How Much Do Regulations Cost?
Republicans love to say that regulation is costing the economy billions of dollars and thousands of jobs. But estimates are all over the place.
…the cost of any particular regulation is often described differently by the agency, by outside parties, and by agency critics in Congress. For example, a regulation issued in 2012 curbing mercury emissions from power plants was described by the Environmental Protection Agency (EPA) as costing $9.6 billion. Sen. James Inhofe (R-Okla.) described the same regulation as costing $100 billion. When assessing the cost of all regulations issued in 2013, the Office of Management and Budget (OMB) used a figure of $2 billion. An outside assessment that has been frequently quoted had a much larger number, $112 billion.
In my latest column for The Hill, I give advice on who to listen to:
Click here for reuse options!How should the public view the numbers they hear regarding the cost of regulations? The best answer is “with a grain of salt.” Beyond that, I would suggest looking at the agency’s estimate first and then look for critiques of this estimate that are as clear about why the agency estimate is incorrect as possible. And I would largely ignore any number that is used in a speech on the floor of Congress.
Copyright 2014 Liberaland
By: Stuart Shapiro
Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.
32 responses to How Much Do Regulations Cost?
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RioBravoHombre July 31st, 2014 at 16:42
I know of the perfect, regulation-free paradise. It’s a place completely devoid of pesky, intrusive, job-killing building codes and safety regulations. Developers are free to erect huge buildings, and save hugely, without any silly nonsense about structural integrity or strength. It’s a little place called Haiti….after their last earthquake, you could see the results for yourself.
RioBravoHombre July 31st, 2014 at 16:42
I know of the perfect, regulation-free paradise. It’s a place completely devoid of pesky, intrusive, job-killing building codes and safety regulations. Developers are free to erect huge buildings, and save hugely, without any silly nonsense about structural integrity or strength. It’s a little place called Haiti….after their last earthquake, you could see the results for yourself.
M A G July 31st, 2014 at 18:05
In addition to the tangible of a regulation costs to a company, such as the salary of the person doing the reporting, there are costs to the general public if certain regulations are not maintained. For example, we don’t allow chemical companies to dump chemicals into our waterways (in theory, I know). Regulations, and the ensuing costs associated are worth it to ensure that our water remains clean and are probably cheaper than the cost of cleaning an ‘event’ up later.
MIAtheistGal July 31st, 2014 at 18:05
In addition to the tangible of a regulation costs to a company, such as the salary of the person doing the reporting, there are costs to the general public if certain regulations are not maintained. For example, we don’t allow chemical companies to dump chemicals into our waterways (in theory, I know). Regulations, and the ensuing costs associated are worth it to ensure that our water remains clean and are probably cheaper than the cost of cleaning an ‘event’ up later.
Suzanne McFly July 31st, 2014 at 18:07
How many lives are positively affected by regulations, anyone who has ever worked has reaped the benefits of regulations so to put a price tag on it is ridiculous. I would love to see a rwnj live in the Republican utopia they so fervently defend.
mmaynard119 July 31st, 2014 at 20:55
Suzanne – you are raising an interesting point. This is why many agencies do cost-benefit analysis. However, when many, like the EPA which the Koch Brothers/GOP want to abolish, do this cost-benefit analysis, the GOP screams bloody murder because all the GOP cares about is reducing expenditures so that they can cut taxes.
mmaynard119 August 1st, 2014 at 16:39
http://www.southernstudies.org/2014/07/voter-ire-over-handling-of-duke-energy-coal-ash-di.html
mea_mark August 1st, 2014 at 08:44
They did. They blew it up though, West, Texas. Now they seem to like some regulations, go figure.
Suzanne McFly July 31st, 2014 at 18:07
How many lives are positively affected by regulations, anyone who has ever worked has reaped the benefits of regulations so to put a price tag on it is ridiculous. I would love to see a rwnj live in the Republican utopia they so fervently defend.
mmaynard119 July 31st, 2014 at 20:55
Suzanne – you are raising an interesting point. This is why many agencies do cost-benefit analysis. However, when many, like the EPA which the Koch Brothers/GOP want to abolish, do this cost-benefit analysis, the GOP screams bloody murder because all the GOP cares about is reducing expenditures so that they can cut taxes.
