OMB's 1997 Report

Chapter 2

Experts Questioned OMB's 1998 Estimate of Regulatory Benefits

In its 1997 report, OMB presented its estimates of federal regulatory costs

OMB's 1997 Report

and benefits in four categories and in total. The four categories were:

· Environmental regulations that focus on improving the quality of the

environment and include those issued by EPA (which has issued the vast

majority of these regulations) and the Departments of Transportation,

Energy, and the Interior;

· Other Social regulations that are designed to advance the health and safety

of consumers and workers, promote social goals such as equal

opportunity, equal access to facilities, and protect the public from fraud

and deception. They also include the disclosure of information about a

product, service or manufacturing process where inadequate information

might place consumers or workers at a disadvantage;

· Economic regulations that directly restrict business' pricing and output

decisions as well as limit the entry or exit of businesses into or out of

certain types of industries. These regulations often affect the agriculture,

trucking or communications industries; and

· Process regulations that involve paperwork, such as filling out income tax

forms and immigration papers.

In its table summarizing the cost and benefits estimates, OMB did not

include estimates for one other category of regulation--the "transfer"

costs and benefits of economic regulations. Transfers refer to regulations

that move payments from one group in society to another, (e.g., federal

Social Security payments and agricultural price supports). OMB estimated

those transfers at $140 billion in costs and benefits but said it did not

include these estimates in its totals because it considered transfers to be

payments that reflect a redistribution of wealth rather than social costs to

society as a whole.

OMB used a variety of academic and agency studies to develop estimates

of the costs and benefits associated with the four regulatory categories

included in the 1997 report. Those sources were

· a 1991 article by Robert W. Hahn and John A. Hird that reviewed and

synthesized the work of more than 25 prior studies assessing the impact of

These categories had been previously used in a series of studies of federal regulatory costs by Thomas

D. Hopkins of the Rochester Institute of Technology. For the most recent of these studies, see Thomas

D. Hopkins, "Regulatory Costs in Profile," Policy Sciences, 31 (Dec. 1998), pp. 301-320).

OMB noted that its 1996 "best practices" guidance states that transfers should not be added to the cost

and benefit totals included in cost-benefit analyses but should be discussed and noted for

policymakers.

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GAO/GGD-99-59 Analysis of OMB's Cost and Benefit Reports