NCPA - National Center for Policy Analysis

Benefits Of Regulations Vary Widely

September 16, 1999

Politicians often talk about government spending, but critics contend they ignore another kind of spending: that required by government regulation. A recent study by economist Robert Hahn for the AEI-Brookings Joint Center for Regulatory Studies shows how expensive such spending can be.

  • On the plus side, the benefit from news rules from the early '80s to the mid '90s is $1.6 trillion.
  • However, the number of rules whose costs exceed their benefits is greater than the number of rules whose benefits exceed their costs.
  • The average regulation for which benefits exceed costs brings about $40 billion in benefits.
  • For regulations where costs exceed benefits, the average net cost is about $2 billion.

Some agencies do better than others. The net benefits of Department of Transportation regulations far exceed the benefits of other agencies, for example. But at the Environmental Protection Agency, the median rule costs $120 million per life saved, eight times higher than what Department of Labor health rules cost, and over 80 times higher than the median for other agencies.

The study also found that new regulations tend to be as cost effective as older ones.

Source: Macroscope, "The Cost of Rules," Investor's Business Daily, September 16, 1999.


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