The case-in-point was Duke Energy’s coal ash spill. Duke Energy, which had it’s former senior executive as governor, tried to get the taxpayers to pay for the clean up.
mmaynard119 August 1st, 2014 at 16:39
http://www.southernstudies.org/2014/07/voter-ire-over-handling-of-duke-energy-coal-ash-di.html
mea_mark August 1st, 2014 at 08:44
They did. They blew it up though, West, Texas. Now they seem to like some regulations, go figure.
tiredoftea July 31st, 2014 at 18:48
The research shows that regulations bring economic benefits that fare outweigh their cost:
http://grist.org/article/2010-11-17-for-epa-regulations-cost-predictions-are-overstated/
Stuart Shapiro July 31st, 2014 at 18:59
You will like this report: http://www.foreffectivegov.org/benefits-public-protections-2014
tiredoftea July 31st, 2014 at 19:33
Thanks! This is another area where Dems/Progressives drop the ball! We really have to stop being defensive about our concern for a decent environment to live in for ourselves and every other being on the planet. The economics are on our side, if not the morality.
Wells July 31st, 2014 at 20:02
1990’s technology breakthrough PHEVs made rooftop PVs ideal match. Battery advancement of 2000’s show direction auto makers should convert their/our overall fleet. Think about it.
200mph HSR is too fast. Who believes Fresno needs HSR.
All other corridors need the rail & electrification upgrades more.
Environmental benefit of electrification is Moot through rural areas. Those there soon to face wheel-squeal, audible for miles.
Habitat through Gilroy definitively harmed. Instead…
Electrify Peninsula to San Jose/Fremont to Stockton to Sacramento. Why waste electricity in the desert where heat expansion of rail line is high maintenance.
Why devote NW rail lines to coal/oil/gas?
Hybrid Talgo-type would run those corridors fast enough.
Mr Buffett hires incompetent managers, probably many liberal enough.
mmaynard119 July 31st, 2014 at 21:25
Our good friends at the GOP are trying to advance a new idea: innovation accounting. The base concept is that they will innovate ways to account for what their rich patrons want to have happen.
During floor debate, Sen. Barbara Boxer (D-Calif.) said, “I call it not devolution but complete and utter destruction of a system that has been in place that the states have grown to count on.” That’s what drove Lee to Uber; he and his House counterpart, Rep. Tom Graves (R-Ga.), are arguing that, even with a cut in the federal gas tax from 18.4 cents to 3.7 cents per gallon, more money stays in states that way because of cuts in red tape. In the technology world, they’ve got a name for that. They call it innovation accounting, meaning that new advances require opening your mind to new ways of measuring things.
http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/31/this-republican-is-trying-to-use-uber-to-sell-his-highway-funding-plan/
tiredoftea July 31st, 2014 at 22:15
So, in less euphemistic terms, math and reality are optional when the right does their accounting.
Tom Ward July 31st, 2014 at 21:11
Good, lets keep them that way by implementing them only when we have to. That statement probably becomes less and less true when regulations aren’t implemented conservatively. Also, there are often non-monetary costs associated with increased regulation like loss of freedom, increased corruption, loss of personal responsibility, increased reliance on government leading to a possible ‘dumbing down’ of the public, etc, which all need to be taken into account.
tiredoftea July 31st, 2014 at 18:48
The research shows that regulations bring economic benefits that far outweigh their cost:
http://grist.org/article/2010-11-17-for-epa-regulations-cost-predictions-are-overstated/
Stuart Shapiro July 31st, 2014 at 18:59
You will like this report: http://www.foreffectivegov.org/benefits-public-protections-2014
tiredoftea July 31st, 2014 at 19:33
Thanks! This is another area where Dems/Progressives drop the ball! We really have to stop being defensive about our concern for a decent environment to live in for ourselves and every other being on the planet. The economics are on our side, if not the morality.
Wells July 31st, 2014 at 20:02
1990’s technology breakthrough PHEVs made rooftop PVs ideal match. Battery advancement of 2000’s show direction auto makers should convert their/our overall fleet. Think about it.
200mph HSR is too fast. Who believes Fresno needs HSR.
All other corridors need the rail & electrification upgrades more.
Environmental benefit of electrification is Moot through rural areas. Those there soon to face wheel-squeal, audible for miles.
Habitat through Gilroy definitively harmed. Instead…
Electrify Peninsula to San Jose/Fremont to Stockton to Sacramento. Why waste electricity in the desert where heat expansion of rail line is high maintenance.
