Working Paper: NBER ID: w27233
Authors: Patrick A. McLaughlin; Casey B. Mulligan
Abstract: Despite evidence to the contrary, three common myths persist about federal regulations. The first myth is that many regulations concern the environment, but in fact only a small minority of regulations are environmental. The second myth is that most regulations contain quantitative estimates of costs or benefits. However, these quantitative estimates appear rarely in published rules, contradicting the impression given by executive orders and Office of Management and Budget guidance, which require cost-benefit analysis (CBA) and clearly articulate sound economic principles for conducting CBA. Environmental rules have relatively higher-quality CBAs, at least by the low standards of other federal rules. The third myth, which is particularly relevant to the historic regulations promulgated during the COVID-19 pandemic, is the misperception that regulatory costs are primarily clerical, rather than opportunity or resource costs. If technocrats have triumphed in the regulatory arena, their victory has not been earned by the merits of their analysis.
Keywords: Federal Regulation; Cost-Benefit Analysis; Economic Distortions
JEL Codes: K23; L51; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory costs (L51) | nature of regulations (environmental vs. non-environmental) (K32) |
| nature of regulations (environmental vs. non-environmental) (K32) | quality of cost-benefit analyses (H43) |
| quality of cost-benefit analyses (H43) | justifications for regulations (G18) |
| justifications for regulations (G18) | public perception and policy-making (D78) |
| mischaracterization of regulatory costs (L51) | understanding of true impact of regulations (G18) |
| economic burdens (e.g., COVID-19 mandates) (F69) | perception of regulatory costs (L51) |