The real world of cost-benefit analysis: Thirtysix questions (and almost as many answers)

Columbia Law Review

Volumn 114, Issue 1, 2014, Pages 167-211

  Sunstein, Cass R ^a  

^a HARVARD UNIVERSITY   (United States)

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EID: 84877958243     PISSN: 00101958     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (174)

1. Amartya Sen, The Discipline of Cost-Benefit Analysis, in Rationality and Freedom 553, 561 (2002) [hereinafter Sen, Discipline].
2. For relevant discussion, see generally Richard A. Posner, Catastrophe: Risk and Response (2004) (defining catastrophes and catastrophic risks, and exploring how to approach both).
3. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
4. Martin L. Weitzman, Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate, 36 J. Envtl. Econ. & Mgmt. 201 (1998) (exploring discount rates long-term).
5. See Frank H. Knight, Risk, Uncertainty and Profit 19-20, 230-32 (Univ. of Chi. Press 1971) (1921) (defining risk as "measurable uncertainty, " uncertainty as "unmeasurable" risk, and "value of estimates" as probability judgment used in economics based on estimates of value rooted in opinion).
6. See Frank H. Knight, Risk, Uncertainty and Profit 19-20, 230-32 (Univ. of Chi. Press 1971) (1921) (defining risk as "measurable uncertainty, " uncertainty as "unmeasurable" risk, and "value of estimates" as probability judgment used in economics based on estimates of value rooted in opinion).
7. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
8. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
9. For relevant discussion, see generally Richard A. Posner, Catastrophe: Risk and Response (2004) (defining catastrophes and catastrophic risks, and exploring how to approach both).
10. A fat tail is an abnormal probability distribution featuring an unusually large number of extreme events. Imagine, for example, a population with an average weight of 180 pounds, but with a significant number of people weighing more than 350 or less than 100. See generally Martin L. Weitzman, Additive Damages, Fat-Tailed Climate Dynamics, and Uncertain Discounting, Econ.: Open-Access, Open-Assessment E-Journal (Oct. 28, 2009), http://www.economics-ejournal.org/economics/journalarticles/2009-39/version_1 / count (on file with the Columbia Law Review) (discussing role of fat tails in analysis of damages from climate change).
11. The discount rate establishes the present value of future benefits or costs. It would, for example, establish the current value of benefits that would not be enjoyed until 2030. With a higher discount rate, future benefits have a low present value. For valuable discussion, see generally Christian Gollier, Pricing the Planet's Future: The Economics of Discounting in an Uncertain World (2013) (exploring proper approach to discounting under various scenarios).
12. OIRA reviewed 2,304 regulatory actions from January 21, 2009 (when I began as Senior Advisor to the Director of the Office of Management and Budget) to August 10, 2012 (when I left the federal government).
13. See Review Counts, Reginfo. gov, http://www.reginfo.gov/public/do/eoCountsSearchInit?action=init (enter "09/10/2009" into "From" field and "08/10/2012" into "To" field) (on file with the Columbia Law Review) (last visited Nov. 7, 2013) (providing number of review counts by date range).
14. For a detailed description, see generally Cass R. Sunstein, Commentary, The Office of Information and Regulatory Affairs: Myths and Realities, 126 Harv. L. Rev. 1838 (2013) [hereinafter Sunstein, Myths and Realities] (offering account of OIRA's role, particularly in promoting interagency coordination and aggregation of dispersed information).
15. For a detailed description, see generally Cass R. Sunstein, Commentary, The Office of Information and Regulatory Affairs: Myths and Realities, 126 Harv. L. Rev. 1838 (2013) [hereinafter Sunstein, Myths and Realities] (offering account of OIRA's role, particularly in promoting interagency coordination and aggregation of dispersed information).
16. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
17. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
18. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
19. OMB, 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 59 fig.2-1 (2012) [hereinafter OMB, 2012 Report], available at http://www.whitehouse.gov/sites/default/files/omb/ inforeg/2012_cb/2012_cost_benefit_report.pdf (on file with the Columbia Law Review). These numbers are based on technical analyses within the executive branch. For the most part, the measures of benefits and costs have remained the same across administrations.
20. The draft 2013 report shows net benefits of $159 billion for the first four fiscal years. OMB, 2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the Unfunded Mandates Reform Act 64 fig.2-1(b) (2013), available at http://www.whitehouse.gov/sites/default/files/omb/inforeg/ 2013_cb/draft_2013_cost_benefit_report.pdf (on file with the Columbia Law Review).
21. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
22. For more detailed discussion, see generally Cass R. Sunstein, Nonquantifiable, 102 Calif. L. Rev. (forthcoming 2014) [hereinafter Sunstein, Nonquantifiable], available at http://ssrn.com/abstract=2259279 (on file with the Columbia Law Review) (exploring role of human dignity and other nonquantifiable variables).
23. For relevant discussion, see generally Richard A. Posner, Catastrophe: Risk and Response (2004) (defining catastrophes and catastrophic risks, and exploring how to approach both).
