Cass Sunstein, head of OIRA, explains gains achieved through cost-benefit analysis of 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 today, detailed some of the promising results of using cost-benefit analysis in overseeing the Obama administration’s regulatory agenda when he spoke at NYU Law on April 30.

Richard Revesz, Cass Sunstein, and Michael Livermore '06At the Institute for Policy Integrity event, the head of OIRA 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 government has expended considerable effort in simplifying regulations and information for citizens. He added that complexity causes real problems: “If you identify a clear path, you really help someone.... Information in the abstract may not be so helpful. You need to enable people to make informed comparisons.” Sunstein used as an example the old fuel economy labels on cars, whose miles-per-gallon figures didn’t necessarily tell consumers what they really needed to know, versus the new labels, which reveal average annual fuel costs. Further, all agencies have been asked to give input about potential regulatory improvements and to simplify their forms in the interest of further streamlining and convenience for constituents.

The current administration’s cost-benefit analysis focus has yielded real monetary benefits, Sunstein reported: $91 billion in its first three fiscal years, manifested in fuel and energy efficiency, consumer and business savings, and deaths and injuries averted. The comparable figures for the George W. Bush and Clinton administrations are $14 billion and $3 billion, respectively, he said. “In an economically hard time, we’ve been extremely diligent to try to keep those costs down as low as possible.”

Transparency has increased through a 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.”

In the question-and-answer session, Sunstein responded to a query about why the Obama administration doesn't seem to get credit for implementing fewer rules than the previous 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 previously visited NYU Law in April 2011, when last year’s volume of the NYU Annual Survey of American Law was dedicated to him.

Posted on May 7, 2012

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