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| | | The most glaring shortcoming of CBA is that it can only accurately measure one side of the equation. While the cost to industry of adopting an extant technology are usually clear, the benefits often elude monetization. | |
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Why do you say this? Industry or other party cost estimates are just as uncertain, assumption-dependent, rhetorically exaggerated, as any other content of the regulatory process.
| | | In conducting cost-benefit analyses, agencies must affix dollar amounts to qualitative aspects of life. Commonly factored into the “benefits” side of the equation are offsets to healthcare costs, missed work, and premature death, which is itself the product of a number of factors such as lost wages and the price workers attach to assuming increased risk of mortality.
The result of such monetization is not the “objective basis” that CBA seeks to provide. Instead, it is a subjective measure resulting from arbitrary values attached to human life. These values vary depending on who is running the numbers. For example, in the DC Circuit’s hearing of White Stallion Energy v. EPA, the court grappled with two dramatically different “benefits” estimates for proposed emissions standards. While petitioners claimed the standards would produce benefits of $4-6 million a year, the EPA cited a benefit range of $37 to $90 billion in health benefits alone. | | | CBA, however, is not just arbitrary; it is detrimental to regulatory goals. | |
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< | The need to monetize every output means that benefits that are unmonetizable, even by subjective estimation, fall out of consideration. Most important among these are regulation’s effects on social psychology. What, for example, is the monetary value of a generation growing up with the expectation that tap water will be potable? Such effects on collective psychology can induce sweeping changes in political engagement, public morality, and social cohesion. But while increased civic activity is undeniably a social benefit, it is not a benefit with a dollar value. | >
> | The need to monetize every output means that benefits that are unmonetizable, even by subjective estimation, fall out of consideration.
No, they receive some form of approximation that you would consider insufficient. But this is about quantification, rather than monetization. You are objecting to social processes that attempt to compare things by making them comparable through quantifying approximation. For some purposes, such an objection has bite. But here you are at fault in claiming that your objection is about money, when really it is about applying quantities to qualitative material.
Most important among these are regulation’s effects on social psychology. What, for example, is the monetary value of a generation growing up with the expectation that tap water will be potable? Such effects on collective psychology can induce sweeping changes in political engagement, public morality, and social cohesion. But while increased civic activity is undeniably a social benefit, it is not a benefit with a dollar value. | | | These factors may, of course, be weighed separately, but this raises another question: are these benefits somehow less valuable than monetary benefits? And if they are not “second-class benefits,” how can an agency possibly conduct a CBA without them? | | | Further, agencies should refocus support for their regulations on community impact. Emphasizing that regulations are often a tool to promote social welfare will help to reframe the issue and weaken challenges from industry that rely primarily on complaints of financial burden.
CBA is attractive in its promise of an optimal level of regulation. But in an era of growing environmental challenges, CBA is too weak a tool. Only by elevating the importance of social and qualitative considerations can government agencies ensure that regulations meet society’s needs. | |
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This properly focuses the draft improving substantially over the last version I read. But you are still locked too closely to the idea that cost-benefit analysis is a particular process. It's a rhetoric for organizing social disputing about policy choices, like law is, or political drama in the cult-of-personality mode, or conspiracy theories. Whether it should be in use or not depends not on whether you win or lose particular disputes conducted within its frame, or within the frame enclosing it. Whether we are invested for or against particular rhetorics, and why---I would suggest, having learned how to suggest it from Thurman Arnold in a form that I think did not much appeal to you---is more a matter of unconscious than of conscious cogitation. If you will focus a moment on your own attitudes about this particular rhetoric, and where they come from, you might gain an insight whose consequences would surprise you.
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