Cost-Benefit Analysis as a Commitment Device
Cost-benefit analysis purports to calibrate regulation. But the way administrative agencies practice cost-benefit analysis can, at best, calibrate a rule at the moment of its promulgation. As scientific knowledge of regulated health, safety, and environmental risks accumulates—and as technology becomes more affordable—the assumptions underlying a rule’s cost-benefit analysis can rapidly obsolesce. Because of the structural incentives towards agency inaction, pressure from regulated firms, or attention to other priorities, outdated rules persist.