Cass Sunstein Discusses Cost-Benefit Analysis in Regulation

Cass Sunstein, the administrator of the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget and one of the most prolific and frequently cited legal academics, detailed some of the positive results of using cost-benefit analysis in overseeing the Obama administration’s regulatory agenda when he spoke at NYU Law on April 30.

Cass Sunstein, Administrator of OIRA

At the Institute for Policy Integrity event, Sunstein received an enthusiastic introduction from NYU Law Dean Richard Revesz, who is also the Institute’s faculty director. In his talk, Sunstein, who taught for 27 years at the University of Chicago Law School and is now on leave from Harvard Law School, explained that the current administration’s cost-benefit analysis focus has yielded net economic benefits: $91 billion in its first three fiscal years, including fuel and energy efficiency savings, consumer and business savings, and deaths and injuries averted, he stated. The comparable figures for the George W. Bush and Clinton administrations are $14 billion and $3 billion, respectively. “In an economically hard time, we’ve been extremely diligent to try to keep those costs down as low as possible,” said Sunstein.

When asked why the Obama administration does not seem to get credit for implementing fewer rules than the Bush administration did during its first three years. “There’s a big disconnect between the record… and the occasional view that we’re regulation-happy with extremely expensive and numerous rules,” he said, adding, “It might be partly that the health care law is just so salient that it’s thought that, given that, it must be the case that there are more costly rules. Maybe that’s the problem.”

Sunstein stated that transparency has increased through an OIRA disclosure initiative in which the government provides large amounts of data to the private sector, which then uses the information to make apps for consumers. One example is an app for energy usage so consumers can calculate possible savings: “The potential here is very large for enabling people to make comparisons across a wide range of consumer products,” Sunstein said.

Sunstein cited the importance of the public comment process as a “central safeguard,” adding that agencies really do pay attention and respond to citizens’ remarks on potential rules. Sunstein also discussed collaborative efforts with Canada, Mexico and Europe to eliminate regulatory differences among the respective countries that present trade barriers. “In a 21st-century economy,” he said, “one thing you can do that’s really important for growth and job creation is to eliminate red tape that has no justification.”

Sunstein previously visited NYU Law in April 2011, when last year’s volume of the NYU Annual Survey of American Law was dedicated to him.