Why devote NW rail lines to coal/oil/gas?
Hybrid Talgo-type would run those corridors fast enough.
Mr Buffett hires incompetent managers, probably many liberal enough.
mmaynard119 July 31st, 2014 at 21:25
Our good friends at the GOP are trying to advance a new idea: innovation accounting. The base concept is that they will innovate ways to account for what their rich patrons want to have happen.
During floor debate, Sen. Barbara Boxer (D-Calif.) said, “I call it not devolution but complete and utter destruction of a system that has been in place that the states have grown to count on.” That’s what drove Lee to Uber; he and his House counterpart, Rep. Tom Graves (R-Ga.), are arguing that, even with a cut in the federal gas tax from 18.4 cents to 3.7 cents per gallon, more money stays in states that way because of cuts in red tape. In the technology world, they’ve got a name for that. They call it innovation accounting, meaning that new advances require opening your mind to new ways of measuring things.
http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/31/this-republican-is-trying-to-use-uber-to-sell-his-highway-funding-plan/
tiredoftea July 31st, 2014 at 22:15
So, in less euphemistic terms, math and reality are optional when the right does their accounting.
Tom Ward July 31st, 2014 at 21:11
Good, lets keep them that way by implementing them only when we have to. That statement probably becomes less and less true when regulations aren’t implemented conservatively. Also, there are often non-monetary costs associated with increased regulation like loss of freedom, increased corruption, loss of personal responsibility, increased reliance on government, etc, which all need to be taken into account.
Wells July 31st, 2014 at 19:58
Stuart, http://www.scientificamerican.com/article/fact-or-fiction-the-sixth-mass-extinction-can-be-stopped/ not sure this link works, title is right.
I find respectable enough articles published there.
1990’s technology breakthrough PHEVs made rooftop PVs ideal match.
Battery advancement of 2000’s show direction auto makers should
convert their/our overall fleet. Think about it.
200mph HSR is too fast. Who believes Fresno needs High Speed Rail.
All other California corridors need the rail & electrification upgrades more.
Environmental benefit of electrification is Moot through rural valley.
Those there soon to face wheel-squeal, audible for miles.
Habitat through Gilroy definitively harmed.
Instead…
Electrify Peninsula to San Jose/Fremont to Stocton to Sacramento.
Why waste the electricity in the desert? Air conditioners?
Why devote NW rail lines to coal/oil/gas/Asian car/stuff imports?
Hybrid tech again or Talgo-type 125mph Amtrak could run fast enough.
Mr Buffett hires incompetent managers, probably many liberal enough.
mmaynard119 July 31st, 2014 at 20:47
One rule here – if you have good drugs, you have to share them with everyone else.
Wells August 1st, 2014 at 13:09
One of my rules is to ignore replies that don’t pertain to my original post.
Regulation of business and industry includes the issue of transportation and energy. Furthermore, a “well-regulated” militia infers the constitutional right to write laws regulating gun ownership.
Wells July 31st, 2014 at 19:58
Stuart, http://www.scientificamerican.com/article/fact-or-fiction-the-sixth-mass-extinction-can-be-stopped/ not sure this link works, title is right.
I find respectable enough articles published there.
1990’s technology breakthrough PHEVs made rooftop PVs ideal match.
Battery advancement of 2000’s show direction auto makers should
convert their/our overall fleet. Think about it.
200mph HSR is too fast. Who believes Fresno needs High Speed Rail.
All other California corridors need the rail & electrification upgrades more.
Environmental benefit of electrification is Moot through rural valley.
Those there soon to face wheel-squeal, audible for miles.
Habitat through Gilroy definitively harmed.
Instead…
Electrify Peninsula to San Jose/Fremont to Stocton to Sacramento.
Why waste the electricity in the desert? Air conditioners?
Why devote NW rail lines to coal/oil/gas/Asian car/stuff imports?
Hybrid tech again or Talgo-type 125mph Amtrak could run fast enough.
Mr Buffett hires incompetent managers, probably many liberal enough.
mmaynard119 July 31st, 2014 at 20:47
One rule here – if you have good drugs, you have to share them with everyone else.
Wells August 1st, 2014 at 13:09
One of my rules is to ignore replies that don’t pertain to my original post.
Regulation of business and industry includes the issue of transportation and energy. Furthermore, a “well-regulated” militia infers the constitutional right to write laws regulating gun ownership.