24. William Nordhaus, Estimates of the Social Cost of Carbon: Background and Results from the Rice-2011 Model 24-25 (Yale Univ., Cowles Found. for Research in Econ., Cowles Found. Discussion Paper No. 1826, 2011) [hereinafter Nordhaus, Estimates of the Social Cost of Carbon], available at http://dido.econ.yale.edu/P/cd/d18a/d1826.pdf (on file with the Columbia Law Review) (same).
25. William Nordhaus, Estimates of the Social Cost of Carbon: Background and Results from the Rice-2011 Model 24-25 (Yale Univ., Cowles Found. for Research in Econ., Cowles Found. Discussion Paper No. 1826, 2011) [hereinafter Nordhaus, Estimates of the Social Cost of Carbon], available at http://dido.econ.yale.edu/P/cd/d18a/d1826.pdf (on file with the Columbia Law Review) (same).
26. William Nordhaus, Estimates of the Social Cost of Carbon: Background and Results from the Rice-2011 Model 24-25 (Yale Univ., Cowles Found. for Research in Econ., Cowles Found. Discussion Paper No. 1826, 2011) [hereinafter Nordhaus, Estimates of the Social Cost of Carbon], available at http://dido.econ.yale.edu/P/cd/d18a/d1826.pdf (on file with the Columbia Law Review) (same).
27. For example, the social cost of carbon has been used in rules involving greenhouse gas emissions and fuel economy for light and heavy vehicles, and also in rules involving energy efficiency for a range of appliances, including small motors and refrigerators. See, e.g., Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25,324, 25,520-24 (May 7, 2010).
28. 49 C.F.R. pts. 531, 533, 536-38 (2010).
29. Energy Conservation Program: Energy Conservation Standards for Residential Refrigerators, Refrigerator-Freezers, and Freezers, 76 Fed. Reg. 57,516, 57,559-61 (Sept. 15, 2011) (codified as amended at 10 C.F.R. pt. 430 (2013).
30. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 13 tbl.2 (2013), available at http://www.whitehouse.gov /sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf (on file with the Columbia Law Review).
31. A further technical revision, offering only minor changes, was done in November 2013. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 2--3, 13 tbl.2 (rev. ed. 2013) [hereinafter Interagency Working Group, November 2013 Technical Support Document Update], available at http://www.whitehouse.gov/sites/default/files/omb/ assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (on file with the Columbia Law Review).
32. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
33. See, e.g., OIRA, Regulatory Impact Analysis: Frequently Asked Questions (FAQs) (2011), available at http://www.whitehouse.gov/sites /default/files/omb/assets/OMB/circulars/a004/a-4_FAQ.pdf (on file with the Columbia Law Review).
34. OIRA, Regulatory Impact Analysis: A Primer [hereinafter OIRA, Regulatory Impact Analysis Primer], available at http://www.whitehouse.gov/sites/default/files/omb /inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf (on file with the Columbia Law Review) (last visited Nov. 7, 2013).
35. OIRA, Regulatory Impact Analysis: A Primer [hereinafter OIRA, Regulatory Impact Analysis Primer], available at http://www.whitehouse.gov/sites/default/files/omb /inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf (on file with the Columbia Law Review) (last visited Nov. 7, 2013).
36. OIRA, Regulatory Impact Analysis: A Primer [hereinafter OIRA, Regulatory Impact Analysis Primer], available at http://www.whitehouse.gov/sites/default/files/omb /inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf (on file with the Columbia Law Review) (last visited Nov. 7, 2013).
37. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
38. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
39. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
40. E.g., Memorandum from Cass R. Sunstein, Adm'r, Office of Mgmt. & Budget, to the Heads of Executive Departments and Agencies, and of Independent Regulatory Agencies (Feb. 2, 2011), available at http://www.whitehouse.gov/sites/default/files/omb /memoranda/2011/m11-10.pdf (on file with the Columbia Law Review) (establishing guidance for implementation of Executive Order 13,563).
41. See Amartya Sen, The Idea of Justice 324-27 (2009) (exploring government by discussion as characteristic of democracy).
42. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
43. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
44. See, e.g., Jim Morris, "Chemicals of Concern" List Still Wrapped in OMB Red Tape, Ctr. for Pub. Integrity (May 15, 2013, 8:27 AM), http://www.publicintegrity.org/ 2013/05/13/12649/chemicals-concern-list-still-wrapped-omb-red-tape (on file with the Columbia Law Review) (identifying Environmental Protection Agency (EPA) proposal that had been under review for extended period of three years). For an explanation of time extensions for the review process.
45. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
46. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
47. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
48. 5 U.S.C. §§ 551-559, 701-706 (2012).
49. 5 U.S.C. §§ 551-559, 701-706 (2012).
50. 5 U.S.C. §§ 551-559, 701-706 (2012).
51. Cass R. Sunstein, Worst-Case Scenarios (2007) [hereinafter Sunstein, Worst-Case Scenarios] (discussing prevention of especially bad outcomes, and analyzing uses and limits of cost-benefit analysis).
