Transfer regulations and cost-effectiveness analysis.

Area of Science:

• Economics
• Public Policy
• Regulatory Analysis

Background:

• Recent scholarship on regulatory oversight primarily examines cost-benefit analysis of prescriptive regulations.
• Prescriptive regulations aim to correct market failures by restricting behavior, such as pollution controls.
• The significant category of transfer regulations, which channel funds to beneficiaries, has been largely overlooked.

Purpose of the Study:

• To highlight the oversight of transfer regulations in academic and policy analysis.
• To demonstrate the inadequacy of cost-benefit analysis for evaluating transfer regulations.
• To advocate for the appropriate use of cost-effectiveness analysis for transfer regulations and improved oversight.

Main Methods:

• Literature review of regulatory oversight scholarship.
• Theoretical analysis of cost-benefit analysis and cost-effectiveness analysis applicability.
• Examination of agency practices in evaluating regulations with economic impact.

Main Results:

• Cost-benefit analysis is fundamentally unsuited for evaluating transfer regulations, as they inherently fail such analyses.
• Cost-effectiveness analysis is the appropriate methodology for assessing transfer regulations.
• Agency implementation of cost-effectiveness analysis for transfer regulations is consistently poor, with widespread failure or incorrect application.

Conclusions:

• Transfer regulations, including entitlement programs and disaster relief, require a different analytical approach than prescriptive regulations.
• Executive orders mandating cost-effectiveness analysis for impactful regulations are not effectively implemented by agencies.
• Enhanced oversight from the Office of Management and Budget and judicial review is necessary to improve the quality of transfer regulation analysis.