methodological challenges and poor incentives, these regulations are often not evaluated with the same care once they are in place. In this paper prepared for the OECD, Dudley explores practices for more consistent and robust evaluation of regulatory outcomes and concludes that a systems approach to understanding regulatory efficacy would be valuable not only for understanding the effect of past actions, but for improving future decisions and outcomes.
January 18, 2017
By Sofie E. Miller
“Midnight” regulations are those issued after the November presidential election but before Inauguration Day as the outgoing administration attempts to finalize its regulatory policy priorities with a surge of rulemaking activity. Scholars have theorized that midnight rules are problematic because they short-circuit important procedural safeguards that ensure high-quality regulatory outcomes, like rigorous analysis, internal and external review, and public input in the rulemaking process. Stepping beyond theory, recent examples—such as the Department of Energy’s energy efficiency standards for clothes washers—illustrate that midnight rules impose real burdens.
December 7, 2016
By Marcus Peacock
President-elect Trump endorsed “a requirement that for every new federal regulation, two existing regulations need to be eliminated” or what could be called a “two-for-one” requirement. This working paper addresses how such a process might work including its scope; what to measure; additional workload; and whether it outlasts a Trump administration.
Utilizing Behavioral Insights (without Romance): An Inquiry into the Choice Architecture of Public Decision-Making
October 19, 2016
By Adam C. Smith
To justify regulations that reduce consumer choice, policymakers are increasingly relying on observations from behavioral economics suggesting that people don’t always make rational decisions. However, behavioral economists generally neglect a complementary examination of public decision-makers. Through a public choice lens, Smith compares two public agencies influenced by behavioral economics, the U.S. CFPB and U.K Behavioral Insights Team, and finds that their different institutional structures lead to divergent policy outcomes. He concludes that for policies to be welfare-improving, they must be based on an understanding of public choice architecture as well as private choice architecture.
September 19, 2016
By Marcus Peacock
Although spending on U.S. regulatory programs has doubled in the last 20 years, that trend is unlikely to last. How these programs manage budget cuts will determine whether downsizing harms or helps regulatory performance. Leaders of regulatory agencies must avoid satisfying tighter budgets with temporary “mindless austerity” measures that anger workers. Instead managers should use scarcity to find, with workers, “frugal innovations” that can significantly and permanently improve program value. In this working paper, Peacock examines how agencies can get budget cuts to help rather than harm.
Evaluation at EPA: Determinants of the Environmental Protection Agency's Capacity to Supply Program Evaluation
August 31, 2016
By Nicholas R. Hart
Since EPA’s inception, it has emphasized the use of prospective policy analysis tools to inform environmental decisions, including cost-benefit analysis and risk assessment. However, EPA and others rarely evaluate these same environmental policies after implementation, to inform future policy development or to modify existing policies. Nicholas Hart, PhD recently completed his dissertation in GW’s Trachtenberg School of Public Policy and Public Administration focusing on the processes and determinants that affect evaluation supply at EPA. Hart identifies ten key factors that constituted both barriers to and facilitators of evaluation. His policy brief summarizes these factors and his conclusions.
August 30, 2016
By Arthur G. Fraas and Randall Lutter
Government mandates to disclose information are a standard response to problems of asymmetric information. Fraas and Lutter examine recent major U.S. regulations issued between 2008 and 2013 to identify disclosure mandates and look for quantitative assessments of their effectiveness in improving comprehension. The authors find that although mandated disclosures underpin a number of major federal regulatory initiatives, agencies infrequently issue such mandates based on scientifically valid, controlled studies of the improvements in comprehension from such disclosure and recommend reforms to improve federally mandated information disclosure.
June 20, 2016
By Richard J. Pierce, Jr.
For 35 years OIRA has used benefit-cost-analysis to review major rules issued by executive branch agencies. Generally, OIRA reviews major proposed agency rules to determine whether their expected benefits to society exceed their expected costs to society. If the estimated costs of a proposed rule exceed its estimated benefits, OIRA urges the agency to change the rule in ways that will increase its benefits and reduce its costs. For almost as long as OIRA has been applying BCA, some of the smartest and most productive progressive scholars have criticized the role of OIRA generally and OIRA’s use of BCA in particular. It is time for those scholars to stop wasting their energy tilting at windmills and put their extraordinary talents to use in more promising endeavors.
June 13, 2016
By Susan E. Dudley
Despite efforts to ensure that new regulations provide net benefits to citizens, the accumulation of regulations threatens economic growth and well-being. As a result, Congress is exploring the possibility that applying fiscal budgeting concepts to regulation could bring more accountability and transparency to the regulatory process. This Essay in the NYU Journal of Legislation and Public Policy examines the advantages and challenges of applying regulatory budgeting practices and draws some preliminary conclusions based on successful experiences in other countries.
