A Progressive Defense of Cost-Benefit Analysis.

• Author: Adler, Jonathan H.
• Position: Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health

Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health

By Michael A. Livermore and Richard L. Revesz

304 pp.; Oxford

University Press, 2020

Is cost-benefit analysis (CBA) a tool of the political left or right? At one time, conservationists and taxpayer advocates used it to attack wasteful and environmentally destructive public works projects. A negative CBA is even credited with helping seal the argument against placing a dam in the Grand Canyon.

Then economists began training their cost-benefit sights on federal regulation. Throughout the 1980s, 1990s, and 2000s, CBA often served as a speed bump--if not a firm barrier--against expansive federal regulation, environmental regulation in particular. Not surprisingly, this made progressives suspicious of the tool. Among other things, they worried that it failed to account for hard-to-quantify, yet real, benefits of regulatory interventions for public health, ecological systems, and the less fortunate. Concluding a regulation would cost too much in relation to its expected benefits was a way to let corporations off the hook, they argued. Critics of regulatory proposals often reinforced those fears, citing CBA results as evidence that much regulation was excessive and even did more harm than good.

Not all progressives were willing to jettison CBA, however. In their 2008 book Retaking Rationality, University of Virginia law professor Michael Livermore and New York University law professor Richard Revesz maintained that "progressive opposition to cost-benefit analysis was ineffective and counterproductive." They sought to rehabilitate it as a tool of progressive government. They argued that there was nothing inherently anti-regulatory about CBA and challenged their progressive colleagues to mend, rather than end, the federal government's reliance upon it in regulatory policymaking. Shorn of unnecessary anti-regulatory biases and focused on the full range of potential benefits, they argued, CBA could be a powerful tool

Much of what they urged was taken up by the Barack Obama administration. Under the leadership of noted law professor Cass Sunstein, Obama's Office of Information and Regulatory Affairs pursued an aggressive regulatory agenda while retaining a central place for CBA. While there were differences in the way the tool was used by Obama and his immediate predecessors, Livermore and Revesz argued that the overall approach represented a consistent emphasis on rigorous analysis of the likely effects of regulatory decisions, leading to better regulatory outcomes.

Along came Trump / And then, they say, everything changed, prompting them to write this book, Reviving Rationality.

Donald Trump's administration broke with business-as-usual regulatory analysis. Under Trump, Livermore and Revesz argue, "what is called cost-benefit analysis in a Republican administration is all but unrecognizable." CBA was no longer a tool to...