Cost-benefit analysis and well-being analysis?

Duke Law Journal

Volumn 62, Issue 8, 2013, Pages 1717-1734

  Robinson, Lisa A ^a  

^a HARVARD UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 84878658674     PISSN: 00127086     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (33)

1. Exec. Order No. 12,866, 3 C.F.R. 638 (1993), reprinted as amended in 5 U.S.C. § 601 note at 745 (2006), and 5 U.S.C. § 601 note at 126 (Supp. V 2012).
2. Exec. Order No. 13,563, 3 C.F.R. 215 (2012).
3. OFFICE OF INFO. & REGULATORY AFFAIRS, OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, REPORT TO CONGRESS ON THE COSTS AND BENEFITS OF FEDERAL REGULATIONS 10-11 (1997).
4. See generally John Bronsteen, Christopher Buccafusco & Jonathan S. Masur, Well-Being Analysis vs. Cost-Benefit Analysis, 62 DUKE L.J. 1603 (2013).
5. See generally Matthew D. Adler, Happiness Surveys and Public Policy: What's the Use?, 62 DUKE L.J. 1509 (2013).
6. For more information on the use of this approach in regulatory analysis, see generally INST. OF MED. OF THE NAT'L ACADS., VALUING HEALTH FOR REGULATORY COSTEFFECTIVENESS ANALYSIS (Wilhelmine Miller, Lisa A. Robinson & Robert S. Lawrence eds., 2006).
7. The authorizing statute may also circumscribe the extent to which CBA may be used in setting regulatory requirements
8. Air-pollution regulations issued by the EPA dominate the set of regulations that are subject to the executive-order analytic requirements, both in terms of the number of regulations and the magnitude of their impacts
9. See, e.g., OFFICE OF INFO. & REGULATORY AFFAIRS, OFFICE OF MGMT. & BUDGET, 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 13-14 tbl.1-2 (2012), available at http://www.whitehouse.gov/sites/default/files/omb/oira/draft_2012_cost_benefit_report.pdf.
10. For more discussion of the theoretical and empirical differences between WTP and WTA, see Lisa A. Robinson & James K. Hammitt, Behavioral Economics and Regulatory Analysis, 31 RISK ANALYSIS 1408, 1412-14 (2011) [hereinafter Robinson & Hammitt, Behavioral Economics and Regulatory Analysis]
11. Lisa A. Robinson & James K. Hammitt, Behavioral Economics and the Conduct of Benefit-Cost Analysis: Towards Principles and Standards, 2 J. BENEFIT-COST ANALYSIS, Apr. 2011, at 1, 9-18 [hereinafter Robinson & Hammitt, Behavioral Economics and the Conduct of Benefit-Cost Analysis].
12. Sources of recent best-practice guidance are numerous. See, e.g., IAN J. BATEMAN ET AL., ECONOMIC VALUATION WITH STATED PREFERENCE TECHNIQUES: A MANUAL (2002); HANDBOOK ON CONTINGENT VALUATION (Anna Alberini & James R. Kahn eds., 2006).
13. The term "revealed preferences" is used to describe market behavior as well as these nonmarket valuation methods
14. Such studies typically compare wages and risks across a cross section of individuals at a particular point in time, although more longitudinal studies are now emerging. For an example of a cross-sectional study, see W. Kip Viscusi, The Value of Life: Estimates with Risks by Occupation and Industry, 42 ECON. INQUIRY 29 (2004). For an example of a longitudinal study, see Thomas J. Kniesner, W. Kip Viscusi, Christopher Woock & James P. Ziliak, The Value of a Statistical Life: Evidence from Panel Data, 94 REV. ECON. & STAT.
15. Lisa A. Robinson, How U.S. Government Agencies Value Mortality Risk Reductions, 1 REV. ENVTL. ECON. & POL'Y, 283, 295 (2007).
16. For requirements related to impacts on children and low-income and minority groups, see Exec. Order No. 13,045, 3 C.F.R. 198 (1998), reprinted as amended in 42 U.S.C. § 4321 (2006); and Exec. Order No. 12,898, 3 C.F.R. 859 (1995), reprinted as amended in 42 U.S.C. §
17. See generally Maureen Cropper, James K. Hammitt & Lisa A. Robinson, Valuing Mortality Risk Reductions: Progress and Challenges, 3 ANN. REV. RES. ECON. 313 (2011).
