Humanizing Cost-Benefit Analysis

In the last twenty months, the Obama Administration has been taking an approach to regulation that is distinctive in three ways.First, we have approached regulatory problems not with dogma or guesswork, but with the best available evidence of how people really behave.Second, we have used cost-benefit analysis in a highly disciplined way, not to reduce difficult questions to problems of arithmetic, but as a pragmatic tool for cataloguing, assessing, reassessing, and publicizing the human consequences of regulation – and for obtaining public comment on our analysis. This emphasis on human consequences – on reducing or eliminating unjustified burdens on the private sector and on ensuring that high costs are justified by high benefits – is especially important in a period of economic difficulty. We have worked to put into place important safeguards while also making regulation compatible with the economic recovery, and while reducing the risk that costly regulations will have adverse effects on job creation, wages, prices, and economic growth as a whole.