52. For relevant discussion, see generally Richard A. Posner, Catastrophe: Risk and Response (2004) (defining catastrophes and catastrophic risks, and exploring how to approach both).
53. Matthew D. Adler, Well-Being and Fair Distribution: Beyond Cost-Benefit Analysis 57-153 (2012) (arguing for welfarist approach but not for cost-benefit analysis).
54. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
55. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
56. See Amartya Sen, The Idea of Justice 324-27 (2009) (exploring government by discussion as characteristic of democracy).
57. Matthew D. Adler, Well-Being and Fair Distribution: Beyond Cost-Benefit Analysis 57-153 (2012) (arguing for welfarist approach but not for cost-benefit analysis).
58. See Amartya Sen, The Idea of Justice 324-27 (2009) (exploring government by discussion as characteristic of democracy).
59. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
60. See Amartya Sen, The Idea of Justice 324-27 (2009) (exploring government by discussion as characteristic of democracy).
61. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
62. see also Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2017-MY 2025: Passenger Cars and Light Trucks 92-109 (2012) [hereinafter DOT, Corporate Average Fuel Economy], available at http://www.nhtsa.gov/staticfiles/rule making/pdf/cafe/FRIA_2017-2025.pdf (on file with the Columbia Law Review) ("In developing today's... standards, the agency developed and examined a wide variety of alternatives."). Of course the law may narrow the range of available options. Note, however, that regulatory impact analyses frequently discuss alternatives that the law does not permit agencies to select, just as agencies often discuss costs even when they are legally irrelevant. The reason for such discussions is to promote transparency: The public, and relevant policymakers, ought to appreciate these facts even if agencies' hands are tied.
63. See Amartya Sen, The Idea of Justice 324-27 (2009) (exploring government by discussion as characteristic of democracy).
64. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
65. See, e.g., OMB, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 103-36 (2011) [hereinafter OMB, 2011 Report to Congress], available at http://www.whitehouse. gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (on file with the Columbia Law Review) (providing monetized cost and benefits estimates for rules over various periods).
66. See, e.g., OMB, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 103-36 (2011) [hereinafter OMB, 2011 Report to Congress], available at http://www.whitehouse. gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (on file with the Columbia Law Review) (providing monetized cost and benefits estimates for rules over various periods).
67. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
68. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
69. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
70. See, e.g., OMB, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 103-36 (2011) [hereinafter OMB, 2011 Report to Congress], available at http://www.whitehouse. gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (on file with the Columbia Law Review) (providing monetized cost and benefits estimates for rules over various periods).
71. See, e.g., OMB, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 103-36 (2011) [hereinafter OMB, 2011 Report to Congress], available at http://www.whitehouse. gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (on file with the Columbia Law Review) (providing monetized cost and benefits estimates for rules over various periods).
72. See, e.g., OMB, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 103-36 (2011) [hereinafter OMB, 2011 Report to Congress], available at http://www.whitehouse. gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf (on file with the Columbia Law Review) (providing monetized cost and benefits estimates for rules over various periods).
73. Note, for example, that for regulations that reduce particulate matter emissions, the benefits ranges tend to be very large because of competing scientific studies. For example, EPA provided the following cost-benefit conclusion for its final rule on air toxics standards: EPA estimates that this final rule will yield annual monetized benefits (in 2007$) of between $37 to $90 billion using a 3% discount rate and $33 to $81 billion using a 7% discount rate. The great majority of the estimates are attributable to co-benefits from 4,200 to 11,000 fewer PM2.5-related premature mortalities. Health & Envtl. Impacts Div., EPA, EPA-452/R-11-011, Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards, at ES-1 (2011), available at http://www.epa.gov/ mats/pdfs/20111221MATSfinalRIA.pdf (on file with the Columbia Law Review). For an evaluation of the EPA's calculation of benefits from air pollution regulation.
74. see also Art Fraas & Randall Lutter, Reply to Letter by Fann, Lamson, Anenberg, and Hubbell, Regarding Fraas & Lutter Article: "Uncertain Benefits Estimates for Reductions in Fine Particle Concentrations, " 33 Risk Analysis 757 (2013) (underscoring EPA's "limited progress" toward improving estimations of health benefits and uncertainty). For greenhouse gas emissions, there is also a range of values for the social cost of carbon. See infra Appendix A.
75. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
76. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
77. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
78. For discussion, see Cass R. Sunstein, Beyond the Precautionary Principle, 151 U. Pa. L. Rev. 1003, 1004-08, 1011-20 (2003) (describing and criticizing precautionary principle's effect of paralyzing regulatory action).
79. For discussion, see Cass R. Sunstein, Beyond the Precautionary Principle, 151 U. Pa. L. Rev. 1003, 1004-08, 1011-20 (2003) (describing and criticizing precautionary principle's effect of paralyzing regulatory action).
80. For discussion, see Cass R. Sunstein, Beyond the Precautionary Principle, 151 U. Pa. L. Rev. 1003, 1004-08, 1011-20 (2003) (describing and criticizing precautionary principle's effect of paralyzing regulatory action).
81. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
82. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
83. For example, the numbers might not reflect reality or there might be another approach with higher net benefits.
84. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
85. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
86. See generally W. Kip Viscusi, The Heterogeneity of the Value of a Statistical Life: Introduction and Overview, 40 J. Risk & Uncertainty 1, 7 (2010) [hereinafter Viscusi, Heterogeneity] (noting median value of $7.6 million).
87. W. Kip Viscusi & Joseph E. Aldy, The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World, 27 J. Risk & Uncertainty 5 (2003) (collecting evidence on valuation of mortality risks).
88. Memorandum from Polly Trottenberg, Under Sec'y for Policy, Dep't of Transp. & Robert S. Rivkin, Gen. Counsel, Dep't of Transp., to Secretarial Officers and Modal Administrators, Dep't of Transp. (Feb. 28, 2013), available at http://www.dot.gov/sites/ dot.dev/files/docs/DOT%202013%20Signed%20VSL%20Memo.pdf (on file with the Columbia Law Review).
89. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
90. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
91. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
92. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
93. Labeling Requirements for Systemic Antibacterial Drug Products Intended for Human Use, 68 Fed. Reg. 6062, 6076 (Feb. 6, 2003) (codified as amended at 21 C.F.R. pt. 201). The FDA has also used a monetary value of the remaining life-years saved by alternative policies. See Labeling Requirements for Systemic Antibacterial Drug Products Intended for Human Use, 68 Fed. Reg. at 6076 (applying 3% and 7% discount rates to calculate value of remaining lifeyears).
94. See Lisa A. Robinson, How US Government Agencies Value Mortality Risk Reductions, 1 Rev. Envtl. Econ. & Pol'y 283, 293-94 (2007) (exploring VSLY practice at several agencies).
95. See generally W. Kip Viscusi, The Heterogeneity of the Value of a Statistical Life: Introduction and Overview, 40 J. Risk & Uncertainty 1, 7 (2010) [hereinafter Viscusi, Heterogeneity] (noting median value of $7.6 million).
96. No agency uses a VSL as low as $4 million.
97. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
98. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
99. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
100. Trudy Ann Cameron et al., Willingness to Pay for Health Risk Reductions: Differences by Type of Illness (June 2009) (unpublished manuscript), available at http://pages.uoregon.edu/cameron/vita/Cameron_DeShazo_ Johnson_0619091.pdf (on file with the Columbia Law Review) (discussing variation in willingness to pay across different mortality risks).
101. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
102. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
103. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
104. See Cass R. Sunstein, Lives, Life-Years, and Willingness to Pay, 104 Colum. L. Rev. 205, 206, 226-28 (2004) (suggesting agencies should focus on number of life-years saved, and discussing how to monetize life-years).
105. See generally Sean Hannon Williams, Statistical Children, 30 Yale J. on Reg. 63 (2013) (discussing economic value of risks to children and urging increase in usual VSL).
106. See generally Sean Hannon Williams, Statistical Children, 30 Yale J. on Reg. 63 (2013) (discussing economic value of risks to children and urging increase in usual VSL).
107. See generally Sean Hannon Williams, Statistical Children, 30 Yale J. on Reg. 63 (2013) (discussing economic value of risks to children and urging increase in usual VSL).
108. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
109. W. Kip Viscusi & Joseph E. Aldy, Labor Market Estimates of the Senior Discount for the Value of Statistical Life (Res. for the Future, Discussion Paper No. 06-12, 2006), available at http://www.rff.org/RFF/documents/RFF-DP-06-12.pdf (on file with the Columbia Law Review) (examining reduction of VSL for older workers due to their greater risk vulnerability). For a discussion of VSL reduction, see Sci. Advisory Bd., supra note 76. The review states: While it is clear from economic theory that individual WTP [willingness to pay] may vary with individual and risk characteristics, the SAB [Science Advisory Board] acknowledges that the objectives, methods, and principles underlying benefit-cost analysis and particularly the values of mortality risk reductions and other non-market goods are often misunderstood or rejected as inappropriate by many participants and commentators on the policymaking process. In the past, for example, the [EPA] was criticized for considering VRRs [values of risk reduction] that differ by individuals' age. However, as acknowledged in the White Paper, values for health risk reductions are not "one size fits all." Applying a willingness to pay value to a targeted population (such as low income or elderly) that exceeds that group's willingness to pay for reduced risk could result in decisions that ultimately reduce the well-being of the targeted group.
110. See generally Sean Hannon Williams, Statistical Children, 30 Yale J. on Reg. 63 (2013) (discussing economic value of risks to children and urging increase in usual VSL).
111. see also Art Fraas & Randall Lutter, Reply to Letter by Fann, Lamson, Anenberg, and Hubbell, Regarding Fraas & Lutter Article: "Uncertain Benefits Estimates for Reductions in Fine Particle Concentrations, " 33 Risk Analysis 757 (2013) (underscoring EPA's "limited progress" toward improving estimations of health benefits and uncertainty). For greenhouse gas emissions, there is also a range of values for the social cost of carbon. See infra Appendix A.
