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The Economic Significance of Executive Order 13422

Oct 2007
Working Paper
By  Roger Noll
In January 2007, President Bush issued an Executive Order changing the procedures for undertaking benefit-cost analyses of proposed regulations. These changes have been hailed by some as dramatic improvements while criticized by others as representing the politicization of the evaluation process. This essay analyzes the major provisions of the new Executive Order, and concludes that it is unlikely to have much of an impact on the number or quality of regulations. Only one provision—subjecting major “guidelines” documents to mandatory benefit-cost analysis—potentially could be important, but even here there is no systematic evidence that agencies have used guidance documents to change the stringency of regulations and thereby to bypass the mandatory regulatory review for regulations. Moreover, the Executive Order leaves untouched the primary weaknesses of benefit-cost analysis as practiced by government agencies, such as the absence of standardization of values for key parameters, the use of inappropriate alternative regulations for comparison with a proposed regulation, and the general lack or either peer review or ex post re-evaluation of regulatory impact studies.