This paper presents my thinking and concerns about formation of COVID-19 policy. Policy formation must cope with substantial uncertainties about the nature of the disease, the dynamics of transmission, and behavioral responses. Data uncertainties limit our knowledge of the past trajectory and current state of the pandemic. Data and modeling uncertainties limit our ability to predict the impacts of alternative policies. I explain why current epidemiological and macroeconomic modeling cannot deliver realistically optimal policy. I describe my recent work quantifying basic data uncertainties that make policy analysis difficult. I discuss approaches for policy choice under uncertainty and suggest adaptive policy diversification.

Tables are a unique form of visualizing data because, unlike many charts, they are not usually intended to give a quick, visual representation of data. Instead, tables are useful when you want to show the exact values of your data or estimates. They are not the best solution if you want to show a lot of data or if you want to show the data in a compact space, but a well-designed table can help your reader find specific numbers and discover patterns and outliers. In this article, I present 10 guidelines for creating better, more effective tables; I then model these lessons by redesigning six tables from articles previously published in the Journal of Benefit-Cost Analysis.

This article has three sections, each of which deals with an Executive Order. The first section, “Office of Information and Regulatory Affairs (OIRA) Past,” emphasizes the critical role that Executive Orders played in the formation of OIRA. More specifically, OIRA owes its initial existence to the establishment of a centralized regulatory review system, the Quality of Life Review, which initiated Office of Management and Budget (OMB) review of environmental regulations through the issuance of a directive from OMB. Every subsequent President expanded OMBs powers through the issuance of Executive Orders which culminated in the Iconic Executive Order 12291. The section concludes with the recommendation that a select class of Executive Orders, and OMB Directives, be designated as “Iconic” by the National Archivist in consultation with the OIRA, and then given substantial deference by incoming Administrations. The second section, “OIRA Present,” describes an Executive Order issued during the Kennedy Administration which remains in effect but was promulgated prior to the establishment of OIRA and therefore recommends that a new Executive Order be issued which gives OIRA specific authority to participate in the conduct of interagency reviews of Executive Orders. The third section, “OIRA Future,” describes an Executive Order which implements a regulatory budget (RB) and institutionalizes a mechanism for controlling the size of the administrative state. This final section of the article recommends that the aforementioned Executive Order be reviewed and modified based upon the outcome of a request for public comments, and rules with demonstrated positive net benefits should no longer be accorded an automatic entitlement for issuance as a final rule absent their inclusion in an RB.

We examine the net benefits of social distancing to slow the spread of COVID-19 in USA. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit–cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

This article presents the first meta-analysis documenting the extent of publication selection biases in stated preference estimates of the value of a statistical life (VSL). Stated preference studies fail to overcome the publication biases that affect much of the VSL literature. Such biases account for approximately 90% of the mean value of published VSL estimates in this subset of the literature. The bias is greatest for the largest estimates, possibly because the high-income labor market and stated preference estimates from the USA serve as an anchor for the VSL in other higher income countries. Estimates from lower-income countries exhibit less bias but remain unreliable for benefit-cost analysis. Unlike labor market estimates of the VSL, there is no evidence that any subsample of VSL estimates is free of significant publication selection biases. Although stated preference studies often provide the most readily accessible country-specific VSL estimates, a preferable approach to monetizing mortality risk benefits is to draw on income-adjusted estimates from labor market studies in the USA that use Census of Fatal Occupational Injuries risk data. These estimates lack publication selection effects as well as the limitations that are endemic to stated preference methods.

Jim Tozzi is a legend and a treasure. Who better to reflect upon the history of, the significance of, and the prospects for centralized regulatory review (CRR)?

A growing body of normative work explores whether and how deference to people’s choices might be reconciled with behavioral findings about human error. This work has strong implications for economic analysis of law, cost–benefit analysis, and regulatory policy. In light of behavioral findings, regulators should adopt a working presumption in favor of respect for people’s self-regarding choices, but only if those choices are adequately informed and sufficiently free from behavioral biases. The working presumption should itself be rebuttable on welfare grounds, with an understanding that the ends that people choose might make their lives go less well. For example, people might die prematurely or suffer from serious illness, and what they receive in return might not (on any plausible account of welfare) be nearly enough. The underlying reason might involve a lack of information or a behavioral bias, identifiable or not, in which case intervention can fit with the working presumption, but the real problem might involve philosophical questions about the proper understanding of welfare, and about what it means for people to have a good life.

