The author responds to an argument made by Cass Sunstein that administrative agencies should use breakeven analysis when unable to quantify benefits of a specific regulation. Breakeven analysis seeks to determine how high nonquantifiable benefits of a regulation would have to be for the benefits to justify the costs. In this Comment, the author argues that breakeven analysis can be useful but is always a second-best technique. The first-best approach is to quantify the benefit.
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.
The costs of China’s record economic growth—including pollution—threaten to undercut its progress if left unchecked. Standing in the way of China’s efforts to control pollution is a complex political system of overlapping levels of local and national authorities. This paper examines recent efforts to address the ill-aligned incentives lead some officials to allow high levels of pollution.
Consumer Welfare Implications of More Stringent CAFE Standards
Are Passenger Vehicles Positional Goods? examines to what degree vehicles generate consumption externalities that are not currently corrected for by the market, and whether a
uniform downward shift in the size of the passenger vehicle fleet will actually result in reduced consumer welfare.
Vehicle fuel efficiency improvements through Corporate Average Fuel Economy (CAFE) standards, may lead owners of more fuel-efficient cars may be driving more as their fuel cost per mile travelled decreases. It’s called the “rebound effect” and it has significant policy implications.
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