Politics And Economic Analysis
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.