In Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health (Oxford University Press, 2008), Dean Richard L. Revesz and Michael A. Livermore argue for a more rational approach to cost-benefit analysis and regulation. They show how traditional cost-benefit analysis tends to overestimate costs and underestimate benefits, leading to less-than-optimal levels of regulation. They identify eight “fallacies” of cost-benefit analysis and argue that these fallacies must be removed, and the structure of regulatory review improved, before cost-benefit analysis can achieve its potential to be a neutral tool of policy analysis.
Retaking Rationality contends that economic analysis is necessary and that it needn’t conflict with—and can in fact support—a more compassionate approach to environmental and public health policy.