112. This range is consistent with Circular A-4. As noted, however, the lower end of this scale does not fit with the technical literature, and hence serious questions would be raised by any effort to use that lower end.
113. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
114. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
115. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
116. This example is realistic. See National Emission Standards for Hazardous Air Pollutants from Coal-and Oil-Fired Electric Utility Steam Generating Units, 77 Fed. Reg. 9304, 9428-32 (Feb. 16, 2012) (codified as amended at 40 C.F.R. pts. 60, 63 (2012) (finding significant cobenefits in form of particulate matter reductions in analysis of mercury rule).
117. This example is realistic. See National Emission Standards for Hazardous Air Pollutants from Coal-and Oil-Fired Electric Utility Steam Generating Units, 77 Fed. Reg. 9304, 9428-32 (Feb. 16, 2012) (codified as amended at 40 C.F.R. pts. 60, 63 (2012) (finding significant cobenefits in form of particulate matter reductions in analysis of mercury rule).
118. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
119. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
120. Mark R. Jacobsen, Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior, Am. Econ. J.: Applied Econ., July 2013, at 1, 1-26 (finding that recent regulatory provisions have prevented potential adverse effects of fuel economy rules on safety).
121. Mark R. Jacobsen, Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior, Am. Econ. J.: Applied Econ., July 2013, at 1, 1-26 (finding that recent regulatory provisions have prevented potential adverse effects of fuel economy rules on safety).
122. See generally Ted Gayer & W. Kip Viscusi, Overriding Consumer Preferences with Energy Regulations (Vanderbilt Univ. Law Sch., Vanderbilt Law & Econ. Working Paper No. 12-24, 2012), available at http://ssrn.com/abstract=2111450 (on file with the Columbia Law Review) (arguing against counting private savings as benefits in context of appliances and vehicles).
123. See, e.g., Assessment & Standards Div., EPA, EPA420-R-04-007, Final Regulatory Analysis: Control of Emissions from Nonroad Diesel Engines, at ES-2, 6-2 to-90 (2004), available at http://www.epa.gov/otaq/documents/nonroad-diesel/420r04007.pdf (on file with the Columbia Law Review) (discussing savings of "nonroad equipment users" and "owners" as benefits).
124. U.S. Dep't of Energy, Regulatory Impact Analysis: Energy Conservation Standards for Consumer Products: Covering: Fluorescent Lamp Ballasts, at R-1 to-2, R-6 (1999), available at http://www1.eere.energy.gov/buildings/appliance_ standards/residential/pdfs/regulatory_impact.pdf (on file with the Columbia Law Review) (listing, among others, "total projected amount of energy savings likely to result directly from the imposition of the standard" as factor in cost-benefit analysis).
125. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
126. For a discussion of the energy paradox, see Adam B. Jaffe & Robert N. Stavins, The Energy Paradox and the Diffusion of Conservation Technology, 16 Resource & Energy Econ. 91, 92-94 (1994) (describing energy paradox as "inadequate diffusion of apparently cost-effective energy-conserving technologies").
127. For a valuable overview, showing the complexity of the underlying issues and the amount that remains to be learned with respect to consumer behavior, see generally Hunt Allcott & Michael Greenstone, Is There an Energy Efficiency Gap?, J. Econ. Persp., Winter 2012, at 3 (urging that existing evidence of consumer error is equivocal).
128. Hunt Allcott et al., Energy Policy with Externalities and Internalities (Nat'l Bureau of Econ. Research, Working Paper No. 17977, 2012), available at http://www.nber.org/papers/w17977 (on file with the Columbia Law Review).
129. Cass R. Sunstein, The Storrs Lectures: Behavioral Economics and Paternalism, 122 Yale L.J. 1826, 1842-52 (2013) (identifying present bias and time inconsistency, ignoring shrouded attributes, unrealistic optimism, and probability problems as forms of behaviorial market failure).
130. Cass R. Sunstein, Why Nudge? The Politics of Libertarian Paternalism (forthcoming Mar. 2014) (on file with the Columbia Law Review) (exploring behavioral market failures as basis for regulation). For examples of energy paradox issues in the context of fuel-efficient vehicles.
131. see also Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2017-MY 2025: Passenger Cars and Light Trucks 92-109 (2012) [hereinafter DOT, Corporate Average Fuel Economy], available at http://www.nhtsa.gov/staticfiles/rule making/pdf/cafe/FRIA_2017-2025.pdf (on file with the Columbia Law Review) ("In developing today's... standards, the agency developed and examined a wide variety of alternatives."). Of course the law may narrow the range of available options. Note, however, that regulatory impact analyses frequently discuss alternatives that the law does not permit agencies to select, just as agencies often discuss costs even when they are legally irrelevant. The reason for such discussions is to promote transparency: The public, and relevant policymakers, ought to appreciate these facts even if agencies' hands are tied.
