Since then, cost-benefit analysis has become routine in both Republican and Democratic administrations. The reason is simple: It’s hard for an agency to know what to do unless it has an understanding of the costs and benefits of doing it.
Some people on the left have not much liked cost-benefit analysis, thinking that it is an obstacle to necessary regulation. But any decision about whether to go forward with a new regulation, or how aggressively to go forward, will depend on implicit judgments about costs and benefits. Why not make those judgments explicit?
Few people think that the EPA’s numbers have been perfect. It is especially challenging to quantify and monetize health and safety benefits. Suppose that a regulation is expected to prevent premature deaths. What’s the monetary value of that?
Agencies have long had answers to that question. First, they try to specify the number of premature deaths that their regulations will prevent. Then there’s the question of monetization. For decades, agencies have answered that question with a famous number: the Value of a Statistical Life. It’s now around $13.7 million — a figure based on the monetary value not of life but of mortality risks. True, you can raise good questions about that number, but it is based on the best evidence we have.
Making reasonable efforts to quantify and monetize the costs and benefits of regulations affecting health, safety, and the environment has been an essential tool for both transparency and sensible governance. It’s especially important for clean air regulations, because the costs and benefits of cleaner air can be high.
This is why presidents Reagan, George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama, Donald Trump, and Joe Biden followed the same essential methodology. I had the privilege to head the Office of Information and Regulatory Affairs under Obama from 2009 to 2012, and we insisted on quantifying and monetizing both benefits and costs, and on proceeding only if the benefits really did justify the costs.
Fast forward to last month, when the EPA issued a regulation governing air pollution from stationary combustion turbines and stationary gas turbines. The regulation amends emissions standards from those turbines. The agency carefully documented the cost savings of its regulation but said almost nothing about the benefits of emissions reductions for human health.
How can that be? The EPA abandoned the practices of seven consecutive administrations (including the first Trump administration), insisting that those “practices often provided the public with a false sense of precision.” For some air pollutants, such as fine particulate matter and ozone, the EPA claims that the health impacts are highly uncertain.
Fair enough. But in describing the impacts of its rule, the agency offers just a few short paragraphs, and they are so full of jargon that they sound a lot like ChatGPT on a bad day.
The agency notes that “prolonged exposures” to ozone “can lead to inflammation of the lung, impairment of lung defense mechanisms, and irreversible changes in lung structure.” It adds that reducing air pollution “can help to improve some of the effects.”
It notes that “high concentration of sulfur dioxide can cause inflammation and irritation of the respiratory system.” It says that increases in fine particulate matter “is associated with significant mortality and morbidity health outcomes.”
All that is common knowledge. But what, more specifically, are the likely benefits and costs, in terms of human health, of the rule that the EPA is issuing? How many people will be helped? How many people will be hurt? The agency tells us essentially nothing.
How, then, can we know whether making the air cleaner, or allowing it to get dirtier, makes any sense? The answer is that we cannot.
No one should be fooled. Refusing to quantify the benefits of air pollution regulations is a failure of transparency and an insult to the American people.