Cost-Benefit Analysis -- Fall 2017 -- Spring 2018 | Howell E. Jackson | August 23, 2017

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Cost-Benefit Analysis -- Fall 2017 -- Spring 2018

by Howell E. Jackson Show/Hide

Cost-benefit analysis is the primary technique used by regulators in the United States and around the world to evaluate and defend the rationality of existing and proposed regulations in fields as diverse as finance, the environment, health care, and transportation. Cost-benefit analysis is sometimes championed as a check on arbitrary regulatory action, but elsewhere derided as a methodology that favors certain special interests.

This year-long seminar will explore the use of cost-benefit analysis in administrative processes in the United States. Students will learn about current and proposed legal requirements for cost-benefit analysis. Students will also have the opportunity to examine the actual methods used to conduct costbenefit analysis as taught in graduate programs for public policy and as used in recent regulatory filings. The purpose of this course is to provide participants a broad conceptual understanding of costbenefit analysis and then to apply that understanding to individual research topics.

The seminar will meet throughout the academic year, with ten 90 minute sessions in the Fall 2017 semester and the balance of meetings in the Spring 2018 semester, mostly after Spring Break. No particular background in law, mathematics, or economics will be presumed by the instructors and students from elsewhere in the University are welcome to participate.

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  1. 0 Show/Hide More Week 1 - September 7th - Cost Benefit Analysis and the Law
    Original Creator: Howell E. Jackson
    Assignment:  Please read Part 1 of the CFPB case study and the Business Roundtable decision appended thereto.   Then take a quick read over Part 2 and 3a of the case study, ignoring the specific regulations mentioned in part 2.  To what extent is the CFPB required to undertake cost benefit analysis in light of the Business Roundtable decision?   You should also read over the first chapter of the Boardman text.  While you need not prepare answers to the problems at the back of this chapter, you should look them over and consider the complexities the questions raise.
  2. 1 Show/Hide More Week 2 — September 14th: Conceptual Foundations of Cost Benefit Analysis
    Original Creator: Howell E. Jackson
    Assignment:   How do the perspectives on cost benefit analysis presented in the Sen article compare to the approach advanced in the Boardman chapter?  To what extent does the Supreme Court’s decision in Michigan v. EPA, as summarized in the HLR Comment, change your understanding of the obligations of the CFPB as discussed in our first class?
  3. 3 Show/Hide More Week 3 — September 21st: Cost-Benefit Analysis in Practice
    Original Creator: Howell E. Jackson
    Assignment:  In our third class, we turn to more practical issues regarding the application of cost benefit analysis.  We begin with a recent article by Professor Cass Sunstein, written shortly after he stepped down from the position of Director of OIRA.  You should read this article carefully.  Also included in this week’s assignment are a number of key OIRA documents, several of which are mentioned in Professor Sunstein’s article and some of which were created after his departure from Washington, D.C.  You need only skim over these documents, but as you do, consider what approach to cost-benefit analysis is being advanced in these materials and Professor Sunstein’s writings.   The final reading for our third class is a recent note from the Harvard Law Review exploring the implication for financial regulators of recent judicial decisions touching upon cost-benefit analysis.
        1. 3.2.2.1 Circular A-4
  4. 4 Show/Hide More Week 4 — October 5th: Valuation in Primary and Secondary Markets
    Original Creator: Howell E. Jackson
    Assignment: F-CBA:  Prehistory and Emergence of the Academic Debate over F-CBA
  5. 5 Show/Hide More Week 5 — October 12th: Discounting
    Original Creator: Howell E. Jackson
    Assignment: F-CBA:  Professor Coates & Principal Rejoiners:
  6. 6 Show/Hide More Week 6 — October 19th: Uncertainty
    Original Creator: Howell E. Jackson
    Assignment: F-CBA:  Institutional Responses & Independent Agencies
  7. 7 Show/Hide More Week 8 — November 9th: Statistical Lives
    Original Creator: Howell E. Jackson
    Assignment: F-CBA:  Adapting CBA to Deal with Behavioral Economics
    1. 7.4 Show/Hide More Selected Readings on Behavior Economics in Cost Benefit Analysis
      Original Creator: Howell E. Jackson
      This playlist includes several readings discussing the use of behavioral economics in cost benefit analsyis.
      1. 7.4.3 Show/Hide More John Y. Campbell, Restoring Rational Choice: The Challenge of Consumer Financial Regulation, 106 AER Papers & Proceedings 1 (2016)
        Note: While the front end of this paper is relatively accessible, it becomes more technical later on.  Read only as far as you feel comfortable.
  8. 8 Show/Hide More Week 7 — October 26th: Willingness to Pay and Contingent Valuation
    Original Creator: Howell E. Jackson
    Assignment: F-CBA:  Reactions/Reforms Under Trump Administration & Comparative CBA
    1. 8.1 Show/Hide More Class Nine -- January 16th, 2018: Materials on Regulatory Budgeting Under the Trump Administration (And Team Assignment II)
      Original Creator: Howell E. Jackson

      The readings for Class Nine will focus on regulatory budgeting, a new concept (at least in the United States) that seeks to import budgeting principles into the area of government regulation.  To introduce the subject, the readings begin with a 2014 article from Rosen and Callanan making the basic case for regulatory budgets, as well as an overview of the subject put together by Hill staffers in the summer of 2016.  The Trump Administration's approach to the subject is presented in a series of official OMB documents, and summarized in a 2017 article by Andrea Renda (an EU expert) reporting on the Trump Administration's approach and offering some comparative perspectives.

      The second team assignment, due by 8:00 pm on Monday, January 15th, is to write a 4-5 page memorandum, addressing the strengths and weaknesses of regulatory budgeting in general and then offering, as best you can, any suggestions as to how the Trump Administration's implementation of the approach might be improved upon.

      Good luck.


  9. 9 Show/Hide More Week 9 -- November 16th : Benefit Analysis in Consumer Protection Regulation
    Original Creator: Howell E. Jackson
    In this week's class, we will look at a draft study of benefit analysis in consumer protection regulation, focusing on the quality of current CBA work in this area.  As guest to the seminar will be Paul Rothtsein of the CFPB, a co-author of the study, as well as Lisa Robinson, a leading practitioner of benefit cost analysis and a lecturer at the Chan School of Public Health at Harvard University.  This week's session may run a bit longer than usual, but will be over by 7:00 pm if not sooner.
  10. 10 Show/Hide More Week 10 — November 30th: Alternative Methods and CBA Critiques
    Original Creator: Howell E. Jackson
    Note on Final Session of the Fall semester: The goal of this final class is to consider several critiques of cost-benefit analysis as well as alternative methods for assessing government policies.
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September 06, 2017

cost-benefit analysis

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Howell E. Jackson

James S. Reid, Jr. Professor of Law

Harvard University

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