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Cost-Benefit Analysis and Agency Independence

Cost-Benefit Analysis and Agency Independence

By Michael A. Livermore
January 7, 2014

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Filed under Academic Articles/Working Papers, Transparency

In “Cost-Benefit Analysis and Agency Independence,” Professor Michael A. Livermore argues that cost-benefit analysis provides a standard that constrains the exercise of OIRA’s power, helping to preserve the autonomy of government agencies in the face of White House review. This argument challenges the prevailing view that cost-benefit analysis is a tool for the President to impose authority over executive agencies.

Livermore examines the evolution of cost-benefit analysis over the past three decades, during the period when OIRA has been charged with conducting regulatory review. The paper focuses on EPA and finds that this agency has had significant influence over the development of cost-benefit analysis methodology. Because OIRA uses a cost-benefit standard to conduct review, influence over the methodology results in an expansion of agency autonomy. At the same time, agencies may internalize cost-benefit norms and are exposed to ex-ante estimates of costs and benefits. Ultimately, this study finds that cost-benefit analysis has ambiguous effects on agency independence, simultaneously preserving, informing, and constraining agency power.