19 Sep 2007

OMB's Principles for Risk Analysis:
OMB's initial response to the National Academy of Sciences

by Richard Belzer

in Regulatory Science, Regulatory Policy

Today the Office of Management and Budget issued a memorandum to agency heads directing them to adhere to certain principles of risk analysis. The memorandum is OMB's initial response to the report of a National Research Council panel that OMB asked to review a 2006 proposed bulletin on risk assessment. That report called the proposed text "fundamentally flawed" and gave seven recommendations, one of which was that it be withdrawn.

A fair reading of the new memorandum is that OMB followed this specific recommendation. More...

27 Jul 2007

Who Pays the Cost of Regulation?
Insights from corporate income tax incidence

by Richard Belzer

in Regulatory Economics

Regulation is widely understood as a tax on the activity or person being regulated. Where these activities repair genuine market failures, benefits from regulation may result. If there are benefits from, say, automobile safety regulation, one would expect the beneficiaries to be persons who otherwise would have been killed or injured at the pre-regulatory safety level.

But what about the costs of regulation? Who bears them? More...

24 Jul 2007

The Perils of Seeking Perfect Information:
How many roadway signs is enough?
Is there a public participation process that can help find out?

by Richard Belzer

in Regulatory Economics, Regulatory Policy

A conventional example of market failure often used to justify regulation is the absence of perfect information. This is explicitly set forth in the Office of Management and Budget's guidance on the conduct of Regulatory Impact Analysis.

While it is true that the strictest form of the economic theory that is the foundation for benefit-cost depends includes this assumption, it is made for expository convenience rather than necessity. Information need not be perfect for economics to explain or predict behavior. Indeed, it works fine when knowledge is limited; the pursuit of knowledge is one of the instruments through which markets improve general welfare, and for some people gaining knowledge is the very activity that brings them satisfaction.

So how much knowledge is enough -- or, in the language of economics, "optimal"? Assuming that it's true that ignorance generally is bad and knowledge is good, is there an amount of knowledge that the government can provide to "solve" market failure, beyond which people start to get worse off? Today's A-hed in the Wall Street Journal gives an example showing that there is an optimum. More...

11 May 2007

Government-wide Information Quality Guidelines:
Does journal peer review achieve "adequate" objectivity?

by Richard Belzer

in Glossary, Information Quality, Peer Review

Federal guidelines require information disseminated by federal agencies to satisfy a few broad criteria, one of which is objectivity. These guidelines give a "rebuttable presumption" to scientific information published in scholarly journals.

• Do all scholarly journals transmit this rebuttable presumption of objectivity? What about scholarly journals that also have an advocacy mission?
• What is the burden of proof for mounting a successful rebuttal?

9 May 2007

Federal Agency Guidance Documents:
What's "significant"?

by Richard Belzer

in Regulatory Policy

OMB has new procedures for agencies to follow in making significant guidance documents transparent.

We posted an extensive discussion on OMB's Bulletin on Good Guidance Practices, and recently OMB issued an implementation memorandum. Yesterday we commented on the first task facing federal regulatory agencies: assembling and publishing online lists of guidance documents.

Today we address another fundamental question: What constitutes a "significant" guidance document, an d how is this determination made? More...

8 May 2007

Federal Agency Guidance Documents:
Building the inventory

by Richard Belzer

in Regulatory Policy

Executive Order 13422 and OMB's Bulletin on Good Guidance Practices will lead to major changes in the way federal agencies issue guidance.

The first step for each agency is to develop and publish inventories of their significant guidance documents. The deadlines for agency compliance are July 24, 2007 (for significant guidance documents issued on or after January 25, 2007) and August 23, 2007 (for all significant guidance documents). More...

7 May 2007

The New OMB Regulatory Review Procedures:
A primer on implementation

by Richard Belzer

in Regulatory Policy

On April 25 OMB issued guidance to agencies concerning the implementation of Executive Order 13422. More...

20 Feb 2007

Markets Work
What happens when governments suppress market forces

by Richard Belzer

in Legislation, Regulatory Economics, Regulatory Policy

Today's news brings a pair of interesting (and foreboding) lessons in what happens when government tries to suppress markets.

In Iran, government subsidies make the price of gasoline just 40 cents per gallon. In Florida, the state has decided to subsidize the cost of property insurance.

In Iran, there is massive overconsumption of energy that threatens both the economy and the polity. Its authoritarian, theocratic government is unwilling to endure the public reaction that would result from restoring market prices for energy.

In Florida, property owners in harm's way will overinsure and not bother taking otherwise cost-effective measures to reduce their losses from future hurricanes. When the hurricanes come, their losses will be covered by surcharges on other property owners (especially those out of harm's way) and taxpayers.

14 Feb 2007

Executive Order 13422, Part 5a
The House subcommittee oversight hearings

by Richard Belzer

in Regulatory Policy

Today we start a series summarizing the testimony from all eight witnesses who appeared yesterday before two separate House oversight subcommittees. More...

13 Feb 2007

Executive Order 13422, Part 4b
An update on today's congressional hearings

by Richard Belzer

in Regulatory Policy

The previously scheduled joint subcommittee hearing has been split into a back-to-back marathon double hearing. See our event record for links to witness testimony.

The full witness list is below.

8 Feb 2007

Executive Order 13422, Part 4
Partisan opposition erupts

by Richard Belzer

in Regulatory Policy

We thought we'd finished discussing Executive order 13422, President Bush's recent amendment to the Clinton-era Executive order on centralized regulatory review.

On Tuesday, February 13, a pair of House subcommittees will hold a hearing to criticize the Executive order.

6 Feb 2007

Good Guidance Practices
Definitions, requirements, and consequences

by Richard Belzer

in Regulatory Policy

On January 18, the Office of Management and Budget issued final government-wide guidance on the issuance of guidance in lieu of rulemaking. OMB's Bulletin for Agency Good Guidance Practices is rich with content. Today we begin a series intended to educate the public about this Bulletin and its implications for regulatory policy and process.
More...

5 Feb 2007

Market Success, Regulatory Failure
Lessons for regulatory policy from the market for blind-side offensive tackles in the NFL

by Richard Belzer

in Information Quality, Regulatory Policy

Michael Rosen reviews The Blind Side, a book on college and pro football by Michael Lewis. Rosen uncovers the reason why blind-side (usually left) offensive tackles are so important in football, and why they are so well paid.

They are valuable because they protect teams' franchise players, their (usually right-handed) quarterbacks from sacks, fumbles, and most importantly, injury. They are paid well because there is an unregulated market for their services, and unregulated markets generally work very well.

4 Feb 2007

Executive Order 13422, Coda
Whither the vice president?