Tobin Center Co-Hosts Webinar on Historic Revision to Federal Cost-Benefit Analyses

Federal regulatory policy requires agencies to conduct cost-benefit analyses, and for the first time in 20 years, the White House is updating these guidelines (“Circular A-4”) to ensure that the cost-benefit analyses that underpin regulation are using the latest economic and technical tools.

To help encourage academics to contribute their expertise to this updated guidance, the Tobin Center and the Stanford Institute for Economic Policy Research (SIEPR) hosted a webinar with representatives from the White House Office of Information and Regulatory Affairs (OIRA) on how to help shape future regulations. The webinar provided concrete ways for academics to have direct impact on regulations and rulemaking in virtually any policy area.

Shagufta Ahmed, Senior Policy Fellow at Tobin Center, introduced the webinar with an overview on how the update will shape regulatory outcomes and benefit society: “Whether the decisions are about labor, fuel economy standards, or education accountability metrics, or even medical billing requirements, these updated guidelines will help the American people, Congress, and the courts understand the effects of policy decisions.”

This Request for Public Comments, due by June 6, seeks expert opinions on the assumptions and methods used by Federal agencies in these required cost-benefit analyses. This revision will have a significant impact on how nearly all Federal regulations are shaped and implemented going forward.

Gopi Shah Goda, Senior Fellow at SIEPR, and former Economist at the Council of Economic Advisors (CEA), outlined how public comments play a significant and meaningful role in the rulemaking and regulatory process. Commenting on her time spent at the White House, she noted that most comments are submitted by industry players with a financial stake in the rule, but “found that academic input, when given, is highly valued in the public comments process, and can change the course of policy decisions made through the regulatory process.”

Yale Economics Professor Kenneth Gillingham, who also spent time at the White House CEA, has continued to stay involved in the regulatory process through submitting public comments for newly proposed rules and regulations. Whether through literature reviews, incisive analyses, or broad comments, he outlined how getting involved in the comment process can have direct policy impact:

I was working with some data on vehicles to understand the effect of raising prices on new vehicle sales, and was trying to understand why a rulemaking was coming up with what seemed to be very large elasticities. It was a time series econometrics problem, and we realized they were not adjusting for the quarterly data, and were off by a factor of four. The people at OIRA and the people at the White House work really hard to catch these, but it sometimes really comes to the broader community to catch errors.

Two senior member of the White House OIRA team attended and provided overviews of the type of input they are looking for: “If you’re interested in virtually any policy area, there’s something here that will affect the way that policy is shaped going forward,” said Sam Berger, an Associate Administrator at OIRA. Sam noted how important this update is due to recent advancements in the field of economics and the tools economists use.

Sam and his colleague Dominic Mancini, a Deputy Administrator, outlined several areas for which they are seeking input and that they anticipate receiving a lot of attention. These include discount rates, shadow price approaches, the use of behavioral economics, transfers, and how agencies conduct distributional analyses. For example, the updated guidelines aim to give agencies a framework to think more deeply about who is benefiting and who is hurting from proposed regulation.

The proposed revisions to Circular A-4 will have direct effects on regulations for years to come, and are currently open for public comment here.