Law Professor Questions Research
By Critics Of Government Regulations
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| Richard Parker, professor of law, has challenged the methodology and findings of some studies that criticize government regulations. |
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Photo by Tina Covensky |
Countless times each day, everyone who eats, breathes, drinks water, or drives a vehicle is protected by an umbrella of government regulations.
Despite the obvious benefit of being assured that tap water is uncontaminated or that auto seat belts meet safety standards, regulations are routinely criticized as costly and ineffective, both by the general public and by some researchers.
Richard Parker, a law professor with extensive experience in government environmental, health, and safety regulations, has delved deeply into the data and methods used by studies that find many regulations largely worthless. He is highly critical of both the methodology and the findings of some of these analyses.
Startling Conclusions
Apparently authoritative studies have reached startling conclusions, he says,
such as that government regulations cost up to $72 billion per life saved, or that
more than half of all major regulations since 1981 fail “a neutral economist’s
cost-benefit test.”
Studies like these attract media attention. Add the widespread American distaste for government intrusion and frequent horror stories about over-zealous enforcement of regulations, and it’s no wonder citizens are sympathetic to the idea of reducing what is often called the “burden” of regulations, and supportive of “reforms” aimed at reining in regulators.
But Parker’s research has turned up some surprising findings. For example, he found that a study by John Morrall, an OMB economist, reached its conclusions in large part by simply substituting the author’s estimates of regulatory costs and benefits for those of agency scientists, and then declaring the rules failures.
When Parker asked to see the study’s supporting data and calculations, he says, Morrall refused to supply them. The study nevertheless circulated for more than a decade and was quoted by Nobel laureates and at least one Supreme Court justice along the way before anyone thought to question its methods.
Another study by Robert Hahn, director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies, examined 136 major regulations enacted over a 15-year period and found that more than half of them fail “a neutral economist’s cost-benefit test.”
Hahn did disclose his data to Parker, who was perplexed by its conclusions. Fully a third of the regulations in Hahn’s database were listed as having a zero benefit, including one to require double-hull tankers to prevent Exxon-Valdez type oil spills and another to protect 3.9 million agricultural workers from acute pesticide poisoning.
It turns out that Hahn assigned a zero to all benefits that the environmental agency could not quantify, or which are not aimed at reducing risks in select categories that he established for the study. These included death or injury by accident, cancer, heart disease, lead poisoning, and exposure to five air pollutants.
Hahn also maintained that FDA regulations relating to safe seafood handling confer “zero” benefit because they do not address cancer, heart disease, or lead poisoning.
Parker responds: “Here is a rule that was supported by industry and everyone else. Improper seafood handling can cause salmonella and other illnesses. The FDA estimates that these illnesses occur from 20,000 to 60,000 times a year and cost victims from $45 million to $116 million to treat.
“What’s more,” he adds, “seafood exporting firms would save $20 million a year in European Union inspection fees, and enforcement actions would drop when the new rules were adopted, saving additional dollars. Consumers would also have greater confidence in seafood safety and buy more of these products. Almost everyone involved with this rule agreed that its benefits exceeded its cost – except Hahn.”
Scorecard Evaluations
As might be expected, Parker and Hahn have a frosty relationship. At the moment,
it is playing out via a series of papers published in professional journals. In
one, Parker maintains that Hahn’s “scorecard” evaluations violate
basic principles of responsible cost-benefit analysis and provide a skewed picture
of regulation. Hahn stands by almost all of his conclusions and dismisses Parker’s
findings as irrelevant, saying that there is no
alternative to ignoring benefits that are not quantified in the course of providing
a scorecard.
Parker disagrees. Determining the value of any regulation is difficult at best and impossible to pigeonhole neatly and precisely onto a scorecard, he says. For example, many people would agree that it makes sense to limit noxious substances that leave factories in the form of smokestack emissions or wastewater. But how can anyone state with certainty the impact of these emissions on people, much less on wildlife, rivers, and streams? There are simply too many unknowns, too many variables.
Making general statements about the value of regulations is likewise difficult, Parker believes, given their volume, complexity, and pervasive presence in everyone’s life. He agrees, however, that some regulations are indefensible and that at least some of the horror stories about regulations and overly zealous enforcement may be partially true.
But he adds, “I can’t substantiate that most regulation is good, but there are market failures that clearly make some regulation good. Without regulations, an industry could maximize profits by polluting, for example.”
The best way to evaluate regulations, he says, is the way airplane crashes are studied – on a case-by-case basis.
A Non-Partisan Center
In fact, he’s weighing the idea of proposing that the University
form a nonpartisan, independent center for evaluating the costs and benefits of
specific regulations.