April 26, 2016
By Chris Carrigan and Stuart Shapiro
Observers across the ideological spectrum have criticized benefit–cost analysis for as long as it has been part of the rulemaking process. Still, proponents and detractors agree that analysis has morphed into a mechanism often used by agencies to justify regulatory decisions already made. We argue that a simpler analysis of more alternatives conducted earlier in the regulatory process can resuscitate it as a tool to inform policy. Recognizing that requiring a procedure does not ensure that regulators will follow it, we offer possible remedies, including strengthening or relaxing subsequent review of proposed rules, which raise the cost of circumventing the reform or lower the cost of following it.
March 4, 2016
By Sofie E. Miller and Susan E. Dudley
In this response in the ALR Accord to Reeve Bull’s article, "Building a Framework for Governance: Retrospective Review and Rulemaking Petitions," Miller and Dudley address the inadequacy of the current retrospective review regime, examine the key causes of this failure, and address Bull’s proposal to encourage private parties to initiate review via rulemaking petitions. Miller and Dudley conclude that, while public participation is beneficial in retrospective review, agencies themselves could better this process by writing plans for review at the outset and improving regulatory outcomes.
Identifying Regulations Affecting International Trade and Investment: Better Classification Could Improve Regulatory Cooperation
November 10, 2015
By Daniel R. Pérez
Early notice of upcoming regulations that are likely to affect international trade and investment helps U.S. citizens and companies as well as our trading partners. The U.S. has tasked its regulatory agencies with flagging such rules in the semiannual Unified Agenda before they are issued. We compared the number of rules that agencies flagged as likely to have an international impact from 2008 through 2014 with the number of rules we identified, based on our criteria, that were likely to have such an impact. Agencies are currently identifying less than 30% of these rules.
November 3, 2015
By Sofie E. Miller
Through a series of Executive Orders, President Obama has encouraged federal regulatory agencies to review existing regulations and to “modify, streamline, expand, or repeal them in accordance with what has been learned.” Learning from experience is an important part of a healthy regulatory process, so multiple government guidelines instruct agencies to incorporate retrospective review plans into their proposals during the rulemaking process. Our latest research finds that, despite these guidelines, agencies are not planning prospectively for ex post analysis of their rules.
October 28, 2015
By Steven J. Balla and Christopher J. Deering
Although state resistance to federal mandates is a prevalent characteristic of contemporary American federalism, little is known about the factors that separate resisting states from states that do not oppose federal policy. This article examines state resistance through a framework that classifies public policies by salience and complexity and identifies societal interests and government officials who are hypothesised to influence policy making on issues of varying types. These hypotheses are investigated in the context of state resistance to four federal laws – the Patient Protection and Affordable Care Act, No Child Left Behind Act, Help America Vote Act and REAL ID Act. The results of the statistical analysis demonstrate the centrality of the characteristics of citizens, elected officials and specialised interest groups in conditioning state resistance to federal mandates. These results suggest that state resistance can be characterised as a strategic response to federal mandates that varies systematically across types of public policies.
September 2, 2015
By Sofie E. Miller
Over the past decade, regulations setting energy efficiency standards have proliferated. These rules account billions of dollars in annual regulatory benefits, but the Department of Energy relies on private benefits and benefits to residents of other countries to justify the standards, contrary to typical benefit-cost analyses. This paper examines the composition of benefits resulting from DOE’s energy efficiency rules 2007 – 2014, and finds that these rules don’t pass a traditional cost-benefit test when relying on traditional analytical assumptions.
August 11, 2015
By Susan E. Dudley & Kai Wegrich
This review of regulatory procedures in the EU and US suggests that each values good regulatory practices, such as transparency, public consultation, and regulatory impact analysis, but emphasizes them to different degrees at different stages in the regulatory process. Particularly for regulations that address human health risks, both jurisdictions should be more transparent regarding the uncertainties surrounding estimates of regulatory outcomes and the effect of key assumptions on those estimates. A transparent process for evaluating regulatory effects ex post could also improve regulatory analysis and outcomes.
July 15, 2015
By Susan E. Dudley
This article examines efforts by the three branches of federal government to oversee regulatory policy and procedures. It begins with a review of efforts over the last century to establish appropriate checks and balances on regulations issued by the executive branch and then evaluates current regulatory reforms that would hold the executive branch, the legislative branch, and the judicial branch more accountable for regulations and their outcomes.