132. see also Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2017-MY 2025: Passenger Cars and Light Trucks 92-109 (2012) [hereinafter DOT, Corporate Average Fuel Economy], available at http://www.nhtsa.gov/staticfiles/rule making/pdf/cafe/FRIA_2017-2025.pdf (on file with the Columbia Law Review) ("In developing today's... standards, the agency developed and examined a wide variety of alternatives."). Of course the law may narrow the range of available options. Note, however, that regulatory impact analyses frequently discuss alternatives that the law does not permit agencies to select, just as agencies often discuss costs even when they are legally irrelevant. The reason for such discussions is to promote transparency: The public, and relevant policymakers, ought to appreciate these facts even if agencies' hands are tied.
133. In a relevant rule, the EPA identified the problem as follows: The central conundrum has been referred to as the Energy Paradox in this setting (and in several others). In short, the problem is that consumers appear not to purchase products that are in their economic self-interest. There are strong theoretical reasons why this might be so:-Consumers might be myopic and hence undervalue the long-term.-Consumers might lack information or a full appreciation of information even when it is presented.-Consumers might be especially averse to the short-term losses associated with the higher prices of energy efficient products relative to the uncertain future fuel savings, even if the expected present value of those fuel savings exceeds the cost (the behavioral phenomenon of "loss aversion")-Even if consumers have relevant knowledge, the benefits of energyefficient vehicles might not be sufficiently salient to them at the time of purchase, and the lack of salience might lead consumers to neglect an attribute that it would be in their economic interest to consider. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 75 Fed. Reg. 25,324, 25,510-11 (May 7, 2010) (codified as amended at 40 C.F.R. pts. 85-86, 600 (2012) (footnotes omitted).
134. 49 C.F.R. pts. 531, 533, 536-538 (2012).
135. In particular, the DOT conducted a sensitivity analysis with consumer welfare losses and found that even if such losses are very high, the benefits of its fuel economy rules justify the costs. See Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2012-MY 2016: Passenger Cars and Light Trucks 419-33 & tbl. VIII-18 (2010), available at http: //www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_FRIA_04012010.pdf (on file with the Columbia Law Review) (indicating positive private benefits of fuel economy rule to vehicle buyers, even accounting for 25% or 50% overestimation of fuel savings or omission of welfare losses).
136. In particular, the DOT conducted a sensitivity analysis with consumer welfare losses and found that even if such losses are very high, the benefits of its fuel economy rules justify the costs. See Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2012-MY 2016: Passenger Cars and Light Trucks 419-33 & tbl. VIII-18 (2010), available at http: //www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_FRIA_04012010.pdf (on file with the Columbia Law Review) (indicating positive private benefits of fuel economy rule to vehicle buyers, even accounting for 25% or 50% overestimation of fuel savings or omission of welfare losses).
137. For recent discussion, see generally Richard T. Carson, Contingent Valuation: A Practical Alternative When Prices Aren't Available, J. Econ. Persp., Fall 2012, at 27 (defending contingent valuation measures as sufficiently reliable).
138. Jerry Hausman, Contingent Valuation: From Dubious to Hopeless, J. Econ. Persp., Fall 2012, at 43 (objecting that contingent valuation studies cannot measure actual preferences).
139. Nondiscrimination on the Basis of Disability in State and Local Government Services, 75 Fed. Reg. 56,164, 56,170 (Sept. 15, 2010) (codified as amended at 28 C.F.R. pt. 35 (2013) ("The standards requiring sufficient space in single-user toilet rooms for a wheelchair user to effect a side or parallel transfer are among the most costly (in monetary terms)... but also... one of the most beneficial in non-monetary terms. ").
140. Nondiscrimination on the Basis of Disability in State and Local Government Services, 75 Fed. Reg. 56,164, 56,170 (Sept. 15, 2010) (codified as amended at 28 C.F.R. pt. 35 (2013) ("The standards requiring sufficient space in single-user toilet rooms for a wheelchair user to effect a side or parallel transfer are among the most costly (in monetary terms)... but also... one of the most beneficial in non-monetary terms. ").
141. Nondiscrimination on the Basis of Disability in State and Local Government Services, 75 Fed. Reg. 56,164, 56,170 (Sept. 15, 2010) (codified as amended at 28 C.F.R. pt. 35 (2013) ("The standards requiring sufficient space in single-user toilet rooms for a wheelchair user to effect a side or parallel transfer are among the most costly (in monetary terms)... but also... one of the most beneficial in non-monetary terms. ").
142. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
143. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
144. Note that in a rule involving building access for people in wheelchairs, the DOJ spoke explicitly of breakeven analysis, in a passage that is worth quoting at length: The requirements relating the [sic] water closet clearances are among the most costly (in monetary terms) of the new provisions. Although the monetized costs of these requirements substantially exceed the monetized benefits, the benefits that have not been monetized (avoiding stigma and humiliation, protecting safety, and enhancing independence) are expected to be quite high.... We estimate that the costs of the requirement as applied to out-swinging doors will exceed the monetized benefits by $454 million, which when annualized over 54 years equals a net cost of approximately $32.6 million a year. We estimate that people with the relevant disabilities will use a newly accessible single-user toilet room with an out-swinging door approximately 677 million times per year. Dividing the $32.6 million annual cost by the 677 million annual uses, we conclude that for the costs and benefits to break even in this context, people with the relevant disabilities will have to value safety, independence, and the avoidance of stigma and humiliation at just under 5 cents per use..... We estimate that people with the relevant disabilities will use a newly accessible single-user toilet room with an in-swinging door approximately 8.7 million times per year. Dividing the $19.14 million annual cost by the 8.7 million annual uses, we conclude that for the costs and benefits to break even in this context, people with the relevant disabilities will have to value safety, independence, and the avoidance of stigma and humiliation at approximately $2.20 per use. Disability Rights Section of the Civil Rights Div., Dep't of Justice, Final Regulatory Impact Analysis of the Final Revised Regulations Implementing Titles II and III of the ADA, Including Revised ADA Standards for Accessible Design 142-43 (2010) (footnote omitted), available at http://www.ada.gov/regs2010/RIA_2010regs/DOJ%20ADA%20 Final%20RIA.pdf (on file with the Columbia Law Review). Relevant additional discussion, including estimates of the value people with disabilities place on avoiding stigma (based on revealed preference studies), can also be found in the DOJ's Regulatory Impact Analysis.
145. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
146. Note that a framing effect might seem relevant here-and lead in unfortunate directions. Suppose, for example, that a rule has a cost of $100 million and that it would provide water quality benefits. The benefits would need specification, but suppose it were asked: Should each citizen of the United States be willing to spend just 33 cents annually to improve water quality? Or 1 cent per month? Or 1/30 of a cent per day? Questions of this sort might make seemingly high costs appear quite low. Suppose that a rule would cost $1 billion and save 100 lives per year. On standard cost-benefit grounds, the rule would not be so easy to defend. But suppose it were asked: Would each American be willing to spend $3 annually to save 100 lives? The problem with these narrow frames is that they mask the economic effect of costly rules, and make it difficult or impossible to establish priorities and make sensible comparisons and tradeoffs. It might as well be asked: Would Americans be willing to spend $1 billion per year to save 1/3 of a life per day? If the focus shifts to monthly or daily expenditures (why not hourly?), high costs quickly turn into small ones, and their aggregate effects are masked.
147. See Peter A. Diamond & Jerry A. Hausman, Contingent Valuation: Is Some Number Better than No Number?, J. Econ. Persp., Fall 1994, at 45, 47-58 (discussing problems with contingent valuation studies).
148. Jerry Hausman, Contingent Valuation: From Dubious to Hopeless, J. Econ. Persp., Fall 2012, at 43 (objecting that contingent valuation studies cannot measure actual preferences).
149. Cass R. Sunstein, The Value of a Statistical Life: Some Clarifications and Puzzles, 4 J. Benefit-Cost Analysis 237 (2013) [hereinafter Sunstein, The Value of a Statistical Life] (exploring relationship between cost-benefit analysis and welfare).
150. OIRA, Regulatory Impact Analysis: A Primer [hereinafter OIRA, Regulatory Impact Analysis Primer], available at http://www.whitehouse.gov/sites/default/files/omb /inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf (on file with the Columbia Law Review) (last visited Nov. 7, 2013).
151. Exec. Order No. 13,563, 3 C.F.R. 215 (2012), reprinted in 5 U.S.C. § 601 app. at 816-17 (2012) [hereinafter Exec. Order No. 13,563].
152. John D. Graham, Saving Lives Through Administrative Law and Economics, 157 U. Pa. L. Rev. 395, 516-24 (2008) (contending OIRA process should attend to people below poverty line and regulations should have net benefits for them).
153. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
154. see also supra note 13 and accompanying text (discussing Executive Order 13,563's mandate that agencies maximize net benefits). Note that in the context of deicing airplanes, the EPA finalized an approach with far lower costs, and also lower benefits, than the approach that it proposed. Compare Effluent Limitations Guidelines and New Source Performance Standards for the Airport Deicing Category, 77 Fed. Reg. 29,168, 29,178 tbl. V-1 (May 16, 2012) (codified as amended at 40 C.F.R. pts. 9, 449 (2012) (calculating annualized cost of $3.5 million and benefit of 16.4 million pounds of total pollutant removals).
155. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
156. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
157. OMB, Exec. Office of the President, Circular A-4: Regulatory Analysis (2003) [hereinafter OMB, Circular A-4], available at http://www.whitehouse.gov/sites/default/ files/omb/assets/regulatory_matters_pdf/a-4.pdf (on file with the Columbia Law Review). The Obama Administration issued several documents-also binding inside the executive branch-that offer significant clarifications.
158. In particular, the DOT conducted a sensitivity analysis with consumer welfare losses and found that even if such losses are very high, the benefits of its fuel economy rules justify the costs. See Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2012-MY 2016: Passenger Cars and Light Trucks 419-33 & tbl. VIII-18 (2010), available at http: //www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_FRIA_04012010.pdf (on file with the Columbia Law Review) (indicating positive private benefits of fuel economy rule to vehicle buyers, even accounting for 25% or 50% overestimation of fuel savings or omission of welfare losses).
