Economic Analysis in Regulatory Decisions: The Implications of Executive Order 12291

TLDR: In the regulatory process, economic analysis closely resembles scientific analysis in a number of ways as discussed by the authors, with both types of analysis can be manipulated, in obvious as well as subtle ways, to support a particular position, although both are also subject to professional norms and procedures that can help detect the worst abuses.

Abstract: In the regulatory process, economic analysis closely resembles scientific analysis in a number of ways. Not only has its general use by the federal government increased, but interest groups are using it extensively to gain legitimacy and political support. Both types of analysis can be manipulated, in obvious as well as subtle ways, to support a particular position, although both are also subject to professional norms and procedures that can help detect the worst abuses. Both scientific and economic analyses have been at the center of substantial controversies, with those who fear the antidemocratic rule of technocrats often stridently opposing those who argue that "objective" evidence can improve regulation or who believe that formal analysis, in general, will enhance their cause. However, unlike most science, cost-benefit analysis-the type of economic analysis discussed here-is normative, rather than descriptive. In extreme form, it provides a criterion for decisions about public projects and regulations which would supplant all other criteria, whether scientific, moral, legal, or political. Furthermore, cost-benefit analysis is unavoidably tied to market-oriented conceptions of valuing costs and benefits, conceptions that many citizens find repugnant. Given the unavoidably normative and ideological content of cost-benefit analysis, the hope that technical