June 1, 2015
By Christopher Carrigan & Elise Harrington
Historically, regulators have relied on a select number of strategies in designing and enforcing rules to carry out their statutory authority. Yet, in reality, a wide range of options exists which regulators can use to tailor their regulatory programs to their particular circumstances. Solving regulatory problems involves considering how to design the regulatory program as well as how to enforce that program once it is in place. This paper considers the substantial diversity that exists both in the regulatory instruments that can be used to achieve regulatory goals and the various ways that regulators might choose to ensure regulatory entities respond to regulatory demands once they are in place.
June 1, 2015
By Christopher Carrigan & Lindsey Poole
Regulatory organizations can be structured in different ways, and choices about their organizational structure can impact regulators’ behavior and performance, both overall as well as at the level of individual employees. This paper analyzes structural decisions about regulatory organizations along both vertical and horizontal dimensions.
May 20, 2015
By Sofie E. Miller
This paper examines the Department of Energy's (DOE) reliance on low discount rates to estimate the benefits of its energy efficiency standards and uses existing literature on implicit consumer discount rates to calculate a range of benefits for DOE’s furnace fan rule. While DOE calculates large net benefits from its energy efficiency rule, using discount rates that better represent average consumer time preferences shows that this standard results in net costs. Furthermore, given the variation in consumer discount rates by income, this standard is effectively a transfer payment from low- and median-income households to high-income households.
May 13, 2015
By Brian Mannix & Susan Dudley
In this Point/Counterpoint article series with Cass Sunstein & Hunt Allcott, Mannix & Dudley argue that allowing regulators to control consumers 'for their own good' – based on some deficiency in the consumers themselves rather than any failure in the marketplace – is to abandon any serious attempt to keep regulatory policy grounded in any objective notion of the public good.
Will the Occupational Safety and Health Administration's Proposed Standards for Occupational Exposure to Respirable Crystalline Silica Reduce Workplace Risk?
March 26, 2015
By Susan E. Dudley & Andrew P. Morriss
This article finds that OSHA's proposed rule would contribute little in the way of new information, particularly since it is largely based on information that is at least a decade old—a significant deficiency, given the rapidly changing conditions observed over the last 45 years. The article concludes with recommendations for alternative approaches that would be more likely to generate information needed to improve worker health outcomes.
March 10, 2015
By Susan E. Dudley & Kai Wegrich
This paper aims to provide a descriptive analysis of procedural differences in regulatory development between the United States and the European Union to serve as a factual basis for understanding the regulatory challenges and opportunities for transatlantic trade. It summarizes regulatory procedures in each jurisdiction, dividing the process for establishing regulations into four stages: 1) agenda setting, 2) regulatory development, 3) final determination and opportunities for challenge, and 4) implementation and enforcement. After presenting the procedures in the U.S. and EU, the paper compares how the shared goals for achieving a regulatory system that is evidence based, transparent, and accountable are achieved in the two jurisdictions.
December 16, 2014
By Randall Lutter et al
Federal and other regulatory agencies often use or claim to use a weight of evidence (WoE) approach in chemical evaluation. Their approaches to the use of WoE, however, differ significantly, rely heavily on subjective professional judgment, and merit improvement. We review uses of WoE approaches in key articles in the peer-reviewed scientific literature, and find significant variations. We find that a hypothesis-based WoE approach, developed by Lorenz Rhomberg et al., can provide a stronger scientific basis for chemical assessment while improving transparency and preserving the appropriate scope of professional judgment. Their approach, while still evolving, relies on the explicit specification of the hypothesized basis for using the information at hand to infer the ability of an agent to cause human health impacts or, more broadly, affect other endpoints of concern. We describe and endorse such a hypothesis-based WoE approach to chemical evaluation.
September 24, 2014
By Kerry Krutilla & Alexander Alexeev
A key issue in the design of environmental polices is how environmental rights are distributed. Among the options, rights can be grandfathered to polluters or taxed or auctioned to generate public revenue. These alternatives have different political consequences, which impose different economic costs and political uncertainties. This research models political behavior around the rights establishment, and formally determines the associated welfare costs. The model includes parameters for the degree to which environmental rights are distributed between polluters and the government; the benefits of the environmental policy; the compliance costs of the policy; and the relative political power of polluters and environmentalists. The model shows that the economic costs of political behavior can significantly erode the expected value of environmental policymaking when the environmental rights are taxed or auctioned. These costs are not considered in the policy evaluations that recommend structuring environmental policy to raise revenue.