We analyze the economic costs and benefits of “community-led total sanitation” (CLTS), a sanitation intervention that relies on community-level behavioral change, in a hypothetical rural region in sub-Saharan Africa with 200 villages and 100,000 people. The analysis incorporates data on the effectiveness of CLTS from recent randomized controlled trials and other evaluations. The net benefits of this intervention are estimated both with and without the inclusion of a positive health externality, that is, the additional reduction in diarrhea for an individual when a sufficient proportion of other individuals in the community construct and use latrines and thereby decrease the overall load of waterborne pathogens and fecal bacteria in the environment. We find that CLTS interventions would pass a benefit–cost test in many situations, but that outcomes are not as favorable as some previous studies suggest. The model results are sensitive to baseline conditions, including the value of time, income level used to calculate the value of a statistical life, discount rate, case fatality rate, diarrhea incidence, and time spent traveling to defecation sites. We conclude that many communities likely have economic investment opportunities that are more attractive than CLTS, and recommend careful economic analysis of CLTS in specific locations.

What is the benefit from obtaining more precise values of environmental or other public goods through surveys or other information gathering? In the value of information (VOI) problem studied here, a buyer who wishes to preserve a resource sets a price to offer a seller without knowing precisely its protection value, B, nor its value to the seller, V. The VOI from more precise information about B is important for environmental and natural resource valuation, but is typically not quantified nor compared to valuation costs. More precise environmental values reduce the frequency of two types of mistakes (protecting the resource when it should not be; and not protecting it when it should), and increases ex ante welfare. We apply our analysis to Amazon rainforest protection, focusing on the “value of perfect information,” VOPI, which, we show through simulations, typically exceeds realistic valuation costs, justifying significant valuation expenditures. VOPI also depends on the nature of buyer–seller interactions, and takes its highest value when the buyer has full concern for the seller’s outcome. Our paper proposes and prepares the base for a new, needed, field in applied welfare economics, the “benefit–cost analysis of public-good valuation studies.”

Jim Tozzi is an activist institutional economist. During his 19-year career in the federal civil service, he was a pertinacious institution builder, armed with a PhD in economics but never flaunting it. He gained a reputation, richly deserved in my experience, as a supreme bureaucratic tactician. But he applied his skills to antibureaucratic purposes. Incessantly, and occasionally at professional risk, he promoted and protected internal executive-branch procedures that used economic analysis, and measures of administrative effectiveness, against the incessant forces of political entropy, agency parochialism, and special-interest capture.

Low probability risks create challenges for individual decisions and potential pressures for government regulation. This article reports original survey evidence regarding the public’s perception and valuation of water-related risks from plastic bottles with bisphenol A, residues in drinking water of the herbicide atrazine, and trace amounts of prescription drugs in water. People who believe that they face high water-related risks generally believe that the risks apply and, given that belief, are willing to pay more to limit the risk. However, the expressed willingness to pay for risk reductions is inordinately high even among those who are unsure of whether they are even exposed to the risk, and therefore may not be reliable as values for the actual benefits.

Since its introduction to the field of environmental and natural resource economics in the late 1960s, existence value has faced several critiques from economists, psychologists, and philosophers. Critics have taken aim at the notion’s conceptual ambiguity and lack of connection to observable behavior, its incompatibility with cognitive processes and its sensitivity to cognitive biases, and ethical shortcomings in applying existence values to environmental decisionmaking. Unlike some critiques of existence value that draw on cognitive and ethical frameworks for decisionmaking fundamentally at odds with stated preference methods and benefit–cost analysis (BCA), this paper takes as given the use and adequacy of both. It focuses on challenges to existence value per se, with respect to the ability of existence value estimates to contribute to benefit–cost analyses in a way that is consistent with qualities of BCA that its proponents value: the objectivity, commensurability, and moral salience of the values analyzed. In light of the challenges, inclusion of existence value in benefit–cost analyses is found to inevitably compromise the quality of the BCA with respect to each criterion.

Jim Tozzi has a wealth of knowledge and experience with cost-benefit analysis and centralized review of Executive Branch rulemaking. Mine is more limited, but nonetheless significant.1 And while I may agree with much of what he says in his article “Office of Information and Regulatory Affairs: Past, Present and Future,” (Tozzi, 2019) I do see things differently than he does in a number of respects.

