Sunstein's Book Has Strengths and Weaknesses
By David Henderson
From 2009 to 2012, [Cass] Sunstein headed the Obama administration’s Office of Information and Regulatory Affairs (OIRA), the part of the executive branch that enforces the requirement for cost–benefit analyses of major government regulations. Seeing government up close often makes analytic people cynical, but that hasn’t been the case with Sunstein. He emerged from his almost four-year stint in Washington as a strong believer in the power of cost–benefit analysis to lead not only to answers but also to good outcomes. In this book, he lays out why and concludes that the cost–benefit revolution “may well turn out to be a transition to something far better, focused more directly on the measurement of human welfare and enlisting unimaginably ambitious strategies to capture and improve the real-world effects of public-sector initiatives.” When that happens, he closes, “There will be dancing at the revolution, and I’m coming.”
Unfortunately, he doesn’t fully make his case. To be sure, he makes a strong argument that cost–benefit analysis has the power to be good analysis. He also shows cases in which good analysis overcame political pressure. But for someone who was in his job when “four thousand regulations were under discussion,” he relates surprisingly little about those discussions when, to make his case, he needed to provide more than just some details about a handful of regulations. He also goes too easy on heads of government agencies, not acknowledging their evident bias. He even makes a simple but telling error in one of his examples of cost–benefit analysis, using an annual figure where he should have used a present value.
This is from David R. Henderson, “Sunstein Will Be Dancing, But Should He?“, Regulation, Winter 2018-2019, which has just been published. (Scroll down about half way.) It’s my review of his book The Cost-Benefit Revolution.
Sunstein also defends WTP [willingness to pay] on grounds that will appeal to those who favor freedom. He writes, “Government should allow people to make choices about how to allocate their resources, not necessarily because people know best, but because they should be treated as adults rather than as infants.” It’s particularly encouraging to see him write this because his well-known earlier view, expressed in his coauthored book Nudge, was that government should treat people as, well, maybe not infants, but not quite adults either. He has consistently thought that people make bad choices, but his defense of their right to make those choices is more full-throated than in his earlier work.
Read the whole thing, including the part where I discuss his and my telephone conversation.