August 15, 2014
By Korok Ray
In this working paper, Korok Ray proposes a microeconomic model of a bank that acts as a financial intermediary engaging in maturity transformation, borrowing short-term debt from a market of investors to fund a long term loan to a firm. The bank installs a manager who exerts costly effort to reduce the credit risk of the loan portfolio. Disclosing this credit risk to the market increases the manager’s incentives for risk management. The market rewards the manager’s early efforts to manage risk with a lower future cost of debt. When paid on bank equity, the manager is induced to better manage risk. Disclosure therefore helps resolve the moral hazard problem inside banks.
June 04, 2014
By Ted Gayer & Kip Viscusi
This article reviews the norms for the scope of benefit assessment based on executive orders and the laws governing risk and environmental regulations. Recent assessments of climate change policies have shifted from a domestic to a worldwide benefits approach, leading to a substantial increase in the estimated benefits. In 2010 the Obama Administration's Interagency Working Group on Social Cost of Carbon developed the guidelines that provide the basis for the assessment of the benefits associated with reductions in carbon dioxide emissions. Based on the estimates in one integrated assessment model that permitted a U.S. analysis, the estimate of the average U.S. benefit is about 7 to 10 percent of the global benefit. Alternatively, if one does not rely on a direct benefit estimate but assumes that the domestic share of the benefits is proportional to the current U.S. share of the global GDP, then the domestic benefit is 23 percent of the global benefit. This article reviews specific examples of such practices for energy efficiency regulations and the broader benefit assessment guidelines that have been developed for greenhouse gas initiatives, including the CAFE rule for passenger cars and light trucks, the carbon pollution rule for existing power plants, the clothes dryer rule, and the phase out of general service incandescent lamps.
January 02, 2014
By Susan E. Dudley
This commentary on Ragnar Löfstedt’s constructive critique of the substitution principle observes that while the principle is intuitively appealing, it begins to unravel on closer examination. When considering government intervention to effect societal improvements, it is important to be aware of two problems. First, predicting the actual outcome of an intervention is very difficult, and second, people disagree about what constitutes ‘societal improvements’. This commentary examines the substitution principle in light of those problems and offers a set of guiding principles for evaluating and developing alternative policy frameworks that will improve public health and welfare.
May 17, 2013
By Sofie E. Miller
Through a series of Executive Orders, President Obama has encouraged federal regulatory agencies to review existing regulations “that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” This paper examines the initial results of that review to understand whether actions pursued under this initiative are likely to be successful at reducing regulatory burden. Since reports suggest that the manufacturing sector bears greater regulatory burdens than other sectors, and that regulations issued by the Environmental Protection Agency (EPA) impose particularly high costs on this sector, the focus here is on the expected effects on the manufacturing sector of EPA’s identified reforms.
January 03, 2013
By Brian Mannix
Many participants, regulators, and observers of commodity and security markets have a sense that something in recent years has gone awry: that the explosive growth of high-frequency digital trading is somehow excessive, costly, unfair, and/or destabilizing. Several ideas for changing the rules have been discussed. Without a coherent explanation of exactly what is wrong, however, it can be very difficult to develop a promising remedy.
August 29, 2012
By Art Fraas & Randall Lutter
The Environmental Protection Agency's (EPA's) estimates of the benefits of improved air quality, especially from reduced mortality associated with reductions in fine particle concentrations, constitute the largest category of benefits from all federal regulation over the last decade. EPA develops such estimates, however, using an approach little changed since a 2002 report by the National Research Council (NRC), which was critical of EPA's methods and recommended a more comprehensive uncertainty analysis incorporating probability distributions for major sources of uncertainty. Consistent with the NRC's 2002 recommendations, we explore alternative assumptions and probability distributions for the major variables used to calculate the value of mortality benefits. For metropolitan Philadelphia, we show that uncertainty in air quality improvements and in baseline mortality have only modest effects on the distribution of estimated benefits. We analyze the effects of alternative assumptions regarding the value of reducing mortality risk, whether the toxicity is above or below the average for fine particles, and whether there is a threshold in the concentration-response relationship, and show these assumptions all have large effects on the distribution of benefits.
August 24, 2012
By Tony Cox
Recent headlines and scientific articles projecting significant human health benefits from changes in exposures too often depend on unvalidated subjective expert judgments and modeling assumptions, especially about the causal interpretation of statistical associations. Some of these assessments are demonstrably biased toward false positives and inflated effects estimates. More objective, data-driven methods of causal analysis are available to risk analysts. These can help to reduce bias and increase the credibility and realism of health effects risk assessments and causal claims.
