November 16, 2011

Regulatory Analysis and Regulatory Reform

Key materials
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Congress and the executive branch have attempted to improve the quality of regulatory decisions by adopting several laws and executive orders. These laws and orders require agencies to identify the problem they are trying to address and assess its significance, examine a wide range of alternatives to solve the problem, assess the costs and benefits of the alternatives, and regulate only when the benefits justify the costs.

To see whether these laws and executive orders have had the desired effects, a research team from the Mercatus Center at George Mason University evaluated the quality and use of the regulatory analysis accompanying every economically significant regulation proposed by executive branch regulatory agencies in 2008 and 2009. The team found that, while it varied widely, the quality of regulatory analysis was generally low and did not alter much with the change of administrations. It also found that budget regulations, which define how the federal government spends money or collects revenues, have much lower quality analysis than other regulations. Improving the quality and use of regulatory analysis will require institutional reforms—not just new executive orders—to ensure that regulatory impact analysis is required, objective, and used to inform decisions about whether and how to regulate.