18. The EPA has not yet determined how to best implement the resulting recommendations in its own analyses. See U.S. ENVTL. PROT. AGENCY, VALUING MORTALITY RISK REDUCTIONS FOR ENVIRONMENTAL POLICY: A WHITE PAPER 46-47 (2010), available at http://yosemite.epa.gov/ee/epa/eerm.nsf/vwan/ee-0563-1.pdf/$file/ee-0563-1.pdf
19. "These studies could be combined or synthesized in a number of ways.... Our goal is to provide enough information on the analytical options and key issues to receive clear recommendations from the SAB-EEAC on an approach to implement for updating our guidance and on future research directions."
20. see also Catherine L. Kling & Deborah L. Swackhamer, Review of Valuing Morality Risk Reductions for Environmental Policy: A White Paper (Dec. 10, 2010), at 1, available at http://yosemite.epa.gov/sab/sabproduct.nsf/298E1F50F844BC23852578DC0059A616/$File/EPA-SAB-11-011-unsigned.pdf (responding to the EPA's request for recommendations).
21. Memorandum from Polly Trottenberg, Under Sec'y for Pol'y, U.S. Dep't of Transp., & Robert S. Rivkin, Gen. Counsel, U.S. Dep't of Transp., to Secretarial Officers & Modal Adm'rs, Guidance on Treatment of the Economic Value of a Statistical Life in U.S. Department of Transportation Analyses 5-6 (Feb. 28, 2013), available at http://www.dot.gov/sites/dot.dev/files/docs/VSL%20Guidance.doc.
22. Richard D. Morgenstern, William A. Pizer & Jhih-Shyang Shih, Jobs Versus the Environment: An Industry-Level Perspective, 43 J. ENVTL.. ECON. & MGMT. 412 (2002).
23. For a discussion of evolving best practices, see Lisa A. Robinson, Toward Best Practices: Assessing the Effects of Regulation on Employment, in JOBS AND REGULATION (Cary Coglianese, Adam Finkel & Chris Carrigan eds.) (forthcoming 2013), available at http://www.hks.harvard.edu/ mrcbg/rpp/Working%20papers/RPP_2013_02_Robinson.pdf.
24. The EPA routinely includes lists of several potentially significant effects of air pollution on human and ecological health that it is unable to quantify in its regulatory analyses
25. See, e.g., U.S. ENVTL. PROT. AGENCY, 2006 NATIONAL AMBIENT AIR QUALITY STANDARDS FOR PARTICLE POLLUTION: CHAPTER 5: BENEFIT ANALYSIS AND RESULTS 5-1, 5-5 tbl.5-2 (2006), available at http://www.epa.gov/ttnecas1/regdata/RIAs/Chapter%205--Benefits.pdf.
26. See Lisa A. Robinson & James K. Hammitt, Skills of the Trade: Valuing Health Risk Reductions in Benefit-Cost Analysis, 4 J. BENEFIT-COST ANALYSIS, Mar. 2013, at 107, 116-123.
27. Lisa A. Robinson, James K. Hammitt, Joseph E. Aldy, Alan Krupnick & Jennifer Baxter, Valuing the Risk of Death from Terrorist Attacks, 7 J. HOMELAND SECURITY & EMERGENCY MGMT., Feb. 2010, at 18. This article is an abbreviated and updated version of the report that the U.S. Department of Homeland Security now uses to support the values it applies in its regulatory analyses.
28. Regulatory costs may be absorbed, at least in part, by the firm rather than fully passed on to consumers, potentially affecting profits and wages as well as, or instead of, prices
29. See James K. Hammitt, Positive v. Normative Justifications for Benefit-Cost Analysis 9- 10 (Regulatory Policy Program, Mossavar-Rahmani Ctr. for Bus. & Gov't, Harvard Kennedy Sch., Working Paper No. 13, 2012).
30. See, e.g., Richard Schulz & Susan Decker, Long-term Adjustment to Physical Disability: The Role of Social Support, Perceived Control, and Self-blame, 48 J. PERSONALITY & SOC. PSYCHOL. 1162, 1170 (1985).
31. For a relatively recent review of the research evidence, see Stefano DellaVigna, Psychology and Economics: Evidence from the Field, 47 J. ECON. LITERATURE 315 (2009).
32. Cass R. Sunstein, Cognition and Cost-Benefit Analysis, 29 J. LEGAL STUD. 1059, 1088- 96 (2000).
33. For simplicity, this brief discussion ignores the complexities of transfers, such as the role of administrative costs and the distortionary effects of taxes