159. In particular, the DOT conducted a sensitivity analysis with consumer welfare losses and found that even if such losses are very high, the benefits of its fuel economy rules justify the costs. See Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2012-MY 2016: Passenger Cars and Light Trucks 419-33 & tbl. VIII-18 (2010), available at http: //www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_FRIA_04012010.pdf (on file with the Columbia Law Review) (indicating positive private benefits of fuel economy rule to vehicle buyers, even accounting for 25% or 50% overestimation of fuel savings or omission of welfare losses).
160. There are other considerations as well. See generally Richard G. Newell & William A. Pizer, Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?, 46 J. Envtl. Econ. & Mgmt. 52 (2003) (explaining when interest rates vary over time, relevant calculation suggests right rate is toward lower end of range).
161. A further technical revision, offering only minor changes, was done in November 2013. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 2--3, 13 tbl.2 (rev. ed. 2013) [hereinafter Interagency Working Group, November 2013 Technical Support Document Update], available at http://www.whitehouse.gov/sites/default/files/omb/ assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (on file with the Columbia Law Review).
162. A further technical revision, offering only minor changes, was done in November 2013. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 2--3, 13 tbl.2 (rev. ed. 2013) [hereinafter Interagency Working Group, November 2013 Technical Support Document Update], available at http://www.whitehouse.gov/sites/default/files/omb/ assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (on file with the Columbia Law Review).
163. Recall that such a process would require many officials to work together to produce a revision in the existing numbers.
164. For relevant discussion, see generally Richard A. Posner, Catastrophe: Risk and Response (2004) (defining catastrophes and catastrophic risks, and exploring how to approach both).
165. William Nordhaus, Estimates of the Social Cost of Carbon: Background and Results from the Rice-2011 Model 24-25 (Yale Univ., Cowles Found. for Research in Econ., Cowles Found. Discussion Paper No. 1826, 2011) [hereinafter Nordhaus, Estimates of the Social Cost of Carbon], available at http://dido.econ.yale.edu/P/cd/d18a/d1826.pdf (on file with the Columbia Law Review) (same).
166. See generally William Samuelson & Richard Zeckhauser, Status Quo Bias in Decision Making, 1 J. Risk & Uncertainty 7 (1988) (exploring human tendency to favor status quo).
167. A further technical revision, offering only minor changes, was done in November 2013. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 2--3, 13 tbl.2 (rev. ed. 2013) [hereinafter Interagency Working Group, November 2013 Technical Support Document Update], available at http://www.whitehouse.gov/sites/default/files/omb/ assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (on file with the Columbia Law Review).
168. A further technical revision, offering only minor changes, was done in November 2013. Interagency Working Grp. on Soc. Cost of Carbon, U.S. Gov't, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, at 2--3, 13 tbl.2 (rev. ed. 2013) [hereinafter Interagency Working Group, November 2013 Technical Support Document Update], available at http://www.whitehouse.gov/sites/default/files/omb/ assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (on file with the Columbia Law Review).
169. OMB, Exec. Office of the President, Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 26 tbl.1-5(a) (2012), available at http://www.whitehouse.gov/sites/default/ files/omb/oira/draft_2012_cost_benefit_report.pdf (on file with the Columbia Law Review).
170. "RIN" refers to the Regulation Identifier Number, a number attached to each regulatory action for the purpose of allowing the public to have greater access to information relating to particular regulatory actions. See Memorandum from Cass R. Sunstein, Adm'r, Office of Mgmt. & Budget, Exec. Office of the President, to the President's Management Council (Apr. 7, 2010), available at http://www.whitehouse.gov/ sites/default/files/omb/assets/inforeg/IncreasingOpenness_04072010.pdf (on file with the Columbia Law Review).
171. OMB, Exec. Office of the President, Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 26 tbl.1-5(a) (2012), available at http://www.whitehouse.gov/sites/default/ files/omb/oira/draft_2012_cost_benefit_report.pdf (on file with the Columbia Law Review).
172. OMB, Exec. Office of the President, Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 26 tbl.1-5(a) (2012), available at http://www.whitehouse.gov/sites/default/ files/omb/oira/draft_2012_cost_benefit_report.pdf (on file with the Columbia Law Review).
173. In particular, the DOT conducted a sensitivity analysis with consumer welfare losses and found that even if such losses are very high, the benefits of its fuel economy rules justify the costs. See Office of Regulatory Analysis & Evaluation, U.S. Dep't of Transp., Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2012-MY 2016: Passenger Cars and Light Trucks 419-33 & tbl. VIII-18 (2010), available at http: //www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-2016_FRIA_04012010.pdf (on file with the Columbia Law Review) (indicating positive private benefits of fuel economy rule to vehicle buyers, even accounting for 25% or 50% overestimation of fuel savings or omission of welfare losses).
174. OMB, 2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 22 tbl.1-4 (2010), available at http://www.whitehouse.gov/sites/default/files/omb/legislative/reports/2010_Benefit_ Cost_Report.pdf (on file with the Columbia Law Review).