This book discusses the current topic of Federal Government regulations increasingly assessed by asking whether the benefits of the regulation justifies the cost of the regulation.

øThe authors present an extensive survey of the empirical evidence on the determinants of environmental performance as well as the effects of environmental regulation on the costs of production, plant location, firm-level productivity, stock prices and

For years, businesses have complained about the costs of regulatory compliance. On the other hand, society is becoming increasingly aware of the environmental, safety, health, financial, and other risks of business activity. Government oversight seems to be one of the answers to safeguard against these risks. But how can we deregulate and regulate without jeopardizing our public goals or acting as a brake on economic growth? Many instruments are available to assess the effects of laws regulating business, including the regulatory impact assessment (RIA), which contains cost/benefit analysis, cost-effectiveness analysis, risk analysis, and cost assessments. This book argues that public goals will be achieved more effectively if compliance costs of the enterprises are as low as possible. Highlighting examples from a wide spectrum of industries and countries, the authors propose a new kind of RIA, the business impact assessment (BIA), designed to improve both business and public policy decision making.

This paper examines the e ...

June 1997 This paper examines the economic impact of regulation in industrial and developing countries. It argues that economic analysis can play an important role in restructuring regulated industries and developing more effective regulations, and in reducing politically driven regulation and capture. The past two decades have seen an unparalleled rise in new health, safety, and environmental regulations in industrial countries. At the same time, in some countries there has been substantial economic deregulation of several industries (including airlines, railroads, trucking, energy, telecommunications, and financialmarkets). Developing countries are engaged in deregulating some sectors of the economy and devising new regulatory frameworks for others. After reviewing the literature, Guasch and Hahn provide an overview of the costs and benefits of regulation throughout the world, highlight the potential gains from reform of regulation and deregulation in both industrial and developing countries, draw lessons from experience with government regulation, and suggest how to improve regulation in developing countries. They find that it is possible to explore systematically the costs and benefits of regulatory activities using standard economic analysis. They conclude that regulation - especially regulation aimed at controlling prices and entry into markets that would otherwise be workably competitive - can limit growth and significantly reduce economic welfare. Although unnecessary process regulation can hurt the economy, social regulations may significantly benefit the average consumer. But some regulations do not meet goals effectively and may sometimes reduce living standards. Developing countries can consider several regulatory policies, tools, and frameworks to improve their approach to regulation. What they choose will depend on available administrative expertise and resources, as well as political constraints and economic impacts. Generally, local and national capabilities for evaluating regulation need to be improved. Regulation is not generally undesirable, but it often has undesirable economic consequences, which result in part from political forces to redistribute wealth. These forces need can be mitigated by more sharply evaluating the consequences and tradeoffs of proposed regulations. This paper - a joint product of the Office of the Chief Economist and Senior Vice President, Development Economics and the Advisory Group, Latin America and the Caribbean Technical Department - was produced as a background paper for World Development Report 1997 on the role of the state in a changing world.

Why policies should be based on careful consideration of their costs and benefits rather than on intuition, popular opinion, interest groups, and anecdotes. Opinions on government policies vary widely. Some people feel passionately about the child obesity epidemic and support government regulation of sugary drinks. Others argue that people should be able to eat and drink whatever they like. Some people are alarmed about climate change and favor aggressive government intervention. Others don't feel the need for any sort of climate regulation. In The Cost-Benefit Revolution, Cass Sunstein argues our major disagreements really involve facts, not values. It follows that government policy should not be based on public opinion, intuitions, or pressure from interest groups, but on numbers—meaning careful consideration of costs and benefits. Will a policy save one life, or one thousand lives? Will it impose costs on consumers, and if so, will the costs be high or negligible? Will it hurt workers and small businesses, and, if so, precisely how much? As the Obama administration's “regulatory czar,” Sunstein knows his subject in both theory and practice. Drawing on behavioral economics and his well-known emphasis on “nudging,” he celebrates the cost-benefit revolution in policy making, tracing its defining moments in the Reagan, Clinton, and Obama administrations (and pondering its uncertain future in the Trump administration). He acknowledges that public officials often lack information about costs and benefits, and outlines state-of-the-art techniques for acquiring that information. Policies should make people's lives better. Quantitative cost-benefit analysis, Sunstein argues, is the best available method for making this happen—even if, in the future, new measures of human well-being, also explored in this book, may be better still.