Institute for Policy Integrity

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Quantifying Regulatory Benefits

Quantifying Regulatory Benefits

By Richard L. Revesz
January 7, 2014

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Filed under Academic Articles/Working Papers, Transparency

In “Nonquantifiable,” the 2013 Jorde Lecture at UC Berkeley, Professor Cass Sunstein explores the steps that agencies should take in doing breakeven analysis, which determines how high nonquantifiable benefits of a regulation would have to be for the benefits to justify the costs. OMB Circular A-4 requires the use of breakeven analysis when estimates of particular benefits cannot be determined. In his Comment on the Lecture, Revesz argues that breakeven analysis is at best second-best technique. The first-best approach is to actually quantify the benefit. Revesz notes that a great deal of progress has been made on efforts to quantify previously unquantifiable benefits for cost-benefit analysis and that governmental intervention is necessary to this endeavor. Revesz acknowledges that bringing greater attention to breakeven analysis is salutary, but cautions that a focus on the technique must be balanced against the possible negative effects such efforts might have on the resources and attention the government devotes to quantification.