Paper Abstract
358. Thomas J. Kniesner and W. Kip Viscusi, A Cost-Benefit Analysis: Why Relative Economic Position Does Not Matter, 04/2002; subsequently published as "Why Relative Economic Position Does Not Matter: A Cost-Benefit Analysis" in Yale Journal on Regulation, Vol. 20, No. 1, Winter 2003, 1-24.
Abstract: The current debate over cost-benefit concerns in agencies' evaluations of government regulations is not so much whether to consider costs and benefits at all but rather what belongs in the estimated costs and benefits themselves. Overlaid is the long-standing concern that the distribution of costs and benefits needs some consideration in policy evaluations. In a recent article in the University of Chicago Law Review, Robert Frank and Cass Sunstein proposed a relatively simple method for adding distributional concerns to policy evaluation that enlarges the typically constructed estimates of the individual's willingness to pay for safer jobs or safer products. We show that when considering the core of the Frank and Sunstein proposal carefully one concludes that current regulatory evaluations should be left alone because there is no reason to believe that relative positional effects are important either to personal decisions in general or to currently constructed cost-benefit calculations of government regulations in particular. We argue that the most important refinements one could make in the area of regulatory evaluation would be for agencies involved to adhere more to the framework of what is generally considered a carefully done cost-benefit study, and for agencies to make greater actual use of appropriately done cost-benefit studies when recommending regulations.