Social discounting conventions vary widely. Some differences reflect institutional constraints, but many reflect differing assumptions about how a social discount rate should be derived and applied. The divide between advocates of social opportunity cost and social time preference (STP) frameworks seems unbridgeable. There is no consensus among STP advocates on whether the social cost of funding $1 of public spending is barely more than $1 of consumption or perhaps more than $2; or on whether the covariance of public service benefits with income merits a discount rate premium that is trivial or a few percentage points. The practicalities of government fund raising are sometimes overlooked. The issues are here reviewed in the light of the literature and of experience with developing and applying social discounting regimes and extended debates within government.

Some issues in the application of benefit–cost analysis (BCA) remain contentious. Although a strong conceptual case can be made for taking account of the marginal excess tax burden (METB) in conducting BCAs, it is usually excluded. Although a strong conceptual case can be made that BCA should not include distributional values, some analysts continue to advocate doing so. We discuss the cases for inclusion of the METB and the exclusion of distributional weights from what we refer to as “core” BCA, which we argue should be preserved as a protocol for assessing allocative efficiency. These issues are topical because a recent article in this journal recommends ignoring the METB on the grounds that desirable distributional effects offset its cost. We challenge the logic of this article and explain why it may encourage inefficient policies.

For decades, a strong case has been made for comprehensive reform of the U.S. federal government’s regulatory processes (for early contributions, see Weidenbaum & DeFina, 1978; Lave, 1981; Breyer, 1982; Harrison & Portney, 1983; Litan & Nordhaus, 1983; Viscusi, 1992; Breyer, 1993; Sunstein, 1996; Graham, 1996, 1997). Establishment of centralized Office of Management and Budget (OMB) oversight through the Office of Information and Regulatory Affairs (OIRA) was an important achievement, but Congress has not yet passed comprehensive regulatory reform legislation.

This paper reviews seven contemporary official guidelines to cost-benefit analysis (CBA) with respect to eight major cost-benefit issues drawing on the latest edition of the major CBA textbook for guidance, although not complete authority. The guidelines are those by UK Treasury, European Commission, U.S. Environmental Protection Agency, New Zealand Treasury, Infrastructure Australia, NSW State Treasury, and Victorian State Department of Treasury and Finance. The eight major issues discussed are the issue of standing, core valuation principles, the scope of CBA with reference to potential additional economic benefits, changes in real values over time, the marginal excess tax burden, the social discount rate, use of benefit-cost ratios, and treatment of risk. While all the guidelines are quality guides to CBA, the paper finds that there is room for improved discussion and practice at various points in each of these guidelines.

United States Environmental Protection Agency (USEPA) has regulated drinking water since the 1974 Safe Drinking Water Act (SDWA). Congress directed it to achieve three conflicting goals: (i) establish stringent nationwide standards, (ii) ensure that these standards are both technologically and economically feasible, and (iii) accommodate significant differences in cost among water systems of different sizes with different water sources. USEPA chose to emphasize goal (i) at the expense of (ii) and (iii). In 1986, Congress intensified its preference for (i), was silent concerning goal (ii), and criticized USEPA for failing to achieve goal (iii). In lieu of economic feasibility, the Agency substituted “affordability,” defined as expenditures up to 2.5 % of national median household income irrespective of the benefits. This imposed deadweight losses, and substantial inequities on rural areas, low-income communities, and low-income households generally. In 1996, Congress directed USEPA to use benefit-cost analysis positively and normatively. Regulations issued since 1996 do not appear to comply, however. A review of post-1996 drinking water standards indicates that most were certified by USEPA as having benefits that justified costs, but these determinations were unsupported by the Agency’s own regulatory impact analyses. This article proposes that USEPA define by regulation that “economic feasibility” means marginal benefits exceed marginal costs for the smallest water system subject to SDWA, and that all future drinking water standards must be economically feasible. Economic efficiency would be greatly enhanced and the pervasive inequities of “affordability” greatly diminished. Unlike “affordability,” this definition is objective and compatible with lay intuition about the meaning of key regulatory terms.

The Office of Information and Regulatory Affairs (OIRA) in the Executive Office of the President coordinates the federal government’s regulatory agenda, reviews executive branch agencies’ draft regulations, and oversees government-wide information quality, peer review, privacy, and statistical policies. Remarkably, its regulatory oversight functions, and the benefit-cost framework underlying them, have not changed significantly through six very different presidential administrations. This article examines the evolution of executive regulatory oversight and analysis from the 1970s to today, exploring the reasons for its durability and whether the current imposition of a regulatory budget challenges the bipartisan nature of regulatory practice.