August 14, 2012
By Susan E. Dudley
The Office of Management and Budget reports that the benefits of regulations issued over the last decade exceed the costs by an order of magnitude. But how accurate are those estimates? Over 80 percent of total reported regulatory benefits derive from three sources: (1) reductions of fine particles in the air as a direct result of regulation, (2) the co-benefits achieved from ancillary reductions in these particles as an indirect result of regulation, and (3) private savings for which agencies have offered no market failure explanation. This article critically examines the approaches and assumptions behind these estimates, and suggests that the reported benefits should be viewed with some skepticism.
March 12, 2012
By Tara M. Sinclair & Kathryn Vesey
Claims about government regulation and its detrimental effects on job creation and economic growth are currently receiving substantial attention in the public sphere. Yet, conclusive evidence demonstrating this link between regulatory activity and macroeconomic indicators remains elusive. This paper seeks to empirically examine these linkages, using the on-budget costs of regulation over time as a proxy for federal regulatory activity. This analysis finds that the macroeconomic effects of regulatory agency budgets as a whole as well as of subcategories of regulatory spending are indistinguishable from no effect based on the data and statistical methods available. This finding is generally robust throughout our sensitivity analysis. Sinclair & Vesey explore possible explanations for this finding, as well as why the results differ from other studies on the same subject. This report highlights throughout the numerous challenges associated with both accurately measuring regulatory activity and obtaining valid estimates of its effects on the macroeconomy. It also offers recommendations moving forward on how to keep the public conversation about regulation constructive and evidence-based.
March 12, 2012
By Brian Mannix
Subsidies are a commonplace feature of government programs, and can be found in regulatory programs as well as in budget expenditures and in the tax code. An accurate accounting of regulatory subsidies, accessible to the general public, could improve government regulation by helping to ensure that such subsidies are used only when, and to the degree that, they serve a sound public purpose. This is easier said than done, however. This paper explores the concept of a regulatory subsidy and review some examples. A more technical Appendix examines some of the obstacles to creating a clear accounting of regulatory subsidies, and suggest areas where useful studies might be pursued.
(Mis)Applications of Behavioral Economics to Regulation: The Importance of Public Choice Architecture
August 01, 2011
By Adam Smith
In this paper, I evaluate the recent promotion of libertarian paternalism as a viable means of coordinating market activities. In doing so, I challenge the notion that “anti-antipaternalism” logically follows from the findings in behavioral economics. For behavioral economic policy to be effective, advocates must show how policy will be rendered effectively through public institutions. I argue that the central dilemma of the field of behavioral law and economics is that it lacks analysis of the public choice architecture within which the improvement of private choice architecture would take place. Without an accompanying theory of the public institutions by which behavioral economic policy will be implemented, the
promotion of these types of policy prescriptions is premature.
December 17, 2010
By Bentley Coffey, Patrick McLaughlin, & Robert Tollison
We examine the correlation between federal government activity and the performance of the D.C. area's National Football League team, the Washington Redskins. We find a significantly positive, non-spurious, and robust correlation between the Redskins' winning percentage and the amount of federal government bureaucratic activity as measured by the number of pages in the Federal Register. Because the Redskins' performance is prototypically exogenous, we give this surprising result a causal interpretation. Drawing upon public choice theory and behavioral economics, we provide a plausible explanation for the causal mechanism: bureaucrats must make "logrolling" deals in order to expand their regulatory power, and a winning football team acts as a commonly shared source of joyous optimism to lubricate such negotiations. We do not find the same correlation when examining Congressional activity, which we attribute to legislator loyalty to their home state's team(s).
November 01, 2010
By Rick Otis
While some eRulemaking improvements have been made, substantial opportunities remain. Many federal agencies employ complex, time consuming, and manual work processes. Public understanding, access, and engagement remains limited. Transparency continues to be circumscribed. Related activities (such as developing laws and regulations) remain distinct processes. Congressional interest is limited. Little effort seems to be dedicated to developing an overall vision for eRulemaking and putting in place the steps necessary to address these and other challenges.
November 01, 2010
By Susan E. Dudley
This paper provides an overview of the U.S. regulatory process to facilitate discussion of stakeholder consultation at the joint Bertelsmann Stiftung and George Washington University Regulatory Studies Center workshop on December 1, 2010. U.S. procedures for developing regulations derive from the U.S. Constitution and the 1946 Administrative Procedure Act (APA). While more recent laws and executive orders provide for additional analytical requirements, review, and consultation, the APA has guided the regulatory process and the role for the public for almost 65 years. This paper summarizes the Constitutional framework and the APA requirements, and then reviews the stages of rulemaking and the